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.
- OUR EARNINGS ARE HIGHLY DEPENDENT ON VOLUMES
Our operations generally have high fixed operating cost components and
therefore our earnings are highly dependent on volumes, which tend to fluctuate.
These fluctuations make it difficult to predict our results with any degree of
certainty.
- 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, 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.
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- 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 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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