**Exhibit 99.1**

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**CAUTIONARY STATEMENTS FOR PURPOSES OF THE “SAFE HARBOR”OF THEPRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.**

 

The following factors, amongothers, could cause actual results to differ materially from those contained inforward-looking statements made in this report and presented elsewhere bymanagement from time to time.

 

**We have not had a profitable year since fiscal 1997.**

 

Fiscal1997 was the last fiscal year in which we achieved a profit. In the past threefiscal years, our net loss has aggregated approximately $96 million, andwe do not anticipate having a profit in fiscal 2005, our current fiscal year.An inability to achieve profitability has had, and could continue to have, anadverse effect on our stock price, as well as the perceptions of our suppliersand customers with respect to our continued viability.

 

**We operate in highly competitive markets, and our customersmay not continue to purchase our products.**

 

Thereare approximately eight primary North American manufacturers producing OPPfilms for resale, including ExxonMobil Corporation, which is the second largestOPP films manufacturer in North America, Toray Industries, Inc., VifanCanada Inc. and Formosa Plastics Corporation, U.S.A. Some of ourcompetitors are subsidiaries of substantially larger, more diversifiedcorporations and have greater financial, personnel and marketing resources thanwe have and therefore, may have some competitive advantages. Our competitorsalso include manufacturers of flexible packaging products who offer a broadrange of products and maintain product and marketing facilitiesinternationally. We also sell products in countries outside the United Statesand may face international competition. In addition, any of our convertercustomers could become competitors by acquiring, or becoming, a supplier of OPPfilms.

 

Themarkets in which we operate are highly competitive. Competition in the OPPfilms market is based primarily on customer relationships, product performancecharacteristics, such as machinability, quality, reliability and price. Ourability to be an effective competitor will depend onour ability to compete on the basis of these characteristics. It will alsodepend on our success in developing new and enhanced products for ourcustomers. Although we have broad product lines and are continually developingnew and enhanced products, our current customers may not continue to purchaseour products, we may not be successful in avoiding product obsolescence, and wemay not be able to compete effectively with our competitors.

 

**Industry overcapacity has negatively affected ourprofitability, and could continue to negatively affect our profitability.**

 

Productioncapacity in the OPP films industry increased significantly in the late 1990’s.This decline in capacity utilization led to sharp declines in selling prices ofOPP films. Although capacity utilization levels have improved since 1999,continued depressed growth in demand has prevented any sustained, significantprice increases. In the past eighteen months capacity in North America wasincreased by approximately another 8 percent, with one production linestarting up in the United States in mid 2003 and two production lines recentlycoming on line in Mexico. Since demand has been relatively flat over the pastfour years, the Company believes the utilization rate is still approximately90 percent. At this level the industry is able to pass on some, but notall, of the raw material price increases. We believe that capacity utilizationin the mid-90 percent range is required to achieve reasonable levels ofprice realization. Profitability may be negatively affected by increased rawmaterial costs should capacity utilization remain at the current level, orworsen.

 

Aside from our new specialtyline and ExxonMobil Corporation’s line that came on stream in fiscal 2003, toour knowledge, no new capacity is expected to be added within the next twelvemonths. However, if additional unexpected capacity were added, industrycapacity utilization levels would fall, which could result in lower sales

 

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prices. In addition, if the rate of growth ofdemand remains depressed below historical levels and capacity outgrows demand,industry overcapacity could harm our business and our debt servicecapabilities.

 

**The operating and financial restrictions and covenants in ourexisting and future debt agreements may materially adversely affect our abilityto finance operations or capital needs or to engage in other businessactivities and may severely limit our ability to plan for or respond to changesin our business.**

 

