AEP COAST TO COAST

ANNUAL REPORT 2009

WAXAHACHIE , TX

TULSA , OK

GRIFF IN , G A

MATTHEWS, NC

BOWLING GREEN , KY

NICHOLASV ILLE , KYALS IP, I L

MANKATO, MN

WEST H ILL, ON CANADA

MOUNTAINTOP, PA

CHINO, CA

FINANCIAL

Highlights

20092005 2006 2007 2008 20092005 2006 2007 2008 20092005 2006 2007 2008

In­Millions­Of­Dollars

NET­SAlES

30

40

20

10

0

INCOME­fROM­CONTINuINg­OPERATIONS

700

800

600

500

400

300

200

100

0In­Millions­Of­Dollars

TOTAl­ASSETS

700

800

600

500

400

300

200

100

0

Net­sales

Income­from­continuing­operations­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­

Diluted­income­per­share­of­common­stock ­­­­­­­­­­­­­­­­­­­

from­continuing­operations

Net­(loss)­income

Diluted­(loss)­income­per­share­of­common­stock

Shareholders’­equity­

Capital­expenditures

Working­capital

Working­capital­ratio

Total­assets

$744,819

$30,429

$4.45

$31,528

$4.61

$75,800

$23,846

$74,101

1.8­to­1

$360,070

$633,273

$1,376

$0.16

$(50,622)

$(5.87)

$6,195

$12,178

$86,670

1.7­to­1

$311,323

$697,233

$35,392

$4.14

$62,929

$7.35­­­­­

$57,593

$34,522

$110,043

2.2­to­1

$336,080

In­Millions­Of­Dollars

­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­2005 ­­­­­­­­­­­­­­ 2006 ­­­­­­­­ 2007 ­­­­­­­ 2008­­ 2009

YEARS­ENDED­OCTOBER­31

(Amounts­in­Thousands,­Except­Per­Share­Data­and­Ratios)

$666,318

$22,877

$2.99

$30,052

$3.93­­­­­

$42,370

$14,264

$102,326

2.0­to­1

$328,792

$762,231

$3,312

$0.48

$12,244

$1.79­­­­­

$40,140

$27,984

$105,787

2.1­to­1

$390,840

1

SHAREH OLDERS’

LetterJ.­BRENDAN­BARBA,While the unfortunate effects of the general economic slowdown in North America continue

to impact our customers and our industry, we believe AEP is navigating the current economicenvironment effectively and is well positioned for improved operating results in the year ahead.Further, continuing marketplace consolidations and rationalizations that are occurring havethe potential to materially benefit AEP and its stakeholder community.

We’ve worked hard to minimize and control our operating costs, and can see that the practicesand programs we’ve put in place over the years – including shutting down plants in Fontana,California and Cartersville, Georgia – are yielding increased value in these trying times.

Gross profit for fiscal 2009 was $160.4 million, a $63.6 million increase from the $96.8 millionreported in fiscal 2008. Gross profit per pound sold, a key metric used for measuring operatingperformance in our industry, increased by 43% to $0.21 in 2009. These improved results in-clude the operations of Atlantis Plastics (formerly one of our largest competitors), that theCompany acquired in 2008. These positive results, particularly in light of the challengingglobal economy, the ever present uncertainties in our markets, and the challenges of integratingthe products, customers and operating systems of Atlantis Plastics into AEP are a significantachievement.

Operating expenses, while increasing sharply due to the Atlantis acquisition, were nonethelesswell controlled. We are pleased to report fully diluted earnings per share (EPS) for fiscal 2009increased $2.82, or 158%, to $4.61, which included a pre-tax gain of $5.3 million resultingfrom the repurchase, at a discount, of outstanding debt, as compared to fully diluted EPS of$1.79 in fiscal 2008.

Net sales for the year ended October 31, 2009 decreased slightly, from $762.2 million for thefiscal year ended October 31, 2008, to $744.8 million, a reduction of 2.3%. Volume increasedby 15.9%, although this increase was offset by a similar reduction in average sales prices.

While the state of the economy continues to create significant challenges for our industry,I am confident that we are doing the best possible job of navigating these challenges andpositioning the Company for growth. AEP is a leader in our markets, and with our solid bal-ance sheet, strong liquidity position and right business strategy, we are well positioned toweather today’s challenges and emerge with renewed strength, able to benefit from oppor-tunities as they arise.

Sincerely,

J. Brendan Barba

Every company that manufactures or processes products shares a need to protectthose products, to keep them fresh, clean and new from factory to customer. That’sthe role of flexible packaging. And as a leader in flexible packaging in the NorthAmerican market, that’s where AEP comes in. Our solutions are integral to almostevery industry, as we are the source for one of the world’s most comprehensivearrays of proven flexible packaging solutions.

