CCL Industries Inc.
TSX : CCL.A
TSX : CCL.B

CCL Industries Inc.

November 06, 2008 13:30 ET

Third Quarter 2008 Investor Package

TORONTO, ONTARIO--(Marketwire - Nov. 5, 2008) -

Dear Shareholder:

Please find enclosed our Third Quarter 2008 Investor Package.

The credit crunch and its continuing impact on global equity and debt markets have been traumatic for individuals and corporations. As we have witnessed in the last few years, cheap credit fuelled the economy allowing consumers to overextend themselves and businesses to experience excessively high valuations and leverage. As a result, cash and liquidity have become critical to the survival and growth of global companies. At CCL, we continue to be disciplined in maintaining a conservative financial leverage, in ensuring our capital reinvestment plans create shareholder value and in not overpaying for acquisitions. In addition, we recently completed a debt placement at very good interest rates and favourable terms, which provides us with substantial cash along with existing unused lines of credit ensuring liquidity into the next decade. We are in great shape to ride out this storm as we are well-positioned to continue our strategy of prudent growth by taking advantage of opportunities that will develop from this economic fallout.

We continue to generate strong cash flow despite the challenging economic environment. As a result, your Board of Directors is pleased to declare the quarterly dividend at the level approved early in 2008 when it was increased by 17%. The quarterly dividend is $0.14 per Class B non-voting share and $0.1275 per Class A voting share and is payable on January 2, 2009 to shareholders of record as at December 12, 2008.

Conference calls with our stakeholders are held following the release of our quarterly results and when significant events require additional communication. These calls are made to ensure that all stakeholders are kept current with our business developments and to support our good corporate governance practices. Presentation materials used during conference calls and formal investor meetings are posted on our website along with audio recordings of the meetings. Instructions for accessing these services are set out at the end of this earnings release.

We encourage all shareholders to access our website www.cclind.com on a regular basis for investor and company news. If you would like to have future Press Releases e-mailed to you at the time they are issued, please complete the Information Request Form under the "Investors" tab ("Contact Us" icon) on our website or write to us at CCL to the attention of the Investor Relations Department at the address above.

Yours truly,

Donald G. Lang

Executive Chairman of the Board

Investor Update



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

1. Third Quarter 2008 Results and Dividend Declaration Press Release
2. Press Release - CCL Announces US$130 Million Private Placement Debt
Financing - Sept. 23rd

Stock Symbol: TSX - CCL.A and CCL.B

CCL Reports 9% Growth in EPS from Continuing Operations in
Third Quarter 2008 and Declares Dividend

Results Summary
---------------

For Periods Ended September 30th
-----------------------------------------------------------
Three months Nine months
------------ -----------
Unaudited Unaudited
-----------------------------------------------------------

(in millions
of Cdn dollars,
except per
share data) 2008 2007 % Change 2008 2007 % Change
---- ---- -------- ---- ---- --------

Sales $ 289.8 $ 274.9 5.4 $ 897.7 $ 894.6 0.3
-------- -------- -------- --------
-------- -------- -------- --------
Restructuring
and other
items - net
gain $ 1.7 $ 1.2 $ 3.5 $ 0.9
Net earnings
from
continuing
operations $ 22.1 $ 20.8 6.3 $ 73.7 $ 73.0 1.0
Net earnings
from
discontinued
operations,
net of tax $ - $ 3.0 $ - $ 9.6
Net earnings $ 22.1 $ 23.8 (7.1) $ 73.7 $ 82.6 (10.8)
-------- -------- -------- --------
-------- -------- -------- --------

Per Class B share
Basic Earnings
Continuing
operations $ 0.70 $ 0.64 9.4 $ 2.30 $ 2.26 1.8
Discontinued
operations $ - $ 0.10 $ - $ 0.30
Net
earnings $ 0.70 $ 0.74 (5.4) $ 2.30 $ 2.56 (10.2)
-------- -------- -------- --------
-------- -------- -------- --------
Diluted
earnings
Continuing
operations $ 0.68 $ 0.61 11.5 $ 2.23 $ 2.18 2.3
Discontinued
operations $ - $ 0.10 $ - $ 0.29
Net
earnings $ 0.68 $ 0.71 (4.2) $ 2.23 $ 2.47 (9.7)
-------- -------- -------- --------
-------- -------- -------- --------

Restructuring
and other
items and tax
adjustments
- net gain $ 0.05 $ 0.12 $ 0.11 $ 0.28
-------- -------- -------- --------
-------- -------- -------- --------

Number of
outstanding
shares
(in 000s)
Weighted
average for
the period 32,116 32,250
Actual at
period end 31,971 32,366


Toronto, November 5, 2008 - CCL Industries Inc., a world leader in the development of labelling solutions and specialty packaging for the consumer products and healthcare industries, announced today its financial results for the third quarter ended September 30, 2008 and declaration of its quarterly dividend.

Sales for the third quarter of 2008 from continuing operations were $289.8 million, up 5% from the $274.9 million recorded in the third quarter of 2007, while sales for the first nine months of 2008 of $897.7 million were marginally up over last year's $894.6 million. Sales increased for the quarter by 3% due to organic growth and acquisitions, while foreign exchange accounted for an increase of 2%. Financial comparisons to the prior year's third quarter results have been positively affected by the significant appreciation of the euro (9%) versus the Canadian dollar partially offset by the depreciation in the U.K. pound (7%). The U.S. dollar was flat in the third quarter compared to the same period last year. Also, business acquisitions in the Label Division have positively impacted financial performance versus the prior year. Year-to-date, sales were flat compared to last year as a result of organic growth and acquisitions of 3% offset by the negative foreign exchange effect of 3%.

Net earnings from continuing operations for the third quarter of 2008 were $22.1 million, up 6% from the $20.8 million recorded in the third quarter of 2007 due primarily to improved operational performance. Operating income was up by $0.9 million or 3% from last year's third quarter. Operating income from Label and Tube was higher than the third quarter of 2007 while Container was marginally lower. In the third quarter of 2008, net earnings were positively impacted by a gain from the repatriation of capital from Europe that arose from the disposal of the Company's investment in ColepCCL late last year of $1.7 million with no tax effect. In the third quarter of 2007, corporate income tax rates were reduced in Germany and the utilization of a previous tax loss was recognized in Mexico, together totalling $2.9 million and this resulted in a decrease in income tax expense. Additionally, the Container Division had a positive net recovery of restructuring and other items of $1.2 million before tax ($0.8 million after tax). Net earnings in the third quarter of 2007 from discontinued operations were $3.0 million.

For the first nine months of 2008, net earnings from continuing operations were $73.7 million, up 1% from $73.0 million in the comparable 2007 period. Net earnings for the nine months of 2008 were positively affected by restructuring and other items for a net gain of $3.5 million. Net earnings for the nine months of 2007 increased by $8.9 million due to restructuring and other items and favourable tax adjustments.

EBITDA from continuing operations was $52.8 million for the third quarter of 2008, up 12% from $47.3 million in the third quarter of 2007. Year-to-date EBITDA was $171.5 million in the third quarter of 2008, up 4% from $164.2 million in the comparable 2007 period.

Basic earnings per Class B share from continuing operations were $0.70 in the third quarter of 2008 compared to $0.64 earned in the same period last year, an increase of 9%. Restructuring and other items in the third quarter of 2008 increased basic earnings per Class B share by $0.05. Favourable tax adjustments had a positive effect on earnings per share in the third quarter of 2007 of $0.09 and a recovery of restructuring and other items increased earnings per share by a further $0.03. Basic earnings per share from discontinued operations in the third quarter of 2007 were $0.10. The positive impact of currency translation and transactions on basic earnings per Class B share from continuing operations was $0.04 in the third quarter of 2008 versus the comparable prior year quarter.

For the first nine months of 2008, earnings per Class B share from continuing operations were $2.30 compared to $2.26 in the prior year period, a 2% increase. Restructuring and other items and favourable tax adjustments increased earnings per Class B share by $0.11 for the first nine months of 2008 versus a $0.28 increase in the same period last year. The negative impact of currency translation and transactions on basic earnings per Class B share from continuing operations was $0.11 in the first nine months of 2008 versus the same period last year.

Geoffrey T. Martin, President and Chief Executive Officer, commented, "In light of the current turbulent global economy, we are quite pleased with our earnings performance in our third quarter of 2008. The slowdown in the U.S. economy has spread to Europe and parts of the developing world; however, our global businesses have held up very well under the circumstances. Our earnings per share growth from continuing operations excluding one-time items were a healthy 25%."

Mr. Martin continued, "The Label Division, our largest segment, recorded growth overall in both sales and operating income compared to a very strong third quarter in 2007 despite the continued softness in the home and personal care business in North America and Europe. The strength of our global healthcare business and geographic expansions into emerging markets with higher growth profiles has more than offset those businesses affected by weak consumer spending. We continue to be pleased with the performances of the CD-Design business in Germany, which was acquired in January and the Clear Image Australian wine label acquisition acquired in April."

Mr. Martin also noted, "Sales in the Container Division were down 8% in the quarter due to slow personal care sales, the divestiture of the ABS "bag-in-can" product line and slightly unfavourable exchange rates. This was partially offset by the growth in our beverage business and higher sales in Mexico. Operating income was 3% below last year's level due to the lower volume and unfavourable currency offset in part by improved margins and operating performance. The stronger U.S. dollar, if sustained, will help offset some of the difficulties at our Canadian plant but the significant decline in aluminum in the past few weeks will largely be passed on to our customers, as have most of the increases over the last couple of years. We also look forward to the start up late this year in our new state-of-the-art plant in Guanajuato, Mexico. The Tube Division posted a strong sales increase in local terms and produced a small profit versus last year. We will be moving to a first-class new facility in Los Angeles late this year and we are anticipating continued improvements in profitability in 2009 assuming that U.S. consumer spending does not deteriorate further."

Mr. Martin added, "Despite the unsettled economic environment, we continue to have confidence to invest in our businesses with growth projects including further geographic expansion into rapidly growing emerging markets for our Label Division. We have further strengthened our balance sheet with our latest US$130 million private debt placement providing the necessary liquidity for the coming years."

Mr. Martin concluded, "So far in the fourth quarter, our order levels have been steady and unaffected by the recent financial crisis in world markets. We are concerned about markets in North America and Europe that are driven by consumer spending as we move into 2009, but are hopeful that growth in the emerging markets will continue. We are in great strategic shape to weather this economic downturn and believe that our diversified product lines and our global spread will help offset the impact of the unstable economy. In the meantime, our capital spending and acquisition plans remain tightly managed and based on our ability to generate cash flows to fund them. Cash flow and earnings growth continue to support our dividend policy. As a result, your Board of Directors has declared a dividend at the same level as the higher dividend declared earlier this year. The quarterly dividend is $0.14 on Class B non-voting shares and $0.1275 on Class A voting shares to shareholders of record at the close of business on December 12, 2008, payable on January 2, 2009. CCL continues its remarkable record of paying quarterly dividends without reduction or omission for over 25 years. This reflects our prudent financial management of the business."

With headquarters in Toronto, Canada, CCL Industries now employs approximately 5,500 people and operates 55 production facilities in North America, Europe, Latin America and Asia Pacific. CCL Label is the world's largest converter of pressure sensitive and film materials and sells to leading global customers in the consumer packaging, healthcare and consumer durable segments. CCL Container and CCL Tube produce aluminum cans, bottles and plastic tubes for the consumer products industry in North America.

Statements contained in this Press Release, other than statements of historical facts, are forward-looking statements subject to a number of uncertainties that could cause actual events or results to differ materially from some statements made.



Note: CCL will hold a conference call at 4:00 p.m. EST on Thursday,
November 6, 2008 to discuss these results.
To access this call, please dial Toll-Free North America -
1-800-814-4862 or International - 416-915-5763.

Conference Replay will be available from Thursday, November 6, 2008
at 6:00 p.m. EST until Saturday, December 6, 2008 at 11:59 p.m. EST

Dial: Toll-Free North America - 1-877-289-8525
Toronto/International - 416-640-1917 -
Access Code: 21288136 followed by the number sign.