Theoperating and financial restrictions and covenants in our debt agreements,including the indenture governing our 12% Senior Notes (the “New Notes”), oursecured credit facility, and any future financing agreements, may materiallyadversely affect our ability to finance future operations or capital needs orto engage in other business activities. For example, our secured creditfacility limits borrowings to specified percentages of inventory and accountsreceivable and includes covenants that require us to meet certain financialconditions, and these may require that we act in a manner contrary to ourbusiness objectives. In addition, we may not be able to meet these conditionsand covenants in the future. Our secured credit facility also restricts, amongother things, our ability to incur additional indebtedness and makeacquisitions and capital expenditures beyond a specified level. A breach of anyof these restrictions or covenants could cause a default under the New Notes,our secured credit facility and other debt. A significant portion of our debtmay then become immediately due and payable. If we fail to comply with therestrictions in our secured credit facility and the lenders declare the entireamount due and payable, they could prohibit us from making payments of interestand principal on the New Notes until the default is cured or all the debt ispaid or otherwise satisfied in full. We are not sure whether we would have, orbe able to obtain, sufficient funds to make these accelerated payments,including payments on the New Notes.

 

**Price increases and shortages in the supply of polypropyleneraw materials could decrease our profitability.**

 

AETis heavily dependent on petroleum and associated products such as propylene andpolypropylene resin, our primary raw materials. The costs of such materialsescalated sharply in fiscal year 2004, an unforeseen development that affectedour economic performance. If the costs of these raw materials continue to rise,we may not be able to absorb the cost increases or pass along a portion of theincrease to our customers, further negatively impacting our financialcondition.

 

Foursuppliers meet the majority of our resin supply requirements. If any of oursuppliers were not able to meet our requirements, we would incur costs inconnection with engaging a new supplier. In addition, the cancellation of oneor more of our favorable resin supply contracts could have a material adverseeffect on our financial condition, results of operation or cash flows.

 

**We may not be able to protect our intellectual propertyagainst competitors, maintain its value, or continue to develop innovativeproprietary technology.**

 

Our success is partiallydependent on our trade secrets, know-how, patents, trademarks and otherproprietary information. We generally have a number of new patent applicationspending at any given time relating to product enhancements and new productdevelopments. We may not obtain patents on the basis of our applications, any patentsthat we hold may not provide us with adequate protection for the coveredproducts, technology, or target markets and any patents or other rights that wehold may not be sufficient protection for our intellectual property in foreigncountries. Additionally, our confidentiality agreements may not adequatelyprotect our trade secrets, know-how or other proprietary information. Further,our activities may infringe on the patents, trademarks or proprietary rights ofothers and we may not be able to obtain licenses, on reasonable terms orotherwise, to technology that we may need to conduct or expand our business.

 

Our continued success willdepend to a large extent upon our ability to maintain a superior technologycapability and to continue to identify, develop and commercialize innovativeproducts for specialty applications to replace existing products, the marginsof which tend to decline as a result of the entry of competitive products intoexisting specialized markets. We may not be able to accomplish this andtechnological developments by our competitors may place some of our products ata competitive disadvantage in the future.

 

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AET is developing newhigh-value products, some of which have recently been introduced commerciallyinto the market, others of which are in various stages of development. It isanticipated that theses new products will contribute significantly to theprofitability of AET in two to three years; however there can be no assurancethat the balance of these products will be successfully commercialized and ifcommercialized, there is no assurance that competing products of greater valuewill be introduced into the marketplace.

 

**The loss of a key customer could decrease our profitability.**

 

Approximately****60 percentof our sales in fiscal 2004 consisted of sales to ten converters, with oneaccounting for approximately 15 percentof sales. Substantially all of the converted products are resold by theconverters to a relatively small number of large consumer products companies orend-users. Both converters and end-users participate in the selection of OPPfilms suppliers. As is customary in the industry, we generally have nolong-term contracts with our customers, and substantially all of ourrelationships can be terminated on short notice. We believe that ourrelationships with these customers and end-users are good, but we may not beable to maintain these relationships or continue to supply our customers atcurrent levels. Unless replaced, the loss of a significant converter or end-userof our OPP films products could materially adversely affect our results ofoperations and cash flows and ability to service our debt.