Our Custom Films Division makes a vast range of custom-designed industrial films.Our Stretch Films Division serves customers’ load containment needs. Our Printed,Converted and Laminated Films Division adds high quality flexographic printingfor branded packaging. Our Resinite PVC Films Division leads in stretch andshrink films for food products. Our PROformance® Films Division producesco-extruded and monolayer films. We also offer agricultural films, food wrap filmand disposable food service items such as gloves, aprons and table covers throughOther Products and Specialty Films. Whatever the packaging requirement,AEP has or can develop the right solution.

Everyday SolutionsFOR EVERY INDUSTRY.

By expanding our production facilities, we’ve reducedour logistical challenges. Coast to coast, we stay closeto our customers.

Our­ability­to­quickly­develop­new

products­and­respond­to­customer­de-

mand­ is­key­ to­our­success.­Oxygen

Transmission­ Rate­ (OTR)­ food­ wrap

films­are­one­of­our­ latest­areas­of

innovation.­Offered­in­three-and­five-

layer­versions,­our­OTR­films­combine

barrier­properties­with­breathability­to

keep­food­products­pure­and­fresh.

NEW PRODUCT DEVELOPMENT

2

CUSTOM F I LMS

STRETCH F I LM

PR INT ING AND CONVER T ING

PROFORMANCE F I LMS

AGR ICULTURAL PRODUCTS

INST I TUT IONAL PRODUCTS

RETA I L PRODUCTS

RES IN I TE PVC F I LMS

F IAP F I LMS

Synergy.IT’S WORKING!

In 2008, AEP acquired the facilities and products of one of our largest competitors,Atlantis Plastics. While Atlantis was the leader in several niche areas in which AEPdid not compete, many commonalities existed between the two companies. Wehave now completed the work of unifying our product offerings, a process that in-volved not just AEP and Atlantis engineers, but required full review and acceptanceby the entire AEP and Atlantis customer community, as well as each company’sbroker, reseller, original equipment manufacturer and convertor relationships.We are one company, with one unified product line, backed by the industry’s mostknowledgeable and experienced workforce.

AEP excels at process quality and cost control. We’re putting our proven method-ologies to work in this consolidation, achieving many incremental efficiencies. Forexample, a pre-stretching operation for hand wrap film that we used to outsourcehas now been brought in-house, a direct revenue enhancement.

In a time when competitors are pulling back and experiencing difficulty servicingcustomers, AEP is surging forward, offering customers the advantages of rock solidreliability, outstanding service, cost competitiveness and unparalleled quality. AEPis a leader in the U.S. flexible packaging industry. And with our newly expandedresources, we are able to offer customers a range of solutions no other supplier canmatch. That’s synergy. And that’s AEP.

The industry is migrating to multilayer co-extruded films,and so is AEP. With three-, five- and seven-layer facilitiesin California, Kentucky, Minnesota, and Pennsylvania, weare a national leader in this important product category.

4

From product design to logistics, we workclosely with customers to solve problemsand increase supply chain efficiency.

At­AEP,­world­class­technical­support

spans­the­life­of­our­flexible­packaging

products­–­from­the­product­concept

and­performance­requirements­stage

through­to­application­at­the­customer

site.­Our­experts­monitor­film­opera-

tions­at­the­customers’­facilities­and

adjust­or­modify­equipment­as­needed

to­ensure­total­quality­and­satisfaction.­

TECH SUPPORT5

Innovation. WE’RE READY FOR TOMORROW.

AEP engineers believe there’s a perfect film for every job. And their job is to findit. Research and development engineers at AEP focus on developing the mostversatile, effective and economical product formulations for every packagingfunction. And the advances keep coming. Our purchase of Atlantis Plastics hasdoubled the size of our dedicated R&D staff. And we continually invest in newtools to advance our capabilities. For example, we added a new Fourier TransformInfrared System at our New Jersey lab this year to support properties analysis forall AEP products. We expect increased investments in 2010 will further increasethe efficacy of our R&D activities in the near term.

Co-extruded film is currently an area of intense focus in the AEP labs. We’vediscovered that by combining the right materials in co-extruded films, we can attainenhanced attributes such as increased tensile strength and flex while using lessmaterial, yielding higher performance at less cost. We’re leading the way in thesearch for ever stronger, thinner, more durable and more cost effective packagingsolutions.

For customers, our industry leading R&D capability means that AEP is far morethan a preferred, reliable supplier of commodity film products. We can serve as atotal packaging solutions partner to our customers, a resource they can draw on tominimize costs while enhancing packaging performance and elevating brand image.

6

We give high profile food, personal care, multi-pack,pet food and industrial customers the advantage of10-color printing on co-extruded packaging through ourBowling Green, Kentucky Printing & Converting plant.

Every aspect of flexible packaging design andperformance is put to the test in AEP’s R&D labs.Our experts know what works, and why.