For more details on CCL, visit our website - www.cclind.com

Financial Tables follow ...


CCL INDUSTRIES INC.
2008 Third Quarter
Consolidated Balance Sheets

September December September
Unaudited 30th 31st 30th
-------------------------------------------------------------------------
(in millions of Cdn dollars) 2008 2007 2007
---- ---- ----

Assets
Current assets
Cash and cash equivalents $ 206.1 $ 96.6 $ 75.8
Accounts receivable - trade 156.7 127.1 195.0
Other receivables and prepaid expenses 18.3 97.7 27.6
Inventories 83.9 69.6 95.9
-----------------------------
465.0 391.0 394.3
Property, plant and equipment 757.5 630.8 651.9
Other assets (note 4) 39.5 33.4 27.5
Future income tax assets 35.1 32.1 33.6
Intangible assets 44.5 26.1 34.8
Goodwill 389.9 374.8 416.6
-------------------------------------------------------------------------
Total assets $1,731.5 $1,488.2 $1,558.7
-------------------------------------------------------------------------

Liabilities
Current liabilities
Bank advances $ - $ - $ 10.9
Accounts payable and accrued liabilities 211.2 221.2 248.5
Income and other taxes payable 2.2 2.5 9.7
Current portion of long-term debt 22.1 21.2 15.5
-----------------------------
235.5 244.9 284.6
Long-term debt (note 12) 566.1 382.2 454.3
Other long-term items 56.7 48.8 48.4
Future income taxes 101.8 94.4 102.4
-------------------------------------------------------------------------
Total liabilities 960.1 770.3 889.7
-------------------------------------------------------------------------

Shareholders' equity
Share capital (note 2) 189.0 190.5 188.8
Contributed surplus 6.2 6.7 7.1
Retained earnings 652.1 606.1 544.6
Accumulated other comprehensive
loss (note 6) (75.9) (85.4) (71.5)
-------------------------------------------------------------------------
Total shareholders' equity 771.4 717.9 669.0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total liabilities and shareholders'
equity $1,731.5 $1,488.2 $1,558.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See notes to interim consolidated financial statements.

Certain figures have been reclassified for comparative purposes.


CCL INDUSTRIES INC.
2008 Third Quarter
Consolidated Statements of Earnings

Three months ended Nine months ended
Unaudited September 30th September 30th
-------------------------------------------------------------------------

(in millions of
Cdn dollars,
except per
share data) 2008 2007 % Change 2008 2007 % Change
---- ---- -------- ---- ---- --------

Sales $ 289.8 $ 274.9 5.4 $ 897.7 $ 894.6 0.3
-----------------------------------------------------------

Costs and
expenses
Cost of
goods sold 225.2 212.8 684.4 682.2
Selling,
general and
administ-
rative 31.3 32.2 97.8 100.9
Depreciation
and
amortization 2.0 1.7 5.3 4.8
Interest
expense, net 6.1 5.8 16.2 18.4
-----------------------------------------------------------
25.2 22.4 12.5 94.0 88.3 6.5
Restructuring
and other
items - net
gain (note 7) 1.7 1.2 3.5 0.9
-----------------------------------------------------------

Earnings before
income taxes 26.9 23.6 14.0 97.5 89.2 9.3
Income taxes 4.8 2.8 23.8 16.2
-----------------------------------------------------------

Net earnings
from continuing
operations 22.1 20.8 6.3 73.7 73.0 1.0

Net earnings
from
discontinued
operations, net
of tax (note 5) - 3.0 - 9.6
-----------------------------------------------------------
Net earnings $ 22.1 $ 23.8 (7.1) $ 73.7 $ 82.6 (10.8)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Basic earnings
per Class B
share
Continuing
operations $ 0.70 $ 0.64 $ 2.30 $ 2.26
Discontinued
operations - 0.10 - 0.30
-----------------------------------------------------------
Net earnings $ 0.70 $ 0.74 $ 2.30 $ 2.56
-------------------------------------------------------------------------

Diluted
earnings per
Class B share
Continuing
operations $ 0.68 $ 0.61 $ 2.23 $ 2.18
Discontinued
operations - 0.10 - 0.29
-----------------------------------------------------------
Net earnings $ 0.68 $ 0.71 $ 2.23 $ 2.47
-------------------------------------------------------------------------

See notes to interim consolidated financial statements.

Certain figures have been reclassified for comparative purposes.


CCL INDUSTRIES INC.
2008 Third Quarter
Consolidated Statements of Comprehensive Income

Three months ended Nine months ended
Unaudited September 30th September 30th
-------------------------------------------------------------------------
(in millions of Cdn dollars) 2008 2007 2008 2007
---- ---- ---- ----
Net earnings $ 22.1 $ 23.8 $ 73.7 $ 82.6
---------------------------------------

Other comprehensive income (loss),
net of tax:

Unrealized gains (losses) on
translation of financial
statements of self-sustaining
foreign operations (17.5) (35.9) 32.1 (95.2)

Gains (losses) on hedges of net
investment in self-sustaining
foreign operations, net of tax
recovery (expense) of
$1.2 million and $4.1 million
for the three-month and
nine-month periods ending
September 30, 2008 (2007 -
($2.0) million; ($6.6) million) (4.0) 14.8 (20.2) 40.1
---------------------------------------

Unrealized foreign currency
translation, net of hedging
activities (21.5) (21.1) 11.9 (55.1)
---------------------------------------

Gains (losses) on derivatives
designated as cash flow hedges,
net of tax recovery (expense)
of $0.8 million and
($0.2) million for the
three-month and nine-month
periods ending September 30,
2008 (2007 - $0.5 million;
$1.3 million) (0.4) (3.1) 2.1 (7.1)

Reclassification of gains
(losses) on derivatives
designated as cash flow hedges
to earnings, net of tax
recovery (expense) of
$0.4 million and $1.0 million
for the three-month and
nine-month periods ending
September 30, 2008 (2007 -
($0.2) million; ($0.5) million) (2.3) 3.0 (4.5) 6.4
---------------------------------------

Change in losses on derivatives
designated as cash flow hedges (2.7) (0.1) (2.4) (0.7)
---------------------------------------

Other comprehensive income (loss) (24.2) (21.2) 9.5 (55.8)
---------------------------------------

Comprehensive income (loss) $ (2.1) $ 2.6 $ 83.2 $ 26.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See notes to interim consolidated financial statements.

Certain figures have been reclassified for comparative purposes.


CCL INDUSTRIES INC.
2008 Third Quarter
Consolidated Statements of Shareholders' Equity

Nine months ended
Unaudited September 30th
-------------------------------------------------------------------------
(in millions of Cdn dollars) 2008 2007
---- ----

Share capital (note 2)

Class A shares, beginning of period $ 4.5 $ 4.5
-------------------
Class A shares, end of period 4.5 4.5

Class B shares, beginning of period 197.4 193.0
Shares issued 0.9 -
Stock options exercised, Class B 2.7 2.7
Normal course issuer bid (3.9) -
-------------------
Class B shares, end of period 197.1 195.7
Executive share purchase plan loans, beginning
of period (1.3) (1.6)
Repayment of executive share purchase plan loans - 0.3
-------------------
Executive share purchase plan loans, end of period (1.3) (1.3)

Shares held in trust, beginning of period (10.1) (5.6)
Shares released from trust 3.2 -
Shares purchased and held in trust (4.4) (4.5)
-------------------
Shares held in trust, end of period (11.3) (10.1)

-------------------------------------------------------------------------
Share capital, end of period 189.0 188.8
-------------------------------------------------------------------------

Contributed surplus
Contributed surplus, beginning of period 6.7 4.2
Stock option expense 0.9 0.7
Stock based compensation plan (1.4) 2.2
-------------------------------------------------------------------------
Contributed surplus, end of period 6.2 7.1
-------------------------------------------------------------------------

Retained earnings, beginning of period 606.1 476.6

Transition adjustment on adoption of new
accounting standards - (3.0)
Net earnings 73.7 82.6
Normal course issuer bid (14.2) -

Dividends
Class A 0.9 0.8
Class B 12.6 10.8
-------------------
Total dividends, end of period 13.5 11.6

-------------------------------------------------------------------------
Retained earnings, end of period 652.1 544.6
-------------------------------------------------------------------------

Accumulated other comprehensive loss (note 6)
Accumulated other comprehensive loss, beginning
of period (85.4) (18.5)
Transition adjustment on adoption of new accounting
standards - 2.7
Other comprehensive income (loss) 9.5 (55.8)
-------------------------------------------------------------------------
Accumulated other comprehensive loss, end of period (75.9) (71.5)
-------------------------------------------------------------------------

-------------------
Total shareholders' equity, end of period $ 771.4 $ 669.0
-------------------
-------------------


CCL INDUSTRIES INC.
2008 Third Quarter
Consolidated Statements of Cash Flows

Three months ended Nine months ended
Unaudited September 30th September 30th
-------------------------------------------------------------------------
(in millions of Cdn dollars) 2008 2007 2008 2007
Cash provided by (used for) ---- ---- ---- ----

Operating activities
Net earnings $ 22.1 $ 23.8 $ 73.7 $ 82.6
Earnings from discontinued
operations, net of tax - (3.0) - (9.6)
Items not requiring cash:
Depreciation and amortization 21.5 19.1 61.3 57.5
Executive compensation 0.7 0.8 2.7 2.9
Future income taxes 2.4 (1.8) 6.4 (2.9)
Restructuring and other items,
net of tax (note 7) (1.7) - (3.5) (0.2)
Gain on sale of property,
plant and equipment (0.1) - (1.0) -
-----------------------------------------------------------------------
44.9 38.9 139.6 130.3
Net change in non-cash working
capital 6.4 10.3 44.8 (31.0)
-----------------------------------------------------------------------
Cash provided by continuing
operations 51.3 49.2 184.4 99.3
Cash provided by discontinued
operations - 4.9 - 15.1
-----------------------------------------------------------------------
Cash provided by operating
activities 51.3 54.1 184.4 114.4
-----------------------------------------------------------------------

Financing activities
Proceeds on issuance of
long-term debt 141.8 1.5 182.2 105.6
Retirement of long-term debt (20.8) (13.8) (28.4) (17.1)
Increase (decrease) in bank
advances - 0.4 - (9.5)
Issue of shares 2.1 1.0 2.2 2.7
Repurchase of shares (note 2) - - (18.1) -
Purchase of shares held in trust
(note 2) - - (4.4) (4.5)
Dividends (4.4) (3.9) (13.5) (11.6)
-----------------------------------------------------------------------
Cash provided by (used for)
financing activities 118.7 (14.8) 120.0 65.6
-----------------------------------------------------------------------

Investing activities
Additions to property, plant
and equipment (54.6) (43.2) (157.7) (113.4)
Proceeds on disposal of
property, plant and equipment 0.5 0.7 3.8 5.3
Proceeds on product line
dispositions (note 7) 1.0 - 9.4 -
Business acquisitions (note 3) - - (35.2) (105.6)
Long-term investment (note 4) - - (6.3) -
Other - (4.4) - (5.5)
-----------------------------------------------------------------------
Cash used for investing
activities (53.1) (46.9) (186.0) (219.2)
-------------------------------------------------------------------------
Effect of exchange rate changes
on cash (15.2) (3.5) (8.9) (10.0)
-------------------------------------------------------------------------

Increase (decrease) in cash 101.7 (11.1) 109.5 (49.2)
Cash and cash equivalents at
beginning of period 104.4 86.9 96.6 125.0
-------------------------------------------------------------------------

Cash and cash equivalents at end
of period $ 206.1 $ 75.8 $ 206.1 $ 75.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Cash and cash equivalents are defined as cash and short-term investments.
See notes to interim consolidated financial statements.
Certain figures have been reclassified for comparative purposes.


