1049442--3/31/2006--PLIANT

related topics

{debt, indebtedness, cash}

{cost, operation, labor}

{investment, property, distribution}

{customer, product, revenue}

{cost, regulation, environmental}

{operation, international, foreign}

{property, intellectual, protect}

{stock, price, operating}

{product, market, service}

Risks related to the Financial and Capital Structure of the Company Operating in bankruptcy imposes significant risks on our business and we cannot predict whether or when we will successfully emerge from bankruptcy. Limits on our borrowing capacity under the DIP Credit Facility may affect our ability to finance our operations. While our DIP Credit Facility provides for a maximum of approximately $68.8 million of postpetition financing, our ability to borrow funds under the DIP Credit Facility is subject to the amount of eligible receivables, inventory and real estate in our borrowing base under the facility and the application of reserves against such amounts. Our ability to make borrowings under our DIP Credit Facility also is conditioned upon our compliance with certain covenants including a requirement to maintain a minimum fixed-charge coverage ratio. Uncertainty regarding the terms of our exit financing may adversely affect our ability to emerge from bankruptcy and to finance post-emergence operations. Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our debt obligations. We may not be able to generate sufficient cash to service all of our indebtedness and could be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. Our variable rate indebtedness subjects us to interest rate risk. We will rely significantly on the funds received from our subsidiaries to meet our debt service obligations, but our subsidiaries may not be able to distribute sufficient funds to us. Risks related to our business Continued increases in resin prices or the loss of a key resin supplier could lead to increased costs and lower profit margins. We operate in highly competitive markets and our customers may not continue to purchase our products, which could lead to our having reduced revenues and loss of market share. If we lose one or more of our major customers, our results of operations and our ability to service our indebtedness could be adversely affected. Our ongoing efforts to achieve cost savings may not improve our operating results. We may not be able to adequately protect our intellectual property, which could cause our revenues to decrease. Any future acquisitions may not be successfully integrated with our business and could cause our revenues to decrease, operating costs to increase or reduce cash flows. Our operations outside of the United States are subject to additional currency exchange, political, investment and other risks that could hinder us from making our debt service payments, increase our operating costs and adversely affect our results of operations. We are controlled by J.P. Morgan Partners, LLC and its interests as an equity holder may conflict with your interests. If we do not maintain good relationships with our employees, our business could be adversely affected by a loss of revenues, increased costs or reduced profitability. The cost of complying with federal and state environmental laws could be significant and increase our operating costs.

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1049442--3/31/2006--PLIANT_CORP