AEP’s­R&D­engineers­constantly­test

different­combinations­of­film­compo-

nents­to­determine­their­performance.

Their­ vast­ storehouse­ of­ knowledge

benefits­customers­when­new­film­is

needed,­ because­ customers­ know

they­can­ rely­on­AEP­ researchers­ to

identify­ the­ correct­materials­ to

produce­whatever­physical­properties

are­required.­

RESEARCH & DEVELOPMENT

7

We’ve said it often, and it’s never been more true: our people are our mostimportant asset. Certainly, the technical skill and knowledge that AEP sales,technical support and R&D professionals bring to any problem are a compellingreason for customers to make AEP their preferred flexible packaging supplier.Simply stated, AEP can do more to create cost effective packaging solutions forunique customer requirements than any other vendor.

Our commitment to quality control leads our industry; ISO 9001:2000 Certifica-tion validates our use of best practices company-wide. And our commitment tosuperior customer service distinguishes everything we do, from requirementsassessment and new product design to on-time delivery and on-site support. Weare expanding our solutions, and are well positioned to benefit as economicconditions for our customers continue to improve.

Team AEP.GREATER THAN THE SUM OF ITS PARTS.

8

gRIffIN,­gA

WEST­hIll,­ONTARIO

MOuNTAINTOP,­PA

MATThEWS,­NC

BOWlINg­gREEN,­KY

NIChOlASvIllE,­KY

WAxAhAChIE,­Tx

TulSA,­OK

AlSIP,­Il

MANKATO,­MN

ChINO,­CA

PvC­PlANTS

PE­PlANTS

AEP COAST to COAST

John J. Powers, Executive Vice President, Sales and MarketingPaul C. Vegliante , Executive Vice President, OperationsDavid J. Cron, Executive Vice President, Manufacturing

DIRECTORS

J.­Brendan­Barba

Chairman­of­the­Board,­President­

and­Chief­Executive­Officer­

AEP­Industries­Inc.

Kenneth­Avia

Managing­Principal

Avia­Consulting­group­llC

Robert­Bell

Executive­Director

Charles­B.­Wang­foundation

Richard­E.­Davis

Chief­financial­Officer

glatt­Air­Techniques­Inc.

Paul­M.­feeney

Executive­vice­President,­finance­

and­Chief­financial­Officer­

AEP­Industries­Inc.

frank­P.­gallagher

Retired

former­Chairman­of­Coach­uSA

Paul­E.­gelbard

Of­Counsel

Warshaw­Burstein­Cohen­Schlesinger

&­Kuh,­llP

lawrence­R.­Noll

vice­President,­Tax­and­Administration

AEP­Industries­Inc.

lee­C.­Stewart

Investment­Banker

Daniel­Stewart­&­Co.

KEY­OPERATINg

OffICERS

NORTh­AMERICA

gary­Bobko

vice­President

PROformance­films­Products

Richard­Boyette

vice­President,­Manufacturing

Polyvinyl­Chloride­Products

Robert­Covella

vice­President,­

Custom­film­Products

Robert­Cron

Executive­vice­President,­

National­Accounts

Brian­Ochsner

vice­President,­

Stretch­film­Products

Joe­Webb

Division­Manager,­

Resinite­Products

CORPORATE­INfORMATION

general­Counsel

Warshaw­Burstein­Cohen­Schlesinger­

&­Kuh,­llP

555­fifth­Avenue

New­York,­New­York­10017­

Special­Counsel

honigman­Miller­Schwartz­

and­Cohn­llP

2290­first­National­Bldg.

660­Woodward­Avenue

Detroit,­MI­48226­

Registrar­and­Transfer­Agent

American StockTransfer andTrustCo.

59­Maiden­lane

New­York,­New­York­10038

Independent­Registered­

Public­Accountants

KPMg­llP

150­John­f.­Kennedy­Parkway

Short­hills,­New­Jersey­07078

Corporate­headquarters­

AEP­Industries­Inc.

125­Phillips­Avenue

South­hackensack,

New­Jersey07606

201-641-6600

www.aepinc.com

CORPORATE­OffICERS

J.­Brendan­Barba

Chairman­of­the­Board,­

President­and­Chief­Executive­Officer

Paul­M.­feeney

Executive­vice­President,­finance­

and­Chief­financial­Officer

David­J.­Cron

Executive vice­President,Manufacturing

John­J.­Powers

Executive­vice­President,­

Sales­and­Marketing

Paul­C.­vegliante

Executive­vice­President,­

Operations

linda­N.­guerrera

vice­President­and­Controller

lawrence­R.­Noll

vice­President,­Tax­and­Administration

Michael­O’Neill

vice­President,­logistics

James­B.­Rafferty

vice­President,Treasurer­and­Secretary

AEP Industries Inc.

125­Phillips­Avenue

South­hackensack,­NJ­07606

201.641.6600­•­800.999.2374

aepinc.com