CCL INDUSTRIES INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Periods ended September 30, 2008 and 2007
(Tabular amounts in millions of Cdn dollars except share data)
(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of presentation

The disclosures contained in these unaudited interim consolidated
financial statements do not include all of the requirements of
generally accepted accounting principles for annual financial
statements. The unaudited interim consolidated financial statements
should be read in conjunction with the annual consolidated financial
statements for the year ended December 31, 2007.

b) Changes in accounting policies

The unaudited interim consolidated financial statements are based
upon accounting principles consistent with those used and described
in the annual consolidated statements, except that: effective January
1, 2008, the Company adopted the new Canadian Institute of Chartered
Accountants (CICA) Handbook Section 1535, Capital Disclosures;
Section 3031, Inventories; Section 3862, Financial Instruments -
Disclosures and Handbook Section 3863, Financial Instruments -
Presentation.

Section 1535 establishes standards for disclosing information about
an entity's capital and how it is managed.

Section 3031 addresses the measurement and disclosure of inventories.
This standard provides changes to the measurement and more extensive
guidance on the determination of cost, including allocation of
overhead; narrows the permitted cost formulas; requires impairment
testing and expands the disclosure requirements to increase
transparency. There have been no material write-downs or write-ups in
inventory during the nine months ended September 30, 2008.

The difference in the measurement of opening inventory may be applied
to the opening inventory for the period, with an adjustment to
opening retained earnings with no prior periods restated, or
retrospectively with a restatement to prior periods in accordance
with Section 1506, Accounting Changes. There was no difference to be
accounted for by the Company.

Inventories are valued at the lower of cost and net realizable value
on the first-in, first-out basis. The cost of work in process and
finished goods includes materials, direct labor applied to the
product and the applicable share of overhead. Net realizable value is
based on selling price less estimated selling costs. Allowances are
made for slow-moving inventory.

Section 3862 and Section 3863 revise and enhance the disclosure
requirements of Handbook Section 3861, Financial Instruments -
Disclosure and Presentation. These Sections require disclosure of
information with regards to the significance of financial instruments
for the Company's financial position and performance, and the nature
and extent of risks arising from financial instruments to which the
Company is exposed during the period and at the balance sheet date
and how the Company manages those risks.

c) Recently issued accounting standards

In November 2007, the CICA issued Handbook Section 3064, Goodwill and
Intangible Assets, that replaced Section 3062, Goodwill and Other
Intangible Assets, and amended Section 1000, Financial Statement
Concepts. The new standard is effective for interim and annual
financial statements for fiscal years beginning on or after October
1, 2008. The new section establishes standards for the recognition,
measurement, presentation and disclosure of goodwill and other
intangible assets subsequent to its initial recognition. Standards
concerning goodwill are unchanged from the standards included in the
previous Section 3062. Guidance is provided on the definition of an
intangible asset and the recognition of internally generated
intangible assets. The Company will comply with the requirements of
the new standard when the standard becomes effective.

The Canadian Accounting Standards Board confirmed in February 2008
that all publicly accountable enterprises will be required to report
under International Financial Reporting Standards ("IFRS") for fiscal
periods beginning on or after January 1, 2011.

2. SHARE CAPITAL

Issued and outstanding

September December September
30, 31, 30,
2008 2007 2007
---- ---- ----
Issued share capital $ 201.6 $ 201.9 $ 200.2
Less: Executive share purchase plan loans (1.3) (1.3) (1.3)
Shares held in trust (11.3) (10.1) (10.1)
-----------------------------
Total $ 189.0 $ 190.5 $ 188.8
-----------------------------
-----------------------------

During 2008, 618,000 Class B shares were repurchased for
$18.1 million. The excess of the purchase price over the paid-up
capital of $3.9 million was charged to retained earnings.

During 2008, the Company issued 29,753 restricted shares as part of
the consideration for the purchase of Clear Image Labels Pty. Ltd.
These restricted shares are price protected and cannot be sold or
transferred until December 31, 2009 (note 3).

During 2008, the Company granted awards totaling 145,000 Class B
shares of the Company. These shares are restricted in nature and will
vest at the end of 2010 dependent on the Company's performance. The
Company purchased these 145,000 shares in the open market and has
placed them in a trust until they vest. The fair value of this stock
award is being amortized over the vesting period and recognized as
compensation expense.

During 2005, the Company granted an award totaling 200,000 Class B
shares of the Company. These shares are restricted in nature. In
2008, 120,000 became fully vested and were released from the trust
that held the shares. The fair value of these shares had been
amortized over the vesting period and recognized as compensation
expense. The balance of the award will continue to be amortized over
the remaining vesting period, ending December 31, 2009 and recognized
as executive compensation expense.

Actual number of shares:

September December September
30, 31, 30,
2008 2007 2007
---- ---- ----
Class A 2,374,043 2,378,496 2,378,496
Class B 30,042,353 30,501,047 30,407,297
-------------------------------------
32,416,396 32,879,543 32,785,793
Less: Executive share purchase
plan shares - Class B (100,000) (100,000) (100,000)
Shares held in trust -
Class B (345,000) (320,000) (320,000)
-------------------------------------
Total 31,971,396 32,459,543 32,365,793
-------------------------------------
-------------------------------------
Year-to-date weighted average
number of shares 32,116,020 32,284,210 32,250,329
-------------------------------------
-------------------------------------
Year-to-date weighted average
diluted number of shares 33,086,510 33,492,937 33,498,920
-------------------------------------
-------------------------------------

3. ACQUISITIONS

On April 1, 2008, the Company completed the purchase of Clear Image
Labels Pty. Ltd. ("Clear Image") based in Australia. Clear Image
supplies pressure sensitive labels to the Australian wine industry
with plants in Sydney, New South Wales and Barossa Valley, South
Australia. Clear Image also exports labels to wine producers in the
United States. The Company paid $33.4 million in a combination of
cash, restricted stock and assumed debt to acquire the business.
During 2008, the Company issued 29,753 restricted shares as part of
the consideration for the purchase of Clear Image. These restricted
shares are price protected and cannot be sold or transferred until
December 31, 2009. The Company is reviewing the valuation of the net
assets acquired, including intangible assets, therefore certain items
disclosed below may change when the review is completed.

Details of the transaction are as follows:

Current assets $ 4.9
Current liabilities (4.2)
Non-current assets at assigned values 10.6
Future taxes (0.7)
Goodwill and intangibles 22.8
---------
Net assets purchased $ 33.4
---------
---------

Cash $ 26.9
Assumed debt 5.6
Restricted shares 0.9
---------
Total consideration $ 33.4
---------
---------

On January 31, 2008, the Company purchased CD-Design GmbH
("CD-Design"), based in Solingen, Germany. CD-Design converts
pressure sensitive films and aluminum for leading original equipment
manufacturers in Germany.

Under the terms of the purchase agreement, the Company agreed to pay
additional purchase consideration not to exceed approximately
$4.5 million if CD-Design achieves predetermined levels of earnings
for the year ended December 31, 2008. The additional consideration
will be recognized as additional consideration if it is determined
that the predetermined levels of earnings are achieved. The Company
is reviewing the valuation of the net assets acquired, including
intangible assets, therefore certain items disclosed below may change
when the review is completed.

Details of the transaction are as follows:
Current assets $ 7.1
Current liabilities (3.2)
Non-current assets at assigned values 1.4
Future taxes (0.5)
Goodwill and intangible assets 4.9
---------
Net assets purchased $ 9.7
---------
---------

Cash, less cash acquired of $0.4 million $ 8.3
Assumed debt 1.4
---------
Total consideration $ 9.7
---------
---------

On January 26, 2007, the Company completed its purchase of the sleeve
label business of Illinois Tool Works Inc. ("ITW"). ITW's sleeve
label business, through its two locations in the United Kingdom and
one location in each of Austria, Brazil and the United States, is a
leading supplier of shrink sleeve and stretch sleeve labels for
markets in Europe and the Americas. The purchase price was
$105.8 million, net of cash acquired. The Company established a
$95.0 million line of credit, of which $75.0 million was drawn to
facilitate the purchase.

Details of the transaction are as follows:

Current assets $ 24.3
Current liabilities (8.4)
Non-current assets at assigned values 35.2
Future taxes (1.5)
Intangible assets 19.0
Goodwill 37.2
---------
Net assets purchased $ 105.8
---------
---------

Cash, less cash acquired of $2.8 million $ 105.8
---------
---------

4. OTHER ASSETS

In December 2007, the Company established CCL-Kontur, a pressure
sensitive label business that will service the territories of Russia
and the Commonwealth of Independent States. CCL paid cash of
$8.8 million for its 50% share in December 2007 and a further
$6.3 million paid in the second quarter of 2008 as the assets of the
business have been legally transferred to CCL-Kontour by the Russian
partner. The Russian partner has operating control of the business
and, consequently, the investment is being carried at its equity
value.

5. DISCONTINUED OPERATIONS

In November 2007, the Company sold its interest in the ColepCCL joint
venture to the majority joint venture partner for $72.8 million
(EUR 50.0 million) in cash and a short-term note for a further
$74.4 million (EUR 50.0 million) that was paid on February 29, 2008.
The sale resulted in a gain of $43.5 million. The disposition is
reported as discontinued operations and the results are as follows:

Three Nine
months months
ended ended
September September
30, 30,
2007 2007
---- ----

Sales from discontinued operations $ 57.0 $ 167.6
Cost of goods sold 46.1 136.2
Selling general and administrative 5.9 16.1
Depreciation and amortization 0.4 1.0
Interest, net 0.4 0.9
-------------------
Earnings before income taxes 4.2 13.4
Income taxes 1.2 3.8
-------------------
Net earnings from discontinued operations $ 3.0 $ 9.6
-------------------
-------------------

September
30,
2007
----
Current assets $ 79.5
Long-lived assets 100.3
Current liabilities 50.3
Long-term liabilities 24.9

6. ACCUMULATED OTHER COMPREHENSIVE LOSS

September December September
30, 31, 30,
2008 2007 2007
---- ---- ----

Unrealized foreign currency translation
losses, net of tax expense of
$9.9 million (2007 - net of tax expense
of $13.9 million; net of tax expense of
$13.9 million) $ (75.0) $ (87.3) $ (73.6)
Impact of new net investment hedge
accounting standards on January 1,
2007, net of tax of $0.0 million
(2007 - net of tax expense of
$0.1 million; net of tax expense of
$0.1 million) - 0.4 0.4
Impact of new cash flow hedge accounting
standards on January 1, 2007, net of tax
of $0.0 million (2007 - net of tax
expense of $1.3 million; net of tax
expense of $1.3 million) - 2.4 2.4
Losses on derivatives designated as cash
flow hedges, net of tax recovery of
$0.7 million (2007 - net of tax
recovery of $1.1 million; net of tax
recovery of $0.8 million) (0.9) (0.9) (0.7)
-----------------------------
$ (75.9) $ (85.4) $ (71.5)
-----------------------------
-----------------------------

7. RESTRUCTURING AND OTHER ITEMS

Three months ended Nine months ended
September 30th September 30th
---------------------------------------------------------------------
Segment 2008 2007 2008 2007
------- ---- ---- ---- ----

Sale of ABS
product line Container $ - $ - $ 3.1 $ -
Restructuring of
Rhyl, Wales label
business Label - - (3.6) -
Gain on note
receivable Corporate - - 2.3 -
Repatriation of
capital Corporate 1.7 - 1.7 -
Container segment
restructuring Container - 1.2 - 0.2
Sale of
non-operational
land Corporate - - - 0.7
---------------------------------------
Net gain $ 1.7 1.2 $ 3.5 0.9
---------------------------------------------------------------------
---------------------------------------------------------------------

Tax recovery (expense)
on restructuring and
other items $ - $ (0.4) $ - $ 0.1
---------------------------------------------------------------------
---------------------------------------------------------------------

On April 4, 2008, the Company signed a binding agreement to divest
the assets of its ABS "Bag-on-Valve" product line to AptarGroup, Inc
for $9.4 million in cash. The product line was sold by CCL Container,
in conjunction with aluminum aerosol containers for applications
requiring separation between the propellant and the contents. CCL
Container retains the aluminum aerosol can business and will continue
to sell to its existing customers and AptarGroup will separately
market these specialized dispensing systems to the customers. The
Company recognized a gain on the sale of $3.1 million ($2.8 million
after tax).