 

**The seasonal fluctuation of our operating results or anunforeseen revenue shortfall has had and could have a substantial impact on ourbusiness.**

 

The sales of some of ourproducts have historically fluctuated due to stronger demand in some seasonsthan in others. For example, demand for our products in the snack food and softdrink markets is generally higher in the spring and summer. Our results havetypically followed a similar seasonal pattern, with stronger operatingperformance in the second and third fiscal quarters. In addition, we plan ouroperating expenses, many of which are relatively fixed in the short term, on thebasis that our revenues will continue to grow. A revenue shortfall, however,could arise from any number of factors including, but not limited to, lowerthan expected demand, price pressures, supplyconstraints, delays in the availability of new products, transit interruptions,overall economic conditions or natural disasters. Even a relatively smallrevenue shortfall may cause a period’s results to fall below expectations.

 

**We are dependent upon key personnel and could have a need tohire and train additional qualified personnel.**

 

We believe that our futuresuccess depends in part upon our ability to attract and retain skilled seniormanagement and technical, professional, marketing, and sales personnel. We,along with other technology-oriented manufacturing companies, face competitionin hiring and retaining skilled technical, professional, marketing, and salespersonnel. In certain areas, such as chemical and process engineering, andsales and marketing, the supply of such people is limited. The process oflocating personnel with the combination of skills and attributes required tocarry out our strategy is often lengthy. Our employees may voluntarilyterminate their employment with us at any time. The loss of service of keypersonnel, or the inability to attract additional qualified personnel, couldhave a material adverse effect on our business.

 

**Our business is subject to extensive health and environmentallaws and regulations and any costs that result from liabilities or penaltiesfor violations of those standards may reduce the resources we can dedicate toattempting to successfully implement our business strategy.**

 

We are subject to extensiveand changing federal, state and foreign laws and regulations establishinghealth and environmental quality standards, and may be subject to liability orpenalties for violationsof those standards. We are also subject to law and regulations governingremediation of contamination at facilities currently or formerly owned oroperated by us or to which we have sent hazardous substances or wastes fortreatment, recycling or disposal. We believe that we are currently incompliance, in all material respects, with all such laws and regulations.However, we may be subject to future liabilities or obligations as a result ofnew or more stringent interpretations of existing laws and regulations. Inaddition, we may have liabilities or obligations in the future if we discoverany environmental contamination or liability at any of our facilities, or atfacilities we may acquire. Any additional liability may reduce the resources wecan dedicate to attempting to successfully implement our business strategy.

 

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**Labor disruptions at our unionized and non-unionizedfacilities could increase our manufacturing costs, causing our profitability to decline.**

 

We employ approximately 940full-time employees. Approximately 100 production and maintenance employees atour plant in Covington, Virginia are represented by the Paper Allied IndustrialChemical and Energy Workers International Union, Local 2-0884 under acollective bargaining agreement that expires in June, 2005. A labor-relatedwork stoppage by these unionized employees could increase our manufacturingcosts, causing our profitability to decline. In addition, it is possible that anylabor union efforts to organize employees at our non-unionized facilities mightbe successful and that any labor-related work stoppages at these non-unionizedfacilities in the future could have the same negative results.

 

**Our operations outside of the United States are subject toadditional currency change, political, investment and other risks that maydecrease profitability.**

 

We sell products in severalcountries outside the United States. Operations outside the United Statesinclude a manufacturing facility in Canada and sales offices in Asia, Europeand Canada. As a result, we are subject to risks associated with selling andoperating in foreign countries. These risks include devaluations andfluctuations in currency exchange rates, unstable political conditions, imposition of limitations on conversion of foreigncurrencies into United States dollars and remittance of dividends and otherpayments by foreign subsidiaries. The imposition or increase of withholding andother taxes on remittances and other payments by foreign subsidiaries, andimposition or increase of investment and other restrictions by foreigngovernments could decrease profitability.

 

**A large part of our production occurs at a single location.**

 

Our largest manufacturingfacility, which accounts for approximately 80 percent of our overall OPPfilms production capacity, is located in Terre Haute, Indiana. Though we alsohave significant manufacturing capacity at other facilities, a fire, flood orother force majeure event at our Terre Haute facility could cause a significantdisruption in our ability to manufacture at or near our capacity. While webelieve we are adequately insured against the short-term impact of losses andbusiness interruptions of this kind, any such disruption could have a materialadverse effect on our business.

