The ratings reflect Appleton Papers Inc.'s aggressive financial profile, declining carbonless paper volumes, expectations for lower operating margins due to a shifting product mix, and potential acquisition risks, partially offset by leading market shares in certain specialty paper markets, diverse end uses, and relatively stable earnings and cash flows. Appleton manufactures high value-added coated papers, flexible film packaging products, and printed security products. The Appleton, Wis.-based company is the world's largest manufacturer of carbonless paper, which is used in multipart forms such as invoices, credit-card receipts, and packing slips. The industry is modestly cyclical and highly concentrated. MeadWestvaco Corp., a larger, diversified forest products company, is Appleton's primary competitor. Factored into the ratings is the continued decline in carbonless paper