In 2008, the Company, as part of its restructuring of the Rhyl plant
located in Wales recorded provisions for costs of $3.6 million
($2.6 million after tax).

In 2008, an unrealized exchange gain on a euro-denominated note
receivable on the sale of ColepCCL of $2.3 million was recognized
($1.6 million after tax).

In the third quarter of 2008, the Company repatriated capital from a
foreign subsidiary that was generated from the sale of its interest
in the ColepCCL joint venture. The repatriation resulted in a net
foreign exchange gain of $1.7 million. Gains and losses arise from
the difference between the exchange rate in effect on the date the
capital was returned to Canada, compared to the historical rate in
effect when the capital was invested. This exchange gain did not give
rise to any tax effect.

For the nine months ended September 30, 2007, $1.0 million
($0.7 million after tax) of costs were incurred relating to the
Container segment restructuring. Additionally, in the third quarter
2007, a reduction in the severance provision was realized resulting
in an income adjustment of $1.2 million ($0.8 million after tax).

In March 2007, the Company sold its non-operational land in Toronto,
Canada for $2.0 million cash and realized a gain of $0.7 million
($0.9 million after tax).

8. EMPLOYEE FUTURE BENEFITS

The expense for the defined benefit plans in the third quarter is
$0.3 million (2007 - $0.4 million) and $1.0 million year to date
(2007 - $1.2 million).

9. SEGMENTED INFORMATION

Industry segments

Three months ended September 30th
---------------------------------------------------------------------
Sales Operating income
---------------------------------------
2008 2007 2008 2007
---- ---- ---- ----

Label $ 237.1 $ 222.9 $ 30.1 $ 29.7

Container 36.9 40.2 2.8 2.9

Tube 15.8 11.8 0.2 (0.4)
---------------------------------------

Total operations $ 289.8 $ 274.9 33.1 32.2
-------------------

Corporate expense (1.8) (4.0)
-------------------

31.3 28.2

Interest expense, net 6.1 5.8
-------------------

25.2 22.4

Restructuring and other items
- net gain (note 7) 1.7 1.2
-------------------

Earnings before income taxes 26.9 23.6
Income taxes 4.8 2.8
-------------------

Net earnings from continuing
operations 22.1 20.8

Net earnings from discontinued
operations - 3.0
-------------------

Net earnings $ 22.1 $ 23.8
---------------------------------------------------------------------
---------------------------------------------------------------------

Nine months ended September 30th
---------------------------------------------------------------------
Sales Operating income
---------------------------------------
2008 2007 2008 2007
---- ---- ---- ----

Label $ 733.4 $ 706.4 $ 107.0 $ 101.3

Container 117.6 142.4 11.0 14.9

Tube 46.7 45.8 0.6 1.2
---------------------------------------

Total operations $ 897.7 $ 894.6 118.6 117.4
-------------------

Corporate expense (8.4) (10.7)
-------------------

110.2 106.7

Interest expense, net 16.2 18.4
-------------------

94.0 88.3

Restructuring and other items
- net gain (note 7) 3.5 0.9
-------------------

Earnings before income taxes 97.5 89.2

Income taxes 23.8 16.2
-------------------

Net earnings from continuing
operations 73.7 73.0

Net earnings from discontinued
operations - 9.6
-------------------

Net earnings $ 73.7 $ 82.6
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------

Identifiable Assets Goodwill
------------------- --------

September December September December
30th 31st 30th 31st
---- ---- ---- ----
2008 2007 2008 2007
---- ---- ---- ----

Label $1,157.1 $ 994.4 $ 349.8 $ 336.6
Container 191.7 166.8 12.7 12.7
Tube 94.0 82.4 27.4 25.5
ColepCCL - - - -
Corporate 288.7 244.6 - -
---------------------------------------
Total $1,731.5 $1,488.2 $ 389.9 $ 374.8
---------------------------------------------------------------------
---------------------------------------------------------------------


---------------------------------------------------------------------
Depreciation & Capital
Amortization Expenditures
------------ ------------
Nine months ended Nine months ended
September 30th September 30th
-------------- --------------
2008 2007 2008 2007
---- ---- ---- ----
Continuing operations
---------------------

Label $ 48.1 $ 43.5 $ 117.4 $ 89.1
Container 7.6 8.5 30.1 7.3
Tube 5.2 5.2 9.7 6.7
ColepCCL - - - 10.2
Corporate 0.4 0.3 0.5 0.1
---------------------------------------
Total $ 61.3 $ 57.5 $ 157.7 $ 113.4
---------------------------------------------------------------------
---------------------------------------------------------------------

10. CAPITAL MANAGEMENT POLICY

The Company's objective is to maintain a strong capital base
throughout the economic cycle so as to maintain investor, creditor
and market confidence and to sustain the future development of the
business. This capital structure supports the Company's objective to
provide an attractive financial return to its shareholders equal to
its leading specialty packaging peers (between 12% and 14% recently).

The Company defines capital as total shareholders' equity and
measures the return on capital (or return on equity) by annual net
income before restructuring and other items and favourable tax
adjustments by the average of the beginning and end of year
shareholders' equity. In both 2006 and 2007, the return on capital
was 13% and was well within the range of its leading specialty
packaging peers.

Management and the Board maintain a balance between the expected
higher return on capital that might be possible with a higher level
of financial debt and the advantages and security afforded by a lower
level of financial leverage. The Company believes that an optimum
level of net debt (defined as current debt, including bank advances,
plus long term debt, less cash and cash equivalents) to total book
capitalization (defined as net debt plus shareholders' equity) is a
maximum of 45%. This ratio was 33% at the end of the third quarter of
2008, 30% at the end of 2007 and 33% at the end of 2006 and therefore
the Company has further capacity to invest in the business with
additional debt without exceeding the optimum level.

The Company has provided a growing level of dividends to its
shareholders over the last few years generally related to its growth
in earnings. The dividends are declared bearing in mind the Company's
current earnings, cash flow and financial leverage. The Company filed
a normal course issuer bid commencing March 4, 2008 allowing the
repurchase of up to 2.5 million Class B shares and 13,000 Class A
shares in the following twelve months. All purchases are to be made
on the open market. The number of shares and the price of such
purchases will be determined by management when it believes that such
purchases will enhance shareholder value.

Other than the filing of the normal course issuer bid, there were no
changes in the Company's approach to capital management during the
year. The Company and its subsidiaries are subject to externally
imposed capital requirements under the Company's senior note
agreements and revolving bank debt; however, the Company is allowed
further significant borrowings under the terms of these agreements at
this time.

11. FINANCIAL INSTRUMENTS

The Company has exposure to the following forms of risk from its use
of financial instruments: credit risk, market risk, and liquidity
risk.

CREDIT RISK

Credit risk is the risk of financial loss to the Company if a
customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Company's
receivables from customers and investment securities.

The Company has established a credit policy under which each new
customer is analyzed individually for creditworthiness before the
Company's payment and delivery terms and conditions are offered. The
Company's review includes external ratings, where available, and in
some cases bank references. Purchase limits are established for each
customer, which represents the maximum open amount without requiring
approval from senior management; these limits are reviewed quarterly.
Customers that fail to meet the Company's benchmark creditworthiness
may transact with the Company only on a prepayment basis.

The Company is potentially exposed to credit risk arising from
derivative financial instruments if a counterparty fails to meet its
obligations. These counterparties are large international financial
institutions and to date, no such counterparty has failed to meet its
financial obligations to the Company. As at September 30, 2008, the
Company does not have any material exposure to credit risk arising
from derivative financial instruments.

The carrying amount of financial assets represents the maximum credit
exposure.

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

September December
30, 31,
2008 2007
---- ----
Cash and cash equivalents $ 206.1 $ 96.6
Accounts receivable 156.7 127.1
Other accounts receivable 8.0 12.5
-------------------------------------------------------------------
Total $ 370.8 $ 236.2
---------------------------------------------------------------------
---------------------------------------------------------------------

The aging of accounts receivable at the reporting date was:

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

September December
30, 31,
2008 2007
---- ----
0 - 30 days $ 100.0 $ 78.0
31 - 60 days 35.9 34.3
61 - 90 days 13.9 11.7
over 90 days 10.8 7.3
-------------------------------------------------------------------
Total $ 160.6 $ 131.3
---------------------------------------------------------------------
---------------------------------------------------------------------

Reconciliation of allowance for credit losses

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

September December
30, 31,
2008 2007
---- ----
Opening balance $ 4.2 $ 4.2
Decrease during the period (0.3) -
-------------------------------------------------------------------
Total $ 3.9 $ 4.2
---------------------------------------------------------------------
---------------------------------------------------------------------

MARKET RISK

Market risk is the risk that changes in market prices, such as
foreign exchange rates and interest rates, will affect the Company's
income or the value of its holding of financial instruments.

Foreign Exchange Risk

The Company operates internationally, giving rise to exposure to
market risks from changes in foreign exchange rates. The Company
partially manages these exposures by contracting primarily in
Canadian dollars, euros, U.K. pounds and U.S. dollars. Additionally,
each subsidiary's sales and expenses are primarily denominated in its
local currency further minimizing the foreign exchange impact on the
operating results.

The Company does not utilize derivative financial instruments for
speculative purposes.

A five percent strengthening of the Canadian dollar against the
following currencies at September 30 would have increased (decreased)
equity by the amounts shown below. This analysis assumes that all
other variables, in particular interest rates, remain constant (a
five percent weakening of the Canadian dollar against the above
currencies at September 30 would have had the equal but opposite
effect). The analysis is performed on the same basis for 2007.

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

September September
30, 30,
2008 2007
---- ----
US dollar $ 19.3 $ 22.7
UK Pounds $ 9.9 $ 9.0
Mexican Peso $ 3.1 $ 2.1
Danish Krone $ 2.8 $ 2.6
Euro $ 2.3 $ 1.0
Brazilian Real $ 1.9 $ 1.7

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

Interest Rate Risk

The Company is exposed to market risks related to interest rate
fluctuations on its debt. To mitigate this risk, the company
maintains a combination of fixed and floating rate debt.

For the three-month and nine-month periods ending September 30, 2008,
a 100 basis point increase (decrease) in the interest rate would have
resulted in $0.3 million and $1.1 million decrease (increase) in the
earnings from operations of the Company and no impact on other
comprehensive income. This analysis assumes that all other variables,
in particular foreign currency rates, remain constant.

LIQUIDITY RISK

Liquidity risk is the risk that the Company will not be able to meet
its financial obligations as they fall due. The Company's approach to
managing liquidity risk is to ensure that it will always have
sufficient liquidity to meet liabilities when due. The Company
believes that future cash flows generated by operations and access to
additional liquidity through capital and banking markets will be
adequate to meet its financial obligations.

The financial obligations of the Company include accounts payable,
long-term debts and other-long term items. The contractual maturity
of accounts payable are six months or less. Long-term debts have
varying maturities extending to 2018.

FAIR VALUES

The Company's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable and long-term
debt. The carrying value of cash and cash equivalents, accounts
receivable, accounts payable approximates their fair values due to
the immediate or short-term maturity of these financial instruments.

The fair values of the Company's derivative financial instruments
used to manage exposure to increases in procurement costs arising
from certain commodities are estimated based upon fair value
estimates of the futures contracts. Fair value of the futures
contracts reflects the cash flows due to or from the Company if
settlement had taken place on September 30, 2008.

12. LONG TERM DEBT

During the current quarter, CCL completed a private placement
financing of Senior Unsecured Notes with U.S. institutional
investors. The amount of the borrowing totals US$130 million with
US$52 million to be repaid in 2013 (five-year) and US$78 million to
be repaid in 2018 (ten-year). Interest rates for the five-year and
ten-year financings are 5.86% and 6.62%, respectively.

These loans have been designated as a hedge of net investments in
self-sustaining foreign operations. The portion of the foreign
exchange gain or loss on these loans that is determined to be
effective, is included in comprehensive income and the ineffective
portion recognized in earnings.