 

**Our business could be adversely affected by our decision torestate our financial results.**

 

On December 14, 2002,we announced that we would restate our financial statements for the first,second and third quarters of fiscal year 2002 and fiscal years 1998 through2001 based on determinations made the in the course of the fiscal year 2002annual audit. For a discussion of the details of the restatement, see Notes 2and 17 to our Consolidated Financial Statements filed in our 2002 Annual Reporton Form 10-K. If we are subject to litigation arising out of therestatement, it could impose significant costs on us and divert managementresources from running our business.

 

**Ourbusiness could be adversely affected by our decision to file a voluntarypetition for reorganization under Chapter 11 of the Bankruptcy Code and certainrisks related thereto.**

 

Thefiling of a bankruptcy petition by the Company and the publicity attendantthereto may adversely affect the business of the Company.  The following risk factors are specific tothe Chapter 11 Case, the Company’s plan or reorganization (the “Plan”) and theCompany as it will exist following the effective date (the “Effective Date”) ofthe plan (“Reorganized AET”).

 

*Risk ofNon-Occurrence of the Effective Date*

 

Althoughthe Company believes that the Effective Date will occur soon after theconfirmation date of the plan (the “Confirmation Date”), there can be noassurance as to such timing.

 

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*Effectof the Chapter 11 Cases on Relations with Trade Vendors, Customers and ourEmployees*

 

Followingour announcement on June 30, 2004 that we are engaging in discussions witha committee of debtors to recapitalize the Company’s 10 3⁄4% Series B SeniorNotes (the “Senior Notes”), certain of our vendors constricted their tradeterms with us. In the period since, all of our key vendors have continued tosupply the Company with materials and or services. It is expected that thevendors will expand their trade terms to pre-announcement levels uponconfirmation of the recapitalization plan. Whilst our trade terms are not asfavorable in this period as the period pending the announcement, taken as awhole, the constriction of terms has not had a material effect on ouroperations.

 

Customerresponses to the Company’s announcement of the recapitalization plan have beengenerally favorable with respect to the eventual strengthened financialposition, which the plan provides. However, certain customers have expressedconcerns with respect to the Company’s ability to ensure continuity of supplyand to develop and supply new higher value film products. While the Companybelieves it has addressed these concerns there can be no assurance that certaincustomers, or end users will not seek alternative sources of supply.

 

TheCompany implemented an employee communication program immediately following theannouncement of the Plan to recapitalize the Senior Notes. This communicationprogram has been effective in addressing employee questions and concerns and,to date the Company has not realized a material change in employee turnover.

 

Inaddition, because of the traditional stigma associated with any bankruptcy,regardless of whether it may improve our financial condition, our commencementof the Chapter 11 Cases may adversely affect our ability to retain and attractcustomers and/or highly-skilled personnel, which could harm our business.Although we intend to seek authority from the Bankruptcy Court to pay, amongother things, all prepetition wages, salaries, commissions and employeebenefits, we cannot assure you that our highly-skilled personnel will continuetheir employment with us, and their failure to do so could harm our business.

 

*CapitalRequirements*

 

Thebusiness of Reorganized AET is expected to have substantial capital expenditureneeds. Although (i) Reorganized AET intends to enter into the ExitFacility, which will provide the Reorganized Debtors with approximately$30 million of liquidity and (ii) the Plan significantly decreasesReorganized AET’s debt obligations, Reorganized AET’s ability to gain access toadditional capital, if needed, cannot be assured, particularly in view ofcompetitive factors and industry conditions.

