##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from           to
 Commission file number 000-31230
 Pioneer Companies, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    06-1215192(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 700 Louisiana Street, Suite 4300, Houston, Texas 77002
(Address of principal executive offices)
(Zip Code)
 (713) 570-3200
(Registrants telephone number, including area code)
 þ o
  o þ o
 o þ
 þ o




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TABLE OF CONTENTS
 PagePart IFinancial InformationItem 1
    
    Consolidated
Financial Statements (Unaudited)Consolidated Balance SheetsMarch 31, 2007 and December 31, 2006
    
    
    1Consolidated Statements of OperationsThree Months Ended March 31, 2007 and 2006
    
    
    2Consolidated Statements of Cash FlowsThree Months Ended March 31, 2007 and 2006
    
    
    3Notes to Consolidated Financial Statements
    
    
    4Item 2
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4
    
    Controls and Procedures
    
    
    26Part IIOther InformationItem 1
    
    Legal Proceedings
    
    
    26Item 1A
    
    Risk Factors
    
    
    27Item 5
    
    Other Information
    
    
    27Item 6
    
    Exhibits
    
    
    29Ninth Amendment to Loan and Security AgreementTenth Amendment to Loan and Security AgreementRule 13a-14(a) CertificationRule 13a-14(a) CertificationRule 13a-14(b) CertificationRule 13a-14(b) Certification
 Certain statements in this Form 10-Q regarding future expectations of Pioneers business and
Pioneers results of operations, financial condition and liquidity may be regarded as
forward-looking statements within the meaning of the Private Securities Litigation Reform Act.
Forward-looking statements relate to matters that are not historical facts. Such statements involve
risks and uncertainties, including, but not limited to, the risks and uncertainties described in
Item 1A of Pioneers Annual Report on Form 10-K/A for the year ended December 31, 2006, as updated
in Item 1A of this Report on Form 10-Q . See also Item 5 of Part II of this Report on Form 10-Q for
a discussion of forward-looking statements. Actual outcomes may vary materially.
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
 PIONEER COMPANIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (unaudited, in thousands, except par value)
 March 31,
    
    
    December 31,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    206,113
    
    
    $
    115,216Accounts receivable, net of allowance for doubtful accounts of $2,356
at March 31, 2007, and $2,235 at December 31, 2006
    
    
    54,217
    
    
    
    52,028Inventories, net
    
    
    17,235
    
    
    
    21,023Prepaid expenses and other current assets
    
    
    15,118
    
    
    
    15,858Total current assets
    
    
    292,683
    
    
    
    204,125Property, plant and equipmentLand
    
    
    5,758
    
    
    
    5,758Buildings and improvements
    
    
    30,418
    
    
    
    30,431Machinery and equipment
    
    
    230,414
    
    
    
    229,059Construction in progress
    
    
    2,699
    
    
    
    2,350269,289
    
    
    
    267,598Less: accumulated depreciation
    
    
    (120,909
    )
    
    
    (114,814
    )Property, plant and equipment, net
    
    
    148,380
    
    
    
    152,784Other assets, net
    
    
    5,046
    
    
    
    1,850Excess reorganization value over the fair value of identifiable assets
    
    
    84,064
    
    
    
    84,064Total assets
    
    $
    530,173
    
    
    $
    442,823Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    16,593
    
    
    $
    16,969Accrued liabilities
    
    
    29,374
    
    
    
    42,625Short-term debt, including current portion of long-term debt
    
    
    75,219
    
    
    
    978Total current liabilities
    
    
    121,186
    
    
    
    60,572Long-term debt, less current portion
    
    
    121,760
    
    
    
    101,761Accrued pension and other employee benefits
    
    
    19,016
    
    
    
    20,729Other long-term liabilities
    
    
    75,969
    
    
    
    74,941Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value, 10,000 shares authorized, none issued or outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 50,000 shares authorized, 11,841 and 11,803
shares issued and outstanding at March 31, 2007 and December 31, 2006, respectively
    
    
    118
    
    
    
    118Additional paid-in capital
    
    
    43,738
    
    
    
    43,704Accumulated other comprehensive loss
    
    
    (7,487
    )
    
    
    (7,997
    )Retained earnings
    
    
    155,873
    
    
    
    148,995Total stockholders equity
    
    
    192,242
    
    
    
    184,820Total liabilities and stockholders equity
    
    $
    530,173
    
    
    $
    442,823
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PIONEER COMPANIES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited, in thousands, except per share amounts)
 Three Months EndedMarch 31,2007
    