MANAGEMENT'S DISCUSSION AND ANALYSIS
Third Quarters Ended September 30, 2008 and 2007


This document has been prepared for the purpose of providing Management's Discussion and Analysis (MD&A) of the financial condition and results of operations for the third quarters ended September 30, 2008 and 2007 and an update to the 2007 Annual MD&A document. The information in this interim MD&A is current to November 5, 2008 and should be read in conjunction with the Company's September 30, 2008 unaudited third quarter financial statements released on November 5, 2008 and the 2007 Annual MD&A document, which forms part of the CCL Industries Inc. 2007 Annual Report, dated February 28, 2008.

The financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) and in accordance with the requirements of Section 1751, Interim Financial Statements, of the CICA Handbook. Unless otherwise noted, both the financial statements and this interim MD&A are expressed in Canadian dollars as the reporting currency. The measurement currencies of CCL's operations are primarily the U.S. dollar, the euro, the U.K. pound sterling, the Australian dollar, the Brazilian real, the Canadian dollar, the Chinese renminbi, the Danish krone, the Japanese yen, the Mexican peso, the Polish zloty, the Russian rouble and the Thailand baht. CCL's Audit Committee and its Board of Directors have reviewed this interim MD&A to ensure consistency with the approved strategy and results of the Company.

Management's Discussion and Analysis contains forward-looking statements, as defined in the Securities Act (Ontario), (hereinafter referred to as "forward-looking statements"), including statements concerning possible or assumed future results of operations of the Company. Forward-looking statements typically are preceded by, followed by or include the words "believes," "expects," "anticipates," "estimates," "intends," "plans" or similar expressions. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions, including, but not limited to: the evolving global financial crisis and its impact on the world economy and capital markets; the impact of competition; consumer confidence and spending preferences; general economic and geo-political conditions; currency exchange rates; and CCL's ability to attract and retain qualified employees. Accordingly, the Company's results could differ materially from those anticipated in these forward-looking statements.

1. Overview

Global economic and financial markets have been disrupted in the last few months by the liquidity crisis. Despite these shocks, CCL continues to experience strong performance globally in its healthcare and specialty businesses as an offset to the challenges in its consumer categories such as home and personal care products that are affected by retail spending. This has been particularly evident in the U.S. market and, over the last quarter, spread to many parts of Europe and even some emerging markets. The U.K. is experiencing a significant slowdown at least as difficult as the U.S. and many parts of continental Europe are now also affected by the crisis. Economic activity continues to be reasonably strong in Asia and Brazil but markets such as Mexico, which is connected to the fortunes of the U.S.; and Russia with its heavy dependence on high oil and gas prices are also being affected. However, in general terms CCL's customers are still showing good growth in emerging markets.

Clearly, the global economy is in the middle of a very uncertain period with consumer spending retrenching, particularly in North America and Europe. Inflation has become less of a concern with the recent meaningful reductions in energy and other commodity costs; however, the recent volatility of exchange rate movements is bringing new challenges. The fear of a global recession and unsettled financial markets are weighing heavily on CCL's customers and markets.

2. Discontinued Operations

In November 2007, CCL completed the sale of its ColepCCL joint venture to its majority partner for cash proceeds of $147 million, with half paid upon closing and the balance paid at the end of February 2008. The disposition resulted in a gain on the sale of $43.5 million after tax. CCL recorded this divestiture as a discontinued operation in 2007 and consequently, the sales and income contribution from ColepCCL have been excluded from the disclosure of continuing operations.

3. Review of Consolidated Continuing Operations

The following acquisitions and divestitures affected financial comparisons to 2007 results in the third quarter and the year-to-date periods. Further details on these transactions follow later in the Business Segment Review section:



- In late January 2007, CCL acquired the shrink sleeve and stretch
sleeve business of Illinois Tool Works, Inc. ("ITW") located in the
United Kingdom, Austria, Brazil and the United States for
$106 million.

- In December 2007, CCL entered into the 50% owned CCL-Kontur equity
investment located in Moscow and St. Petersburg, Russia, servicing
the personal care and beverage markets in the region for $9 million
with a further $6 million invested in April 2008 after the assets
were legally transferred to CCL-Kontur by the Russian partner. The
net income from this investment for the first nine months of 2008 was
nominal.

- In January 2008, CD-Design in Germany was acquired for $10 million,
including assumed debt, as CCL's first entry into the durable label
business as it services the European automotive original equipment
manufacturing market in Europe. A further payment to a maximum of
$5 million is contingent upon its 2008 financial performance.

- In April 2008, Clear Image Labels Pty. Ltd., a privately owned
pressure sensitive label company based in Australia was acquired for
$33 million in a combination of cash, restricted stock and assumed
debt. Clear Image is a leading Australian wine label business with
two operations in Australia servicing both the domestic and U.S.
markets.

- In April 2008, the Company sold the inventory and equipment related
to the Container Division's ABS 'Bag-on-Valve' product line located
within its Penetanguishene, Ontario, plant for $9 million payable in
cash.


All of the above transactions, with the exception of the ITW acquisition, impacted financial comparisons for the third quarter of 2008 compared with the same period in 2007.

Sales for the third quarter of 2008 from continuing operations were $289.8 million, up 5% from the $274.9 million recorded in the third quarter of 2007, while sales for the first nine months of 2008 of $897.7 million were marginally up over last year's $894.6 million. Sales increased for the quarter by 3% due to organic growth and acquisitions, while foreign exchange accounted for an increase of 2%. Financial comparisons to the prior year's third quarter results have been positively affected by the significant appreciation of the euro (9%) versus the Canadian dollar partially offset by the depreciation in the U.K. pound (7%). The U.S. dollar was flat in the third quarter compared to the same period last year. Also, business acquisitions in the Label Division have positively impacted financial performance versus the prior year. On a comparative basis with last year's third quarter, sales were higher in the Label and Tube Divisions partially offset by lower sales in the Container Division due to lower volume and the ABS disposition. Year-to-date, sales were flat compared to last year as a result of organic growth and acquisitions of 3% offset by the negative foreign exchange effect of 3%.

Net earnings from continuing operations for the third quarter of 2008 were $22.1 million, up 6% from the $20.8 million recorded in the third quarter of 2007 due primarily to improved operational performance. Operating income (see non-GAAP measures in Section 14 later in this report) was up by $0.9 million or 3% from last year's third quarter. Operating income from Label and Tube was higher than the third quarter of 2007 while Container was marginally lower. In the third quarter of 2008, net earnings were impacted by a gain from the repatriation of capital from Europe that arose from the disposal of the Company's investment in ColepCCL late last year of $1.7 million with no tax effect. In the third quarter of 2007, corporate income tax rates were reduced in Germany and the utilization of a previous tax loss was recognized in Mexico, together totalling $2.9 million and this resulted in a decrease in income tax expense. Additionally, the Container Division had a positive net recovery of restructuring and other items of $1.2 million before tax ($0.8 million after tax). Net earnings in the third quarter of 2007 from discontinued operations were $3.0 million.

For the first nine months of 2008, net earnings from continuing operations were $73.7 million, up 1% from $73.0 million in the comparable 2007 period. Net earnings for the first nine months of 2008 were affected by the gain on the repatriation of capital from ColepCCL noted above of $1.7 million with no tax effect, a gain on a note receivable of $2.3 million ($1.6 million after tax), the gain on the ABS product line of $3.1 million ($2.8 million after tax) and the loss from the shutdown of the Rhyl, Wales location of $3.6 million ($2.6 million after tax).

This small home and personal care operation has been consolidated into the plant near Leeds, U.K. Net earnings increased by $3.5 million from the foregoing items. Net earnings for the nine months of 2007 were affected by Container restructuring and other costs for a positive net recovery of $0.2 million and a gain on the sale of a property of $0.7 million for a net gain of $0.9 million before tax (net gain of $1.0 million after tax). Including the positive effect of favourable tax adjustments of $7.9 million, net earnings in 2007 increased by $8.9 million due to the foregoing items.

Net interest expense was $6.1 million in the third quarter of 2008, $0.3 million higher than last year's corresponding quarter of $5.8 million due primarily to the $0.4 million in costs to complete the private placement of debt in September. Corporate expense of $1.8 million for the quarter was lower than the $4.0 million in last year's third quarter due to a reduction in self-insurance claims reserves, lower variable executive compensation and foreign exchange gains.

The overall effective income tax rate was 18% for the third quarter of 2008 compared to 12% in the third quarter of 2007. The tax rate in the third quarter of 2008 was favourably affected by the non-taxable repatriation of capital which reduced the rate by 1% down from 19%. Overall, there was a change in the mix of taxable income in the third quarter with an increase in lower taxed jurisdictions such as Mexico and Thailand and a decrease in the higher taxed jurisdictions, particularly the U.S. The tax rate in the third quarter of 2007 was positively affected by lower tax rates in Germany and the utilization of the tax benefit of previous tax losses in Mexico. The impact of these items reduced the tax rate in the third quarter of 2007 from 24% to 12%.

EBITDA (see non-GAAP measures in Section 14 below) from continuing operations was $52.8 million for the third quarter of 2008, up 12% from $47.3 million in the third quarter of 2007. Year-to-date EBITDA was $171.5 million in the third quarter of 2008, up 4% from $164.2 million in the comparable 2007 period.

Basic earnings per Class B share from continuing operations were $0.70 in the third quarter of 2008 compared to $0.64 earned in the same period last year, an increase of 9%. Restructuring and other items in the third quarter of 2008 increased basic earnings per Class B share by $0.05. Favourable tax adjustments had a positive effect on earnings per share in the third quarter of 2007 of $0.09 and a recovery of restructuring and other items (a non-GAAP measure; see Section 14) increased earnings per share by a further $0.03. Consequently, restructuring and other items and favourable tax adjustments in the third quarter of 2007 increased earnings per share by $0.12. In addition, basic earnings per share from discontinued operations in the third quarter of 2007 were $0.10. The positive impact of currency translation and transactions on basic earnings per Class B share from continuing operations was $0.04 in the third quarter of 2008 relative to the comparable prior year quarter.

For the first nine months of 2008, earnings per Class B share from continuing operations were $2.30 compared to $2.26 in the prior year period, a 2% increase. Restructuring and other items and favourable tax adjustments increased earnings per Class B share by $0.11 for the first nine months of 2008 versus a $0.28 increase in the same period last year. The negative impact of currency translation and transactions on basic earnings per Class B share from continuing operations was $0.11 in the first nine months of 2008 versus the same period last year.

Diluted earnings from continuing operations and net earnings per Class B share were $0.68 in the third quarter of 2008 and $0.61 in the third quarter of 2007. Diluted earnings from discontinued operations in the third quarter of 2007 were $0.10.

The following table is presented to provide context to the change in the Company's financial performance. There is an improvement over the prior year's earnings performance from continuing operations, excluding the effect of restructuring and other items and favourable tax adjustments.



(in Canadian dollars)
---------------------

3rd Quarter Year-to-Date
---------------------------------------
Basic Earnings per Class B shares 2008 2007 2008 2007
--------------------------------- ---- ---- ---- ----

From continuing operations $ 0.70 $ 0.64 $ 2.30 $ 2.26
From discontinued operations Nil $ 0.10 Nil $ 0.30

Net gain from restructuring and
other items and favourable tax
adjustments included above $ 0.05 $ 0.12 $ 0.11 $ 0.28


The following is selected financial information for the eleven most recently completed quarters. In November 2007, the ColepCCL joint venture was sold and is treated as Discontinued Operations.



