The rating on Appleton Papers Inc. reflects its aggressive financial profile, declining carbonless paper volumes, and lower operating margins from shifting product mix and geographic markets. Leading market shares in certain specialty paper markets, diverse end uses, successful efforts to offset some of the decline in carbonless paper business, and relatively stable earnings and cash flows partially offset these factors. The Appleton, Wis.-based company is the world's largest manufacturer of carbonless paper, which includes multipart forms such as invoices, credit-card receipts, and packing slips. The industry is modestly cyclical and highly concentrated, with one primary competitor, P.H. Glatfelter Co. Factored into the ratings is the continuing decline in carbonless paper volumes in the U.S. at 5%-10% annually, because of the