    
    2006Revenues
    
    $
    122,441
    
    
    $
    134,872Cost of sales
    
    
    (99,051
    )
    
    
    (99,638
    )Gross profit
    
    
    23,390
    
    
    
    35,234Selling, general and administrative expenses
    
    
    (9,283
    )
    
    
    (8,079
    )Gain on asset dispositions and other, net
    
    
    49
    
    
    
    312Operating income
    
    
    14,156
    
    
    
    27,467Interest expense
    
    
    (2,082
    )
    
    
    (2,729
    )Interest income
    
    
    1,325
    
    
    
    263Other expense, net
    
    
    (1,124
    )
    
    
    (2,290
    )Income before income taxes
    
    
    12,275
    
    
    
    22,711Income tax expense
    
    
    (5,030
    )
    
    
    (6,661
    )Net income
    
    $
    7,245
    
    
    $
    16,050Net income per share:Basic
    
    $
    0.61
    
    
    $
    1.36Diluted
    
    $
    0.61
    
    
    $
    1.35Weighted average number of shares outstanding:Basic
    
    
    11,804
    
    
    
    11,761Diluted
    
    
    11,880
    
    
    
    11,864
  2




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PIONEER COMPANIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited, in thousands)
 Three Months EndedMarch 31,2007
    
    
    2006Operating activities:Net income
    
    $
    7,245
    
    
    $
    16,050Adjustments to reconcile net income to net cash flows from operating activities:Depreciation and amortization
    
    
    6,131
    
    
    
    6,030Provision for (reduction of) allowance for doubtful accounts
    
    
    122
    
    
    
    (674
    )Deferred tax expense
    
    
    155
    
    
    
    742Gain on disposal of assets
    
    
    (89
    )
    
    
    (312
    )Currency exchange loss (gain)
    
    
    499
    
    
    
    (153
    )Loss on early debt extinguishment
    
    
    625
    
    
    
    2,500Stock-based compensation expense
    
    
    93
    
    
    
    378Accretion of asset retirement obligations
    
    
    231
    
    
    
    76Changes in operating assets and liabilities:(Increase) decrease in accounts receivable
    
    
    (2,163)
    
    
    
    5,203Decrease in inventories, prepaid expenses and other current assets
    
    
    4,616
    
    
    
    2,278Decrease in other assets
    
    
    395
    
    
    
    112Decrease in accounts payable and accrued liabilities
    
    
    (11,056
    )
    
    
    (11,367
    )Decrease in other long-term liabilities
    
    
    (2,120
    )
    
    
    (1,179
    )Net cash flows from operating activities
    
    
    4,684
    
    
    
    19,684Investing activities:Capital expenditures
    
    
    (3,663
    )
    
    
    (3,087
    )Proceeds from disposal of assets
    
    
    222
    
    
    
    132Net cash flows used in investing activities
    
    
    (3,441
    )
    
    
    (2,955
    )Financing activities:Payment of premium on early debt extinguishment
    
    
    (625
    )
    
    
    (2,500
    )Proceeds from issuance of convertible notes
    
    
    120,000
    
    
    
    Debt issuance costs
    
    
    (3,973
    )
    
    
    Repayments of long-term debt
    
    
    (25,758
    )
    
    
    (51,135
    )Proceeds from issuance of stock, net
    
    
    
    
    
    
    218Net cash flows from (used in) financing activities
    
    
    89,644
    
    
    
    (53,417
    )Effect of exchange rate changes on cash
    
    
    10
    
    
    
    (17
    )Net change in cash and cash equivalents
    
    
    90,897
    
    
    
    (36,705
    )Cash and cash equivalents at beginning of period
    
    
    115,216
    
    
    
    62,790Cash and cash equivalents at end of period
    
    $
    206,113
    
    
    $
    26,085
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PIONEER COMPANIES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 1. Organization and Basis of Presentation
       2. Recent Accounting Pronouncements
  See
 4




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3. Debt
  March 31,
    
    
    December 31,2007
    
    
    2006Senior Subordinated Debt:2.75% Convertible Senior Subordinated Notes due 2027
    
    $
    120,000
    
    
    $
    Senior Secured Debt:10% Senior Secured Guaranteed Notes due December 2008
    
    
    75,000
    
    
    
    100,000Revolving credit facility, variable interest rates based on U.S. prime
rate plus a margin ranging from 0.5% to 1.25% or LIBOR (1) plus
a margin ranging from 2.50% to 3.25%, expiring December 31, 2007, as
amended
    
    
    
    
    
    
    Other debt:Unsecured, non-interest-bearing, long-term debt, denominated in Canadian
dollars, original face value of $5.5 million with an effective interest
rate of 8.25%
    