(in millions of Canadian dollars, except per share amounts)
-----------------------------------------------------------
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total
----- ----- ----- ----- -----

Sales-continuing operations
2008 $295.1 $312.8 $289.8
2007 316.2 303.5 274.9 $249.7 $1,144.3
2006 268.6 257.5 246.6 256.8 1,029.5

Net earnings-continuing operations
2008 27.5 24.1 22.1
2007 26.3 25.9 20.8 20.4 93.4
2006 18.1 15.1 10.0 21.7 64.9

Net earnings
2008 27.5 24.1 22.1
2007 30.0 28.8 23.8 65.3 147.9
2006 21.1 17.6 13.6 25.1 77.4

Net earnings per Class B share - continuing operations
Basic
2008 $0.85 $0.75 $0.70
2007 0.82 0.80 0.64 $0.64 $2.90
2006 0.57 0.46 0.32 0.67 2.02

Diluted
2008 0.82 0.73 0.68
2007 0.79 0.77 0.61 0.62 2.79
2006 0.55 0.45 0.30 0.65 1.95

Net earnings per Class B share
Basic
2008 0.85 0.75 0.70
2007 0.93 0.89 0.74 2.03 4.59
2006 0.66 0.54 0.43 0.78 2.41

Diluted
2008 0.82 0.73 0.68
2007 0.90 0.86 0.71 1.95 4.42
2006 0.64 0.53 0.41 0.75 2.33

Effect of restructuring and other items, favourable tax adjustments and
gain on discontinued operations on basic earnings per Class B share
2008 0.05 0.01 0.05
2007 0.05 0.11 0.12 1.49 1.77
2006 (0.03) (0.03) (0.10) 0.20 0.04


The impact on basic net earnings per Class B share of the gain on the sale of ColepCCL in November 2007 is included in the table above. Net earnings per Class B share have generally increased due to improved operational performance over time but have also fluctuated significantly due to changes in foreign exchange rates, restructuring costs and other items and favourable tax adjustments.

In addition, the seasonality of the business has evolved with the first quarter generally being the strongest due to the number of work days and various customer related activities. Also, there are many products that have a spring-summer bias in North America and Europe such as agricultural chemicals and certain beverage products, which generate additional sales volumes for CCL in the first half of the year. The third quarter of the year is negatively affected from a sales and income perspective by summer vacations in the Northern Hemisphere and the fourth quarter is negatively affected by Thanksgiving in Canada and the U.S. and the holiday season shutdowns at the end of the year.

4. Business Segment Review



Label Division
--------------
($ millions) Third Quarter Year-To-Date
-----------------------------------------------------------
2008 2007 +/- 2008 2007 +/-
---- ---- --- ---- ---- ---

Sales $ 237.1 $ 222.9 +6% $ 733.4 $ 706.4 +4%
Operating
Income(1) $ 30.1 $ 29.7 +1% $ 107.0 $ 101.3 +6%
Return on
Sales(1) 12.7% 13.3% 14.6% 14.3%
Capital
Spending $ 28.9 $ 30.0 $ 117.4 $ 89.1
Depreciation
and
Amortization $ 16.9 $ 14.6 $ 48.1 $ 43.5

(1) A non-GAAP measure (refer to definition in Section 14).


Sales for the Label Division were $237.1 million for the third quarter, up 6% from $222.9 million in the same quarter last year. The change in sales was the result of acquisitions and organic growth of 3% and positive foreign currency translation of 3%.

Sales growth in the third quarter was due in part to the CD-Design acquisition completed at the beginning of February 2008 and the Clear Image acquisition effective the beginning of April 2008. The overall base business experienced a very slight reduction in sales primarily due to the North American home and personal care category.

North American sales in the Label Division were slightly lower compared to last year. Healthcare and Specialty, now CCL's largest product group in North America, continued to grow organically at mid single digit rates. Home and personal care sales and battery label sales were soft for the quarter compared to last year, particularly in high-end personal care and showing no signs of improvement so far in the fourth quarter. Specialty products sales were up high single digits compared to last year's third quarter, with strong fast-food promotion sales partially offset by a softer ag-chem market related to the weak U.S. housing market affecting the lawn and garden sector. Shrink sleeve sales grew significantly from a small base. Overall, North American profitability was flat with last year as cost inflation and soft markets were offset by improved mix and operational improvements. Order intake for North America has been reasonable with continued strong healthcare business offsetting softer consumer related products. However, with U.S. consumer demand for the Christmas season being difficult to predict, label sales for the balance of the quarter are uncertain.

In Europe, sales were soft compared to a very strong third quarter of 2007 with the impact of the global financial crisis affecting some product categories. The healthcare and specialty business was very strong, up double-digits, excluding currency and continues to look firm for the balance of the year. Home and personal care volume and battery label sales were down overall versus last year similar to the U.S. experience. Beverage sales were down significantly from last year's levels as the business had the benefit of many new, large product launches in the beer segment in Russia during the third quarter of 2007. Many international beer producers also reported very significant reductions in their rate of growth in Russia this summer and are forecasting a difficult second half of 2008. Shrink and stretch sleeve sales were up modestly with U.K. softness more than offset by growth in central Europe. The recently acquired CD-Design performed above management's expectations in the quarter. Profitability overall in Europe was down due to the extraordinarily strong beer sales and related profits in the third quarter of 2007.

In emerging markets consisting of Latin America, Eastern Europe, Asia and Australia, sales were up in local currencies overall in the third quarter versus last year, excluding the April 2008 acquisition of Clear Image in Australia. In Latin America, sales were up significantly in Brazil but in Mexico, the move to a new facility resulted in sales being flat with last year. In Eastern Europe, our equity investment in Russia reported nominal net earnings but Poland continues to show good sales improvement. Sales in Asia in home and personal care were up significantly with strong growth in China partially offset by slightly weaker sales in Thailand compared to a strong third quarter last year. Battery label sales doubled from last year's level and Beverage sales in China and other Asian countries are also growing. The Clear Image acquisition in Australia performed above expectations in the wine label business. The Company continues to grow in emerging markets with plans to expand an existing plant in China and to build new plants in the north of China, Vietnam, India, Japan and a second facility in Thailand.

Overall in emerging markets, the outlook continues to be positive but with signs those countries dependent on high commodity prices are also experiencing slowing consumer sentiment.

Operating income for the third quarter of 2008 was $30.1 million, up 1% from $29.7 million in the third quarter of 2007. Overall, operating income was flat compared to an exceptional third quarter last year. Increases in income in healthcare and geographic improvement generally outside of North America were offset by reductions primarily in the North American and European home and personal care businesses and in the European beverage business. The Division incurred $1.3 million of moving costs in the third quarter of 2008 as it is relocating a number of operations to new facilities. Return on sales at 12.7% was ahead of our internal targets and slightly below the 13.3% return generated in last year's record third quarter.

Sales and operating income from the Clear Image and CD-Design acquisitions in the third quarter were $12.3 million and $1.4 million, respectively.

Sales backlogs for the label business are generally low due to short customer lead times, but indications are that customers' orders continue to be generally firm so far in the fourth quarter of 2008. However, the impact of the financial crisis on the world economy as the Christmas season approaches is uncertain.

The Label Division invested $117.4 million in capital in the first nine months of 2008 compared to $89.1 million in the same period last year. The capital was spent throughout the Division to maintain and expand its manufacturing base by adding presses in strategic locations. In the third quarter, capital was spent on the expansion of the plant in Meerane, Germany, and a new plant in Montréal. The Division expects to continue to spend capital to increase its capabilities, expand geographically, and replace or upgrade existing plants and equipment. Depreciation and amortization for the Label Division was $48.1 million for the first nine months of 2008 and $43.5 million in the comparable 2007 period.



Container Division
------------------
($ millions) Third Quarter Year-To-Date
-----------------------------------------------------------
2008 2007 +/- 2008 2007 +/-
---- ---- --- ---- ---- ---

Sales $ 36.9 $ 40.2 -8% $ 117.6 $ 142.4 -17%
Operating
Income(1) $ 2.8 $ 2.9 -3% $ 11.0 $ 14.9 -26%
Return on
Sales(1) 7.6% 7.2% 9.4% 10.5%
Capital
Spending $ 18.7 $ 4.8 $ 30.1 $ 7.3
Depreciation
and
Amortization $ 2.7 $ 2.8 $ 7.6 $ 8.5

(1) A non-GAAP measure (refer to definition in Section 14).


Sales in the third quarter were $36.9 million, down 8% from $40.2 million in the same period last year. Sales decreased for the quarter due to reduced volume of can sales to U.S. customers and the sale of the ABS "bag on valve" business earlier this year.

The Container Division experienced an overall decrease in sales volume primarily due to the slow personal care market in the U.S. offset in part by the growth of new beverage business. Mexican aerosol container sales volumes were up substantially over last year with improved profitability. The new plant in Guanajuato, Mexico, will be up and running at the end of the year to satisfy the trend of many major customers continuing to move their aerosol filling operations to Mexico for requirements in both the U.S. and Latin American markets. In addition, there are opportunities to build the beverage bottle business in Mexico and Central America.

Operating income for the Container Division in the third quarter of 2008 was $2.8 million, down 3% from $2.9 million in the third quarter of 2007. This decline in profitability was due to a combination of lower sales volume and slightly unfavourable currency translation. The Division successfully passed on to customers the higher aluminum costs experienced so far in 2008. The recent steep falls in aluminum costs in the fourth quarter will be largely offset by hedges connected to customer pricing or agreements with customers to pass on actual aluminum costs. With the Canadian dollar weakening and with reduced operating costs, profitability in the Penetanguishene, Ontario, operation should benefit. This business incurred a loss in the third quarter. Return on sales was up marginally in the third quarter of 2008 to 7.6% compared to 7.2% in last year's third quarter.

The aluminum container plant in Penetanguishene, Ontario, sells the vast majority of its production to the United States market in U.S. dollars. The business had previously hedged a part of the Canadian dollar value of these U.S. dollar sales by way of forward contracts. This practice was terminated in 2007 as the Company expects the impact of hedging not to be material over time. The slight change in the exchange rates on U.S. currency transactions had no effect on income for the Container Division in the third quarter of 2008 compared to third quarter 2007. For the first nine months of 2008, comparative income was negatively affected by $2.3 million ($0.05 per share).

The Container Division invested $30.1 million in capital in the first nine months of 2008 compared to $7.3 million in the same period last year. The majority of the third quarter's capital spending was on the new plant construction and a new high speed production line in Guanajuato, Mexico. Depreciation and amortization for the first nine months of 2008 and 2007 were $7.6 million and $8.5 million, respectively.

The Container Division continues to hedge some of its anticipated future aluminum purchases in line with its customer sales contracts through the futures market and has hedged 47% of its 2008 requirements and 43% of its 2009 estimated requirements.

Order intake for the Division continues to be softer than planned in the U.S. home and personal care market offset by stronger but more volatile demand for beverage bottles and growth in Mexico.



Tube Division
-------------
($ millions) Third Quarter Year-To-Date
-----------------------------------------------------------
2008 2007 +/- 2008 2007 +/-
---- ---- --- ---- ---- ---

Sales $ 15.8 $ 11.8 +34% $ 46.7 $ 45.8 +2%
Operating
Income(1) $ 0.2 $ (0.4) nm $ 0.6 $ 1.2 -50%
Return on
Sales(1) 1.3% (3.4)% 1.3% 2.6%
Capital
Spending $ 6.9 $ 5.4 $ 9.7 $ 6.7
Depreciation
and
Amortization $ 1.8 $ 1.6 $ 5.2 $ 5.2

(1) A non-GAAP measure (refer to definition in Section 14).


Sales in the third quarter for the Tube Division were $15.8 million, up 34% from $11.8 million last year with currency translation having a modest negative effect. Tube sales were up over the weak third quarter of last year as new business has been added despite the slowing economy's negative effect on high-end personal care products.

Operating income for the Tube Division for the third quarter of 2008 was $0.2 million, up from a loss of $0.4 million in the third quarter of 2007. This is the third consecutive quarter since the third quarter of 2007 that it has recorded a profit. The return on sales was 1.3% in the third quarter compared to a negative 3.4% return in the prior year's third quarter. The move into a new but much smaller facility in Los Angeles is in progress and is critical to the improvement of divisional profitability in 2009. The Division incurred $0.1 million in moving costs during the quarter.

The Tube Division invested $9.7 million in capital in the first nine months of 2008 compared to $6.7 million in the same period last year. Capital spending in the third quarter consisted of a new integrated tube line and the leasehold improvements associated with the move to the new leased building in Los Angeles. Depreciation and amortization for the nine months of 2008 and 2007 were $5.2 million in each year.

