Orchids Paper Products Co. (NYSE AMEX:TIS)

Dear Fellow Shareholders,

As I write this letter, the United States, along with the rest of the world, is experiencing severe economic challenges. In the face of this difficult environment, I am especially pleased to announce the significant achievements of the Orchids management and workforce over the past year, efforts that have resulted in another year of record sales and earnings. In 2008, we achieved record net sales for the full year of about $90.2 million, up 21% from last year's record sales, and record earnings per share, up 98% to $.79 per diluted share. We generated a 54% increase in operating income. We look forward to strong revenues and earnings in 2009.

We are encouraged by the positive impact and coordinated efforts of our management and workforce over the past year. Along with record sales and earnings, we have set records in the Paper Manufacturing Plant, the Converting Plant and in Sales and Shipping. Additionally, the investments we made over the year in people and equipment continue to pay off in positive results. The hiring of a productivity consultant firm and the implementation of the resultant equipment maintenance programs, along with the completion of the automation project and line upgrades have all contributed to our increased efficiency and productivity.

Looking forward, we believe Orchids is well positioned with recession-resistant products that will enable us to continue to grow in the current economic climate. The at-home tissue market remains strong and our customer base continues to provide us with a strong backlog for our products. Our additional converting production has allowed us to increase our market share. Moreover, we have identified additional opportunities and we are positioning Orchids to take advantage of these opportunities. To this end, to meet the growing demand for our converted products and to grow that business in our region, our management team is developing a plan to add a converting line and to improve our logistic infrastructure needed to deliver the product to our customers.

We are also excited about the March 2009 launch of our care (customers aware of a renewing environment) line of paper towels and bathroom tissue. These are quality 100% recycled products made from clean, premium, bright white recycled fiber. Starting in May 2009, these products will be available in stores in the mid-west and mid-south regions of the United States and will offer shoppers an affordable green option in tissue products.

Our industry faces even tougher economic challenges in the coming year. As such, we must continually seek ways to increase our efficiency and reduce our operating costs. Thus, optimizing the operation of our paper making and converting assets will continue to be a major focus for 2009. We will continue to pursue the profitable growth of our converted product business through a combination of increased sales to existing customers and sales to new customers.

I would like to again commend the employees of our Company for their dedication to the tasks before them and for being adaptive to change as the Company continues to strive for growth, innovation and profitability. Also, we are grateful for our customers and our investors who continue to believe in the Company's fundamental value.

                                                                                 Sincerely,