    
    
    
    
    
    428Other notes, maturing in various years through 2014, with various
installments, at various interest rates
    
    
    1,979
    
    
    
    2,311Total
    
    
    196,979
    
    
    
    102,739Short-term debt, including current portion of long-term debt (2)
    
    
    (75,219
    )
    
    
    (978
    )Long-term debt, less current portion
    
    $
    121,760
    
    
    $
    101,761
 
 (1)
    
    The three month London inter-bank offered rate (LIBOR) for the periods ended
March 31, 2007, and December 31, 2006, was 5.35% and 5.36%, respectively.(2)
    
    The $75.0 million of outstanding principal balance of 10% Senior Notes was
classified as short-term debt in the consolidated balance sheets as of March 31, 2007, due
to the issuance of the Convertible Notes in March 2007 and the corresponding redemption
notice that the 10% Senior Notes would be redeemed in April 2007. 2.75% Convertible Senior Subordinated Notes due 2027
     5




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st
 10% Senior Secured Guaranteed Notes due 2008
   Revolving Credit Facility
  6




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4. Environmental Liabilities
    7




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##### Table of Contents



5. Net Income per Share
   Three Months EndedMarch 31,2007
    
    
    2006Numerator for basic and diluted net income per share:Net income
    
    $
    7,245
    
    
    $
    16,050Denominator for weighted average shares  Basic
    
    
    11,804
    
    
    
    11,761Potentially dilutive common shares:Stock options
    
    
    76
    
    
    
    103Denominator for weighted average shares  Diluted
    
    
    11,880
    
    
    
    11,864Net income per share:Basic
    
    $
    0.61
    
    
    $
    1.36Diluted
    
    $
    0.61
    
    
    $
    1.35
  6. Supplemental Financial Information
 Inventories
  March 31,
    
    
    December 31,2007
    
    
    2006Raw materials, supplies and parts, net
    
    $
    9,008
    
    
    $
    10,655Finished goods
    
    
    8,227
    
    
    
    10,368Inventories, net
    
    $
    17,235
    
    
    $
    21,023
 Other Assets, net
  Other Expense, net
  8




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##### Table of Contents



7. Stock-Based Compensation
   8. Supplemental Cash Flow Information
  Three Months EndedMarch 31,2007
    
    2006Cash payments for:Interest
    
    $
    172
    
    
    $
    243Income taxes
    
    
    13,612
    
    
    
    2,193Non-cash investing activities:Property, plant and equipment acquisitions, included in accounts payable
    
    $
    367
    
    
    $
    644Non-cash financing activities:Debt issuance costs, included in accounts payable
    
    $
    377
    
    
    $
    
 9. Condensed Consolidating Financial Statements
 See
  9




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Condensed Consolidating Balance Sheet  March 31, 2007 (in thousands)
 PCI
    
    
    Pioneer
    
    
    Other
    
    
    
    
    
    
    PioneerPCI
    
    
    Canada
    
    
    Americas
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    248
    
    
    $
    205,865
    
    
    $
    
    
    
    $
    
    
    
    $
    206,113Accounts receivable, net
    
    
    
    
    
    
    13,376
    
    
    
    40,841
    
    
    
    
    
    
    
    
    
    
    
    54,217Inventories, net
    
    
    
    
    
    
    7,336
    
    
    
    9,899
    
    
    
    
    
    
    
    
    
    
    
    17,235Prepaid expenses and other current assets
    
    
    1,886
    
    
    
    1,882
    
    
    
    11,350
    
    
    
    
    
    
    
    
    
    
    
    15,118Total current assets
    
    
    1,886
    
    
    
    22,842
    
    
    
    267,955
    
    
    
    
    
    
    
    
    
    
    
    292,683Property, plant and equipment, net
    
    
    
    
    
    
    86,233
    
    
    
    61,366
    
    
    
    781
    
    
    
    
    
    
    
    148,380Other assets, net
    
    
    4,341
    
    
    
    15
    
    
    
    690
    
    
    
    
    
    
    
    
    
    
    
    5,046Intercompany receivable
    
    
    132,292
    
    
    
    105,033
    
    
    
    
    
    
    
    90,419
    
    
    
    (327,744
    )
    
    
    Investment in subsidiaries
    
    
    175,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (175,615
    )
    
    
    Excess reorganization value over the fair value of identifiable assets
    
    
    
    
    
    
    84,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,064Total assets
    
    $
    314,134
    
    
    $
    298,187
    
    
    $
    330,011
    
    
    $
    91,200
    
    
    $
    (503,359
    )
    