5. Currency Translation and Currency Transaction Hedging

As only about 10% of CCL's sales are generated from Canadian manufacturing locations, the remaining 90% of sales from international operations are recorded in foreign currencies and then translated into Canadian dollars for reporting purposes. The U.S. dollar is the functional currency for approximately 35% of the Company's total sales and it depreciated by less than 1% on average compared to the Canadian dollar in the third quarter of 2008 versus last year's third quarter and depreciated 8% on a year-to-date basis. European currencies are now approximately 43% of CCL's sales and the primary European currency, the euro, appreciated by 9% compared to the Canadian dollar versus the prior year's quarter while conversely, the U.K. pound declined by 7%. Fluctuations in foreign exchange rates can have a material effect on the Company's profitability. In this quarter, the positive value of the euro and other currencies more than offset the negative value of the U.S. dollar and the U.K. pound. The positive impact on earnings per share due to currency translation was $0.04 compared to last year's third quarter. Year-to-date, earnings per share have been negatively affected by $0.06 due to currency translation compared to last year's nine-month period.

The Company has not hedged any foreign currency transactions since June 2007. The Container Division sells products from its Canadian plant into the U.S. market in U.S. dollars, as previously discussed. The nominal change in the exchange rates on U.S. currency transactions had no effect on comparative income for continuing operations in the third quarter of 2008. Currency transactions reduced comparative income from operations for the first nine months of 2008 by $2.3 million or $0.05 per share.

With the recent pronounced increase in value of the U.S. dollar, it is anticipated that the Company will benefit significantly from currency translation and transactions relative to prior periods, particularly from its U.S. operations and to a lesser extent, its European operations. There is some economic uncertainty in the currency markets in Latin America and other emerging countries such as China and Russia.

6. Liquidity and Capital Resources

The Company's capital structure is as follows:



September December September
30, 31, 30,
$ Millions 2008 2007 2007
---------- ---- ---- ----

Total debt $ 588.2 $ 403.4 $ 480.7
Cash and cash equivalents 206.1 96.6 75.8
--------- --------- ---------
Net debt(1) $ 382.1 $ 306.8 $ 404.9
--------- --------- ---------
--------- --------- ---------

Shareholders' equity $ 771.4 $ 717.9 $ 669.0
--------- --------- ---------
--------- --------- ---------
Net debt: total book capitalization(2) 33.1% 29.9% 37.7%
Book value per Class B share(3) $ 24.13 $ 22.12 $ 20.67

(1) Net debt is a non-GAAP measure (refer to definition in Section 14).

(2) Net debt: total book capitalization is a non-GAAP measure (refer to
definition in Section 14).

(3) Book value per Class B share is a non-GAAP measure (refer to
definition in Section 14).


The Company's financial position remains solid. As of September 30, 2008, cash and cash equivalents amounted to $206 million compared to $97 million at December 31, 2007 and $76 million at September 30, 2007. Net debt was $382 million at September 30, 2008, $75 million higher than the net debt of $307 million at the end of December 2007. The increase in net debt in this time frame is primarily due to the acquisitions of CD-Design and Clear Image and the extensive capital spending program.

Net debt to total book capitalization at September 30, 2008 was 33.1%, down from 37.7% at the end of September 2007 due to the ColepCCL sale and up slightly from the 29.9% at the end of 2007 as a result of the CD-Design and Clear Image acquisitions and seasonal working capital increases partially offset by the collection of the balance of the ColepCCL sale proceeds in February. Book value per share, a non-GAAP measure, defined later in Section 14, was $24.13 at the end of the third quarter of 2008, 17% above $20.67 a year ago and 9% above the $22.12 at December 31, 2007. The increase is primarily the result of the retained earnings generated this year.

Prior to its most recent financing, the Company's debt structure was primarily comprised of three private debt placements completed in 1997, 1998 and 2006 with a total value of US$ 317.5 million (Cdn$ 337.8 million) as at September 30, 2008 and a five-year revolving extendible line of credit of $95 million commencing in January 2007. This was unchanged from December 31, 2007 except for the annual payment on one of the senior notes of US$ 9.4 million in September.

In September 2008, the Company completed a private debt placement with U.S. institutional investors as it was concerned about having access to liquidity in light of the development of the credit crunch. The Company raised US$130 million consisting of US$52 million of five-year term debt at 5.86% and US$78 million of ten-year term debt at 6.62%. In January 2007, the Company established a five-year revolving line of credit with a Canadian chartered bank for $95 million. As at the end of September 2008, $80 million was borrowed under this line of credit. This line of credit was extended in January for a further year and expires in January 2013. The Company may elect to request an annual extension at the end of 2008 to extend the term for a further year. The Company has repaid the bank line with the proceeds of the private placement and intends to maintain the line of credit with the bank to provide future liquidity as required.

The Company's overall average interest rate including the latest private placement is currently 5.7% after factoring in the related Interest Rate Swap Agreements ("IRSAs") and Cross Currency Interest Rate Swap Agreements ("CCIRSAs") compared to 5.8% at December 31, 2007. The IRSAs and CCIRSAs are discussed later in this report.

The Company believes that it has sufficient cash on hand and lines of credit and the ability to generate cash flow from operations to fund its expected financial obligations over the mid-term. The Company has considered the uncertainty of the current credit crunch and consequently, is not intending to rely on capital markets in the mid-term to fund its operations.

7. Cash Flow

During the third quarters of 2008 and 2007, the Company generated cash from operating activities from continuing operations of $51.3 million and $49.2 million, respectively. The increase in cash flow compared to last year's third quarter was primarily due to the increase in earnings from continuing operations this year. On a year-to-date basis, the seasonal build-up of normal working capital is in line with last year. The collection of the remaining ColepCCL receivable in February was the primary reason for the positive cash flow from working capital this year.

Capital spending in the third quarter of $54.6 million compared to $43.2 million last year. The major capital expenditures in the third quarter were for many new presses, plant expansions and new plants for the Label Division and a new plant and production line for the Container Division. This level of capital spending was higher than the $21.5 million of depreciation and amortization in the third quarter of 2008 and the $19.1 million in the third quarter of 2007. Plans for capital spending in 2008 are expected to be in the $190 million range for the year. With the uncertain world economy, capital spending plans for 2009 are expected to be in the $125-135 million range. The Company is continuing to expand its business base into new markets and invest in assets to add capacity and improve its competitiveness.

Dividends declared in the third quarters of 2008 and 2007 were $4.4 million and $3.9 million, respectively. The total number of shares outstanding as at September 30, 2008 and 2007 was 32.0 million and 32.4 million, respectively. The Company has historically paid out dividends at a rate of 20-25% of net earnings. Since the Company's cash flow and financial position are strong, the Board of Directors approved a continuation of the higher dividend declared earlier this year of $0.1275 per Class A share and $0.14 per Class B share to shareholders of record as of December 12, 2008 and payable on January 2, 2009. The annualized dividend rate is $0.51 per Class A share and $0.56 per Class B share.

The Company's share repurchase program under a normal course issuer bid ("bid") became effective March 4, 2008 indicating the intention to acquire under the bid up to 13,000 Class A voting shares and 2,500,000 of its issued and outstanding Class B non-voting shares in the following 12-month period. In March 2008, the Company repurchased 415,900 Class B shares under the bid at an average price of $28.37 for a total cost of $11.8 million and in June 2008 acquired a further 202,100 Class B shares at an average price of $31.13 for a total cost of $6.3 million. No further purchases have been made under the bid. Total purchases in 2008 to date have been 618,000 Class B shares at an average price of $29.28 for a total cost of $18.1 million.

8. Interest Rate and Foreign Exchange Management

The Company has utilized IRSAs to allocate notional debt between fixed and floating rates since the underlying debt is fixed rate debt with U.S. financial institutions. Since the Company has developed into a global business with a significant asset base in Europe in the last few years, it has utilized CCIRSAs to effectively convert notional U.S. dollar fixed rate debt into fixed and floating rate euro debt to hedge its euro-based assets and cash flows.

The effect of the IRSAs and CCIRSAs had no effect on interest expense in the third quarter of 2008 compared to a reduction in interest expense of $0.1 million in the third quarter of 2007. Interest coverage (refer to definition in Section 14) improved to 6.5 times at September 30, 2008 compared to 6.2 times as at September 30, 2007.

9. New Accounting Standards

A. Changes in Accounting Policies

The unaudited interim consolidated financial statements are based upon accounting principles consistent with those used and described in the annual consolidated statements, except that: effective January 1, 2008, the Company adopted the new Canadian Institute of Chartered Accountants (CICA) Handbook Section 1535, "Capital Disclosures"; Section 3031, "Inventories"; Section 3862, "Financial Instruments - Disclosures" and Handbook Section 3863, "Financial Instruments - Presentation."

Section 1535 establishes standards for disclosing information about an entity's capital and how it is managed. The Company's Capital Management Policy is as follows:

The Company's objective is to maintain a strong capital base throughout the economic cycle so as to maintain investor, creditor and market confidence and to sustain the future development of the business. This capital structure supports the Company's objective to provide an attractive financial return to its shareholders equal to its leading specialty packaging peers (between 12% - 14% recently).

The Company defines capital as total shareholders' equity and measures the return on capital (or return on equity) by annual net income before restructuring and other items and favourable tax adjustments by the average of the beginning and end of year shareholders' equity. In both 2006 and 2007, the return on capital was 13% and was well within the range of its leading specialty packaging peers.

Management and the Board maintain a balance between the expected higher return on capital that might be possible with a higher level of financial debt and the advantages and security afforded by a lower level of financial leverage. The Company believes that an optimum level of net debt (refer to definition in Section 14) to total book capitalization (refer to definition in Section 14) is a maximum of 45%. This ratio was 33% at the end of the third quarter of 2008, 30% at the end of 2007 and 33% at the end of 2006 and therefore, the Company has further capacity to invest in the business with additional net debt without exceeding the optimum level.

In September 2008, the Company accessed the U.S. private placement market and borrowed a further US$130 million at favourable terms. Although the Company had cash on hand, the decision was based on concerns about the future availability of credit in an uncertain market. This new liquidity will allow the Company to pursue its long term strategic goals.

The Company has provided a growing level of dividends to its shareholders over the last few years generally related to its growth in earnings. The dividends are declared bearing in mind the Company's current earnings, cash flow and financial leverage. The Company filed a normal course issuer bid ("bid") commencing March 4, 2008 allowing the repurchase of up to 2.5 million Class B shares and 13,000 Class A shares in the following twelve months. All purchases are to be made on the open market. The number of shares and the price of such purchases will be determined by management when it believes that such purchases will enhance shareholder value. The Company has repurchased approximately 600,000 shares so far under the bid.

Other than the filing of the bid and the recent private debt placement, there were no changes in the Company's approach to capital management during the year. The Company and its subsidiaries are subject to externally imposed capital requirements under its senior note agreements and its revolving bank debt; however, the Company is allowed further significant borrowings under the terms of these agreements at this time.

Section 3031 addresses the measurement and disclosure of inventories. This standard provides changes to the measurement and more extensive guidance on the determination of cost, including allocation of overhead; narrows the permitted cost formulas; requires impairment testing and expands the disclosure requirements to increase transparency.

The difference in the measurement of opening inventory may be applied to the opening inventory for the period, with an adjustment to opening retained earnings with no prior periods restated or retrospectively with a restatement to prior periods in accordance with Section 1506, "Accounting Changes." There was no difference to be accounted for by the Company.

Inventories are valued at the lower of cost and net realizable value on the first-in, first-out basis. The cost of work in process and finished goods includes materials, direct labour applied to the product and the applicable share of overhead. Net realizable value is based on selling price less estimated selling costs. Allowances are made for slow-moving inventory.

Section 3862 and Section 3863 revise and enhance the disclosure requirements of Handbook Section 3861, "Financial Instruments - Disclosure and Presentation." These Sections require disclosure of information with regards to the significance of financial instruments for the Company's financial position and performance and the nature and extent of risks arising from financial instruments to which the Company is exposed during the period and at the balance sheet date and how the Company manages those risks.

The Company has exposure to the following forms of risk from its use of financial instruments: credit risk, market risk and liquidity risk.

