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EXHIBIT 99.2
We, or our executive officers and directors on our behalf, may from time to
time make "forward looking statements" within the meaning of the Securities Act
of 1933 and the Securities Exchange Act of 1934. Forward-looking statements
include statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "plans," "estimates," or similar
expressions. These statements may be contained in reports and other documents
that we file with the SEC or may be oral statements made by our executive
officers and directors to the press, potential investors, securities analysts
and others. These forward looking statements could involve, among other things,
statements regarding the Company's intent, belief or expectation with respect
to:
- our results of operations and financial condition,
- the consummation of acquisitions and financial transactions and their
effect on our business, and
- our plans and objectives for future operations and expansion.
Any forward looking statements would be subject to risks and uncertainties
that could cause actual results of operations, financial condition,
acquisitions, financing transactions, operations, expansion and other events to
differ materially from those expressed or implied in such forward looking
statements. Any forward looking statements would be subject to a number of
assumptions regarding, among other things, future economic, competitive and
market conditions generally and could be affected by changes in management's
plans, such as delays or changes in anticipated capital expenditures or changes
in our operations. These assumptions would be based on facts and conditions as
they exist at the time the forward looking statements are made as well as
predictions as to future facts and conditions. These future facts and conditions
may be difficult for us to predict accurately and may involve the assessment of
events beyond our control. We, or our executive officers and directors, have no
duty under the Securities Exchange Act of 1934 to update any forward-looking
statement. Further, our business is subject to a number of risks that would
affect any such forward looking statements. These risks include, among other
things, the following:
- WE MAY FACE INCREASED COSTS AND REDUCED SUPPLY OF RAW MATERIALS
Historically, the cost of recovered paper, virgin paperboard and
containerboard, our principal raw materials, have fluctuated significantly due
to market and industry conditions. Increasing demand for products packaged in
100% recycled paper and the shift by virgin paperboard manufacturers to the
production of paperboard with some recycled paper content may increase demand
for recovered paper. The increasing demand may result in cost increases. In
recent years, the cost of natural gas, which we use in many of our manufacturing
operations, including each of 12 of our paperboard mills, have also fluctuated
significantly. There can be no assurance that we will be able to recoup any
future increases in the cost of recovered paper or other raw materials or of
natural gas or electric power through price increases for our products. Further,
a reduction in supply of recovered paper, virgin paperboard and containerboard
or other raw materials due to increased demand or other factors could have an
adverse effect on our results of operations and financial condition.
- WE MAY EXPERIENCE PRICING VARIABILITY
The paperboard and converted products industries historically have
experienced significant fluctuations in selling prices. Our inability to
maintain the selling prices of products within these industries during periods
of weak economic conditions may have a material adverse effect on our results of
operations and financial condition. We are not able to predict with certainty
market conditions or the selling prices for our products.
- WE FACE INTENSE COMPETITION
The packaging products and paperboard industries are highly competitive,
and no single company dominates either industry. Our competitors include large,
vertically integrated packaging products and paperboard companies and numerous
smaller companies. In the folding carton and corrugated container markets, we
compete with a significant number of national and regional packaging suppliers.
In the fiber partitions, corrugated displays, thermoformed plastic products and
laminated paperboard products markets,
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we compete with a smaller number of national, regional and local companies
offering highly specialized products. We also compete with foreign companies in
the book cover market. In the paperboard segment, we compete with integrated and
non-integrated national, regional and local companies manufacturing various
grades of paperboard. Our paperboard also competes with virgin paperboard.
The primary competitive factors in the packaging products and paperboard
industries are price, design, quality and service, with varying emphasis on
these factors depending on the product line and customer preferences. We believe
that we compete effectively with respect to each of these factors. However, to
the extent any of our competitors becomes more successful with respect to any
key competitive factor, our business could be materially adversely affected.
The packaging products and recycled paperboard industries have undergone
significant consolidation in recent years. We believe that current trends within
these industries will result in further consolidation. Within the packaging
products industry, larger corporate customers with an expanded geographic
presence have tended in recent years to seek suppliers who can, because of their
broad geographic presence, efficiently and economically supply all of the
customers' packaging needs. In addition, during recent years, purchasers of
recycled paperboard and packaging products have demanded higher quality products
meeting stricter quality control requirements. These market trends could
adversely affect our results of operations or, alternatively, favor our products
depending on our competitive position in specific product lines.
- WE MAY BE UNABLE TO COMPLETE AND FINANCE ACQUISITIONS
We have completed several acquisitions during the past five fiscal years
and may seek additional acquisition opportunities. There can be no assurance
that we will be able successfully to identify suitable acquisition candidates,
complete acquisitions, integrate acquired operations into our existing
operations or expand into new markets. There can also be no assurance that
future acquisitions will not have an adverse effect upon our operating results.
This is particularly true in the fiscal quarters immediately following the
completion of such acquisitions while the operations of the acquired business
are being integrated into our operations. Once integrated, acquired operations
may not achieve levels of revenues, profitability or productivity comparable
with those achieved by our existing operations, or otherwise perform as
expected. In addition, it is possible that, in connection with acquisitions, our
capital expenditures could be higher than we anticipated and that expected
benefits of such capital expenditures may not be realized.
- WE ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL AND GOVERNMENTAL REGULATION
We are subject to various Federal, state, local and foreign environmental
laws and regulations, including those relating to the discharge, storage,
handling and disposal of a variety of substances. We regularly make capital
expenditures to maintain compliance with applicable environmental laws and
regulations. However, environmental laws and regulations are becoming
increasingly more stringent. Consequently, our compliance and remediation costs
could increase materially. In addition, we cannot currently assess with
certainty the impact that the future emissions standards and enforcement
practices under the 1990 amendments to the Clean Air Act will have on our
operations or capital expenditure requirements. Further, we have been identified
as a potentially responsible party at various "superfund" sites pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act or
comparable state statutes. There can be no assurance that any liability we may
incur in connection with these superfund sites will not be material to our
results of operations, financial condition or cash flows.
- WE HAVE BEEN DEPENDENT ON CERTAIN CUSTOMERS
Each of our divisions has certain key customers, the loss of which could
have a material adverse effect on the division's sales and, depending on the
significance of the division to our operations, our results of operations,
financial condition or cash flows.
- CHANGES IN ACCOUNTING PRACTICES COULD REQUIRE US TO CHANGE PREVIOUSLY
REPORTED RESULTS OF OPERATIONS
We understand that the SEC is evaluating existing practice regarding, among
other things, accounting for restructuring charges, goodwill write-offs and
other pro forma adjustments made in connection with
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recapitalizations and/or acquisition transactions and is concurrently developing
guidance on how registrants should apply existing regulations. We believe that
our previously reported financial information has been prepared in a manner that
complies with published SEC regulations and is consistent with current practice.
However, there can be no assurance that the SEC will not require modification or
reformulation of our previously reported financial information. Any such
modification or reformulation may be significant.
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