On August 16, 2000, we filed suit against Georgia-Pacific in the General Court of Justice, Superior Court Division, of Mecklenburg County, North Carolina (Case No. 00-CVS-12302), asserting a claim for breach of contract based on Georgia-Pacific’s refusal to continue making purchases under the contract. The complaint seeks damages in excess of $100.0 million. The complaint was amended in October 2000 to request an injunction requiring Georgia-Pacific to specifically perform its obligations under the contract, but the specific performance claim was dismissed on January 26, 2001. The case is proceeding on the damages claim.

On September 1, 2000, Georgia-Pacific filed a separate action in the Superior Court of Fulton County, Georgia (Case No. 2000CV-27684), seeking a declaratory judgment in support of its interpretation of the contract that its actions are not in breach of the contract. On December 22, 2000, this action was stayed pending final resolution of the action we filed in North Carolina.

We and Georgia-Pacific have engaged in settlement discussions from time to time, but have failed to reach any agreement to date.

We intend to vigorously prosecute the North Carolina action, but can give no assurance as to the timing or outcome of the litigation or the adequacy of any remedy that we might obtain. Based on the nature of litigation generally and the course of developments in the North Carolina action to date, we can give no assurance that we will reach a resolution of the dispute in the near future. Accordingly, we believe that our operating results and financial condition will continue to be materially and adversely affected by the loss of contract volume from Georgia-Pacific. In addition, we may incur significant litigation costs in pursuing the action against Georgia-Pacific.

Quantitative and Qualitative Disclosures
About Market Risk
At December 31, 2000, we had outstanding borrowings of approximately $200.0 million related to an issuance of public debt securities registered with the SEC in June of 1999. The 7 3/8% senior notes were issued at a discount to yield an effective interest rate of 7.473%. The notes pay interest semiannually, and are our unsecured obligations. As of December 31, 2000, we had a $400.0 million five-year senior credit facility, with interest computed using our choice of (a) the Eurodollar rate plus a margin or (b) the higher of the federal funds rate plus a margin or the bank’s prime lending rate. As of December 31, 2000, borrowings of $194.0 million were outstanding under the senior credit facility at a weighted average interest rate of 7.27%. In addition, we have senior notes dated October 8, 1992, which are payable to an insurance company in five equal installments of $16.55 million, the first of which was paid on October 8, 2000. As of December 31, 2000, we owed $66.2 million under these notes. Interest on the notes accrues at 7.74% and is payable semiannually. Our senior management establishes parameters, which are approved by the board of directors, for our financial risk. We do not utilize derivatives for speculative purposes. We adopted SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” effective January 1, 2001, which had no material impact on our financial statements upon adoption.

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