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investment securities.

The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company's payment and delivery terms and conditions are offered. The Company's review includes external ratings, where available, and in some cases bank references. Purchase limits are established for each customer, which represents the maximum open amount without requiring approval from senior management; these limits are reviewed quarterly. Customers that fail to meet the Company's benchmark creditworthiness may transact with the Company only on a prepayment basis.

The Company is potentially exposed to credit risk arising from derivative financial instruments if a counterparty fails to meet its obligations. These counterparties are large international financial institutions and to date, no such counterparty has failed to meet its financial obligations to the Company. As at September 30, 2008, the Company believes it does not have any material exposure to credit risk arising from derivative financial instruments.

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company's income or the value of its holding of financial instruments.

The Company operates internationally, giving rise to exposure to market risks from changes in foreign exchange rates. The Company partially manages these exposures by contracting primarily in Canadian dollars, euros, U.K. pounds and U.S. dollars. Additionally, each subsidiary's sales and expenses are primarily denominated in its local currency, further minimizing the foreign exchange impact on the operating results.

The Company does not utilize derivative financial instruments for speculative purposes.

Interest rate risk is the risk that the Company is exposed to market risks related to interest rate fluctuations on its debt. To mitigate this risk, the Company maintains a combination of fixed and floating rate debt.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to manage liquidity risk is to ensure that it will always have sufficient liquidity to meet liabilities when they are due. The Company believes that future cash flows generated by operations and access to additional liquidity through capital and banking markets will be adequate to meet its financial obligations.

B. Recently Issued Accounting Standards

In November 2007, the CICA issued Handbook Section 3064, "Goodwill and Intangible Assets," that replaced Section 3062, "Goodwill and Other Intangible Assets," and amended Section 1000, "Financial Statement Concepts." The new standard is effective for interim and annual financial statements for fiscal years beginning on or after October 1, 2008. The new section establishes standards for the recognition, measurement, presentation and disclosure of goodwill and other intangible assets subsequent to its initial recognition. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. Guidance is provided on the definition of an intangible asset and the recognition of internally generated intangible assets. The Company will comply with the requirements of the new standard when the standard becomes effective.

C. International Financial Reporting Standards ("IFRS")

The Canadian Accounting Standards Board confirmed in February 2008 that all publicly accountable enterprises will be required to report under IFRS for fiscal periods beginning on or after January 1, 2011.

The Company is formulating a framework to address the change to IFRS. CCL completed a review of IFRS analyzing the significant effects that its implementation may have on the Company. This review was enlightening and will provide a framework for developing the overall approach to implementing IFRS. In addition, CCL's corporate financial managers have been attending seminars on the details behind the transition. Before year end, the Company will be forming a project team to implement IFRS throughout the organization and to determine the potential financial and other impacts it may have on the business. The Company currently operates in certain countries that have implemented IFRS and expects that it will be able to leverage this knowledge during the transitional period.

10. Commitments and Contingencies

The Company has no material "off-balance sheet" financing obligations except for typical long-term operating lease agreements. The nature of these commitments is described in note 14 of the December 31, 2007 Annual Consolidated Financial Statements. The Company does not have any material related party transactions. There are no defined benefit plans funded with CCL stock.

The Company has had no material changes in contractual obligations in the third quarter of 2008 and has not made any material changes in critical accounting estimates in the third quarter of 2008.

11. Controls and Procedures

Disclosure Controls and Procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Executive Chairman, President and Chief Executive Officer ("CEO") and the Senior Vice President and Chief Financial Officer ("CFO") on a timely basis so that appropriate decisions can be made regarding public disclosure.

At the end of 2007, the CEO and CFO evaluated the effectiveness, design and operation of CCL's disclosure controls and procedures, including a review of the activities of the Disclosure Committee. This Committee reviews all external reports and documents of CCL. As of September 30, 2008, based on this evaluation of the disclosure controls and procedures, the CEO and CFO have concluded that CCL's disclosure controls and procedures, as defined in Multilateral Instrument 52-109 ("MI 52-109") are effective to ensure that information required to be disclosed in reports and documents that CCL files or submits under Canadian securities legislation is recorded, processed, summarized and reported within the time periods specified.

MI 52-109 also requires CEOs and CFOs to certify that they are responsible for establishing and maintaining the internal controls over financial reporting for the issuer, that those internal controls have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with Canadian GAAP, and that the issuer has disclosed any changes in its internal controls during its most recent interim period that has materially affected or is reasonably likely to materially affect its internal control over financial reporting.

As at the end of 2007, the CEO and the CFO certified that they were in compliance with the regulations of MI 52-109 except for the Company's investment in the ColepCCL joint venture. The ColepCCL joint venture was sold in November 2007.

As at September 30, 2008, the CEO and CFO certified that they are responsible for establishing and maintaining controls over financial reporting for CCL Industries Inc., that those internal controls have been designed to provide reasonable assurance regarding the reliability of financial reporting with Canadian GAAP and that the Company has had no change in its internal controls that has materially affected or is likely to materially affect its internal controls over financial reporting.

12. Risks and Strategies

The 2007 Management's Discussion and Analysis in the Annual Report detailed risks to the Company's business and the strategies that were planned for 2008 and beyond. The recent meltdown of global financial markets has created significant uncertainties on the prospects of the economies in which the Company operates and the effects these uncertainties may have on its customers, employees and suppliers. Other than the foregoing, there have been no material changes to those risks and strategies as detailed in the Annual Report of 2007. With the sale of the ColepCCL joint venture, CCL is no longer exposed to the inherent risks associated with owning a minority investment in a European contract manufacturing business. However, the Company remains significantly dependent on the European and emerging market economies and their currencies. These non-Canadian risks were described in the 2007 Management's Discussion and Analysis.

13. Outlook

The Company continues to focus on the growth prospects of its specialty packaging businesses within its core competencies. The Company will continue to prudently manage and reinvest its cash on hand and improve its cash flow generation with a view to sustaining and enhancing shareholder value in the future. CCL is continuing to integrate and reorganize the large number of recent acquisitions it has made in order to improve profitability and simplify administration. The Company is investigating mid-sized potential acquisition candidates that meet its criteria of core products and customers, and the expectation of earnings accretion in the first year of ownership. The recent pull back in equity valuations and the extended liquidity crisis may provide more favourable pricing of potential business acquisitions but the Company will be even more selective about appropriate acquisitions in this business climate. The Company may continue to buy back its stock if it believes that it will improve shareholder value assuming that it has the financial resources to do so.

CCL continues to invest in its businesses to maintain its premier position as the largest global supplier of pressure sensitive labels and a leading specialty packager. The Company intends to further expand its product offerings geographically and enter into new regions based on its customers' need for its services and products. This growth can be generated organically or by way of acquisitions.

There are many challenges ahead in the next year. The most significant macro issue is the potential further spreading and deepening of U.S. economic problems into the rest of the world beyond Europe and North America. At CCL, there are concerns associated with the Company's ability to maintain margins in all Divisions as our customers focus more attention on cost reductions during this economic cycle. In addition, the Label Division has relocated its operations in Mexico and Paris to new facilities and may incur additional direct and indirect costs associated with these moves. The Container business is completing a new plant in Mexico and the Tube business is relocating its Los Angeles operation to a new facility. There will be direct and indirect costs associated with these moves.

The strength of the Canadian dollar relative to the U.S. dollar and the European currencies negatively impacted overall earnings for the first half of 2008 compared to 2007 but was slightly positive in the third quarter as the U.S dollar strengthened dramatically into the fourth quarter. Based on current exchange rates, further significant comparative translation and transaction gains would occur in CCL's U.S. operations for the fourth quarter of 2008. In addition, based on current rates, the euro would also provide a significant positive comparative translation effect into the fourth quarter. At this stage, it would appear that the Canadian dollar may have a dramatic positive impact on earnings in 2009.

14. Key Performance Indicators and Non-GAAP Measures

CCL measures the success of its business using a number of key performance indicators, many of which are in accordance with Canadian GAAP as described throughout this report. The following performance indicators are not measurements in accordance with Canadian GAAP and should not be considered as an alternative or replacement of any other measure of performance under Canadian GAAP. These non-GAAP measures do not have any standardized meaning and may not be comparable to similar measures presented by other issuers.

Book Value per Share - A measure of the shareholders' equity at book value per the combined Class A and Class B shares. It is calculated by dividing shareholders' equity by the actual number of Class A and Class B shares outstanding, excluding amounts and shares related to shares held in trust and the executive share purchase plan.

EBITDA - Earnings before interest, income taxes, depreciation and amortization is a measure of the gross flow generated by the business excluding restructuring and other items. In particular, this non-GAAP measure is used extensively by financial analysts, investors, business valuators and our bankers in reviewing our business operations. The legal agreements with our private placement lenders and our bankers utilize this measure as a basis for establishing negative covenants for these debts.

Interest Coverage - A measure indicating the relative amount of operating income earned by the Company compared to the amount of interest expense incurred by the Company. It is calculated as operating income including discontinued operations before restructuring and other items plus net interest expense divided by net interest expense calculated on a 12-month rolling basis.

Net Debt - A measure indicating the financial indebtedness of the Company assuming that all cash on hand is used to repay a portion of the outstanding debt. It is defined as current debt including cash advances plus long-term debt less cash and cash equivalents.

Net Debt to Total Book Capitalization - A measure that indicates the financial leverage of the Company. It measures the relative use of debt versus equity in the book capital of the Company. Net debt to total book capitalization is defined as Net Debt (see above) divided by Net Debt plus shareholders' equity, expressed as a percentage.

Operating Income - A measure indicating profitability of the Company's business units defined as operating income before corporate expenses, interest, restructuring and other items and tax.

Restructuring and other items and favourable tax adjustments - A measure of significant non-recurring items that are included in net earnings. The impact of restructuring and other items and favourable tax adjustments on a per share basis is measured by dividing the after-tax income of these items by the average number of shares outstanding in the relevant period. Management will continue to disclose the impact of these items on its results because the timing and extent of such items do not reflect or relate to the Company's ongoing operating performance. Management evaluates the operating income of its divisions before the effect of these items.

Return on Sales - A measure indicating relative profitability of sales to customers. It is defined as operating income (see above definition) divided by sales, expressed as a percentage.

Stock Symbol: TSX - CCL.A and CCL.B

Tuesday, September 23, 2008

CCL Industries Announces US$ 130 Million Private Placement Debt Financing

Toronto, September 23, 2008 - CCL Industries Inc., a world leader in the development of labelling solutions and specialty packaging for the consumer products and healthcare industries, announced today that it has entered into a private placement financing of Senior Unsecured Notes with U.S. institutional investors. The amount of the borrowing totals US$ 130 million with US$ 52 million to be repaid in five years and US$ 78 million to be repaid in 10 years. Interest rates for the five-year and ten-year financing are 5.86% and 6.62% respectively. Closing and funding are expected by Friday, September 26 subject to the satisfactory completion of due diligence and documentation.

Donald Lang, Executive Chairman of CCL Industries said, "We are extremely pleased to have entered into this financing despite the most difficult credit markets that have been seen in decades. The private placement included many previous lenders and one new significant lender and indicates the market's confidence in CCL and our strategy. The cash from this debt offering provides CCL with a strong foundation for the foreseeable future."

Proceeds from the transaction will be used to repay bank debt with the balance for general corporate purposes.

With headquarters in Toronto, Canada, CCL Industries now employs approximately 5,500 people and operates 56 production facilities in North America, Europe, Latin America and Asia Pacific. CCL Label is the world's largest converter of pressure sensitive and film materials and sells to leading global customers in the consumer packaging, healthcare, and consumer durable segments. CCL Container and CCL Tube produce aluminum cans, bottles and plastic tubes for the consumer products industry in North America.

Statements contained in this Press Release, other than statements of historical facts, are forward-looking statements subject to a number of uncertainties that could cause actual events or results to differ materially from some statements made.

Contact Information

  • CCL Industries Inc.
    Steve Lancaster
    Executive Vice President and Acting CFO
    (416) 756-8517
    Website: www.cclind.com