The rating on Wisconsin-based Appleton Papers Inc. reflects our expectation that the paper manufacturer's financial risk profile will remain highly leveraged despite slightly lower adjusted debt levels and recent EBITDA improvements. The rating also incorporates our view of the company's adequate liquidity position, given that it has no significant near-term debt maturities or financial maintenance covenant requirements. We continue to view Appleton's business risk profile as weak, primarily due to the long-term decline in demand for the company's core carbonless paper products, which account for over 50% of its sales. Our baseline scenario for the full fiscal year assumes that soft demand for carbonless paper and higher raw material costs will slow EBITDA growth in the second half of 2011,
