1325281--3/10/2010--KAPSTONE_PAPER_&_PACKAGING

related topics

{cost, regulation, environmental}

{cost, operation, labor}

{product, market, service}

{stock, price, share}

{condition, economic, financial}

{tax, income, asset}

{stock, price, operating}

{control, financial, internal}

{operation, international, foreign}

{customer, product, revenue}

{debt, indebtedness, cash}

{acquisition, growth, future}

{interest, director, officer}

{personnel, key, retain}

{system, service, information}

Risks associated with our business Recent changes in U.S. and global economic conditions could have a continuing adverse effect on the profitability of some or all of our businesses. Conditions in the global capital and credit markets and the economy generally may materially adversely affect our business, results of operations and financial position and we do not expect these conditions to improve in the near future. We rely on key customers and a loss of one or more of our key customers could adversely affect our business, results of operations, cash flows and financial position. We are dependent upon key management executives the loss whom may adversely impact our business. KapStone's indebtedness may adversely affect its financial health. If we fail to extend or renegotiate the collective bargaining agreements with the United Steelworkers Union as they expire from time to time, or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed. Our operations are global in nature, and accordingly our business, results of operations, cash flows and financial position could be adversely affected by the political and economic conditions of the countries in which we conduct business, by fluctuations in exchange rates and other factors related to our international operations. If we fail to maintain effective systems for disclosure controls and internal control over financial reporting, we may be unable to comply with the requirements of Section 404 of the Sarbanes Oxley Act of 2002 in a timely manner. We may be required to record a charge to our earnings if our goodwill becomes impaired. Our business depends on effective information management systems. We may incur business disruptions. Environmental regulations could materially adversely affect our results of operations and financial position. We may be required to pay income taxes related to the Alternative Fuel Mixture Tax Credit. Risks Associated with KapStone's Common Stock The market price for our common stock may be highly volatile. Shares available for future issuance, conversion and exercise could have an adverse effect on the earnings per share and the market price of our common stock. Our executive officers and directors control a substantial percentage of our common stock and thus may influence certain actions requiring a stockholder vote. Some of our executive officers and directors may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. Risks associated with the paper, packaging, forest products and related industries The paper, packaging, forest products and related industries are highly cyclical. Fluctuations in the prices of and the demand for products could result in smaller profit margins and lower sales volumes. Difficulty obtaining wood fiber at favorable prices, or at all, may negatively impact companies in the paper and packaging industry. An increase in the cost of purchased energy and raw materials would lead to higher manufacturing costs, thereby reducing margins which would have an adverse effect on our results of operations. Paper and packaging companies face strong competition. Certain paper and wood products are vulnerable to long-term declines in demand due to competing technologies or materials. Paper and packaging companies are subject to significant environmental regulation and environmental compliance expenditures, as well as other potential environmental liabilities. Future acquisitions of businesses by us would subject us to additional business, operating and industry risks, the impact of which cannot presently be evaluated, and could adversely impact our capital structure. Our operations are dependent upon certain operating agreements for fiber.

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1325281--3/10/2010--KAPSTONE_PAPER_&_PACKAGING_CORP