Tom Polischuk - Radius

Industry Overview and TrendsTom PolischukEditor in ChiefRadius SolutionsNA N.A. Users ConferenceJune 11, 2008

Economics 2007• Weak U.S. dollar• Recessionary conditions• Housing industry downturn• Sub-prime fiasco• Oil price increases

Flexible Packaging Industry• Relatively healthy segment• Continuing growth in pouches• Advantages in performance and sourcereduction potential• U.S. growth:– 4.0% annual average during last decade– 2006, 5.1%; 2007, 2.9%; 2008, 2.1% (FPA)

Tag and Label Industry• Glue-applied and p-s account for 90% ofworld label market (AWA)• Growth in shrink-sleeve sleeve labeling – 77% 7.7%CAGR to 2011 (Freedonial Group)• Growth in film substrates t vs. paper• Highly fragmented (many small printers)

Mergers and Acquisitions• 2007 was record year in packaging M&A• Slowed significantly in 2008• Further M&A ahead(Source: BMO Capital Markets)

Globalization – A Reality•‘BRIC’ countries: Large growing middleclass• Strain on world resources– Paper, lumber, steel– Oil• China’s imports: 1996, 165.9 million barrels; in2006, 1,064.6 6 million (National Geographic, 5/08)• Growth in local suppliers in these regions

Market Trends• Sustainability• Product safety/security• Consumer convenience• Demographics/Lifestyle• More product information on package/label• Regional marketing/shorter runs

Political Picture• U.S. election• Tax increase• No moves on major issues

Technology Trends• Smart/Active labeling/packaging• Overt/Covert security• RFID• Digital printing

Economic Trends• High raw material prices• Continuing margin squeeze• Inflationary pressures• Economic stimulus package

Business Opportunities• Product decoration• Personalized local service or expert inniche market (AWA)• Establish presence in geographic markets(AWA)• Brand security