 

*Variancesfrom Projections*

 

Thefundamental premise of the Plan is the deleveraging of the Company and theimplementation and realization of the Company’s business plan, as reflected inthe Solicitation and Disclosure Statement filed by the Company in connectionwith the confirmation of the Plan. The Projections contained therein reflectnumerous assumptions concerning the anticipated future performance ofReorganized AET and its subsidiaries, some of which may not materialize. Suchassumptions include, among other items, assumptions concerning the generaleconomy, the ability to make necessary capital expenditures, the ability toestablish market strength, consumer purchasing trends and preferences, and theability to stabilize and grow the Company’s sales base and control futureoperating expenses. The Company believes that the assumptions underlying theprojections are reasonable. However, unanticipated events and circumstancesoccurring subsequent to the preparation of the projections may affect theactual financial results of Reorganized AET. Therefore, the actual resultsachieved throughout the projection period necessarily will vary from theprojected results, and such variations may be material and adverse.Accordingly, holders of claims and interests and other interested parties arecautioned not to place undue reliance on the projections.

 

Moreover,the estimated percentage recovery by holders of the Senior Notes is based uponestimated values of the New Notes and common stock to be issued under the Plan(the “New Common Stock”). Because the market

 

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and economic conditions upon which such valuesare based are beyond the control of AET, the actual results achievednecessarily will vary from the estimate. Such variations may be material andadverse.

 

*Disruptionof Operations*

 

Thecommencement and pendency of the Chapter 11 Cases could adversely affect AET’srelationships with its customers and suppliers, as well as AET’s ability toretain or attract high-quality employees. In such event, weakened operatingresults may occur that could give rise to variances from AET’s projections.

 

*Lack ofTrading Market and Restrictions on Transfer*

 

TheNew Notes and the New Common Stock are new issues of securities with noestablished trading market or prior trading history. There can be no assuranceregarding the future development of a market for the New Notes and the NewCommon Stock, the ability of holders thereof to sell their New Notes or NewCommon Stock or the price for which such holders may be able to sell their NewNotes and New Common Stock. If a market were to develop, the New Notes and theNew Common Stock could trade at prices lower than their initial values. Thetrading prices of such securities will depend on many factors, includingfactors beyond the Company’s control. Furthermore, the liquidity of, andtrading market for, the New Notes and the New Common Stock may be adverselyaffected by price declines and volatility in the market for similar securities,as well as by any changes in the Company’s financial condition or results ofoperations.

 

TheNew Notes and the New Common Stock will be subject to substantial restrictionson transfer contained in the Amended AET Certificate of Incorporation, theAmended AET By-Laws, the indenture related to the New Notes and thestockholders’ agreement entered into in connection with the Plan. Consequently,any holder of New Notes or New Common Stock may have to bear the economic riskof its investment for an indefinite period of time.

 

ReorganizedAET will not be subject to the reporting requirements under the Exchange Act,and does not intend to register any such securities under the Securities Act orlist shares of the New Common Stock or New Notes on any national securitiesexchange or on the Nasdaq National Market. Holders of these securities will notreceive reports or financial statements from Reorganized AET except to theextent required by the Stockholders’ Agreement and the New Note Indenture.

 

*DividendPolicies*

 

AETdoes not anticipate that any dividends will be paid on the New Common Stock inthe foreseeable future. In addition, the covenants in the Exit Facility and theNew Note Indenture may limit the ability of Reorganized AET to pay dividends.Certain institutional investors may only invest in dividend-paying equitysecurities or may operate under other restrictions that may prohibit theirability to invest in the New Common Stock.

 

*Intereston Notes May Be Deferred*

 

Inthe event that the Company does not achieve certain financial thresholds, theindenture covering the New Notes will allow the Company to defer interest paymentsin full in lieu of making such interest payments on the New Notes provided,however, that if the Company elects to defer any interest payment on the NewNotes in accordance with such Indenture, then the amount of interest sodeferred, together with all prior amounts of interest that have previously beendeferred shall constitute the “Cumulative Deferred Amount”. Interest on theCumulative Deferred Amount will accrue at the rate of 12.0% per annum, and(unless the Company defers the payment of interest as described above, in whichevent such interest will be added to the Cumulative Deferred Amount) suchinterest on the Cumulative Deferred Amount will be payable on each interestpayment date and will be equal in right of payment to all interest due and payableon the New Notes on such interest payment date.

 

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