    $
    530,173Liabilities and stockholders equity (deficiency in assets)Current liabilities:Accounts payable
    
    $
    
    
    
    $
    8,282
    
    
    $
    8,311
    
    
    $
    
    
    
    $
    
    
    
    $
    16,593Accrued liabilities
    
    
    560
    
    
    
    13,224
    
    
    
    15,590
    
    
    
    
    
    
    
    
    
    
    
    29,374Short-term debt including current portion of long-term debt
    
    
    
    
    
    
    75,000
    
    
    
    219
    
    
    
    
    
    
    
    
    
    
    
    75,219Total current liabilities
    
    
    560
    
    
    
    96,506
    
    
    
    24,120
    
    
    
    
    
    
    
    
    
    
    
    121,186Long-term debt, less current portion
    
    
    120,000
    
    
    
    
    
    
    
    1,760
    
    
    
    
    
    
    
    
    
    
    
    121,760Investment in subsidiary
    
    
    
    
    
    
    67,893
    
    
    
    
    
    
    
    
    
    
    
    (67,893
    )
    
    
    Intercompany payable
    
    
    1,332
    
    
    
    648
    
    
    
    325,764
    
    
    
    
    
    
    
    (327,744
    )
    
    
    Accrued pension and other employee benefits
    
    
    
    
    
    
    11,947
    
    
    
    7,069
    
    
    
    
    
    
    
    
    
    
    
    19,016Other long-term liabilities
    
    
    
    
    
    
    36,369
    
    
    
    39,191
    
    
    
    409
    
    
    
    
    
    
    
    75,969Stockholders equity (deficiency in assets)
    
    
    192,242
    
    
    
    84,824
    
    
    
    (67,893
    )
    
    
    90,791
    
    
    
    (107,722
    )
    
    
    192,242Total liabilities and stockholders equity
    
    $
    314,134
    
    
    $
    298,187
    
    
    $
    330,011
    
    
    $
    91,200
    
    
    $
    (503,359
    )
    
    $
    530,173
 Condensed Consolidating Balance Sheet  December 31, 2006 (in thousands)
 PCI
    
    
    Pioneer
    
    
    Other
    
    
    
    
    
    
    PioneerPCI
    
    
    Canada
    
    
    Americas
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    
    $
    
    
    
    $
    3,049
    
    
    $
    112,167
    
    
    $
    
    
    
    $
    
    
    
    $
    115,216Accounts receivable, net
    
    
    
    
    
    
    11,327
    
    
    
    40,701
    
    
    
    
    
    
    
    
    
    
    
    52,028Inventories, net
    
    
    
    
    
    
    10,158
    
    
    
    10,865
    
    
    
    
    
    
    
    
    
    
    
    21,023Prepaid expenses and other current assets
    
    
    2,614
    
    
    
    2,121
    
    
    
    11,123
    
    
    
    
    
    
    
    
    
    
    
    15,858Total current assets
    
    
    2,614
    
    
    
    26,655
    
    
    
    174,856
    
    
    
    
    
    
    
    
    
    
    
    204,125Property, plant and equipment, net
    
    
    
    
    
    
    88,122
    
    
    
    63,881
    
    
    
    781
    
    
    
    
    
    
    
    152,784Other assets, net
    
    
    
    
    
    
    15
    
    
    
    1,835
    
    
    
    
    
    
    
    
    
    
    
    1,850Intercompany receivable
    
    
    15,679
    
    
    
    132,483
    
    
    
    
    
    
    
    90,438
    
    
    
    (238,600
    )
    
    
    Investment in subsidiaries
    
    
    167,859
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (167,859
    )
    
    
    Excess reorganization value over fair value of identifiable assets
    
    
    
    
    
    
    84,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84,064Total assets
    
    $
    186,152
    
    
    $
    331,339
    
    
    $
    240,572
    
    
    $
    91,219
    
    
    $
    (406,459
    )
    
    $
    442,823Liabilities and stockholders equity (deficiency in assets)Current liabilities:Accounts payable
    
    $
    
    
    
    $
    10,530
    
    
    $
    6,432
    
    
    $
    
    
    
    $
    7
    
    
    $
    16,969Accrued liabilities
    
    
    
    
    
    
    22,906
    
    
    
    19,719
    
    
    
    
    
    
    
    
    
    
    
    42,625Short-term debt including current portion of long-term debt
    
    
    
    
    
    
    428
    
    
    
    543
    
    
    
    7
    
    
    
    
    
    
    
    978Total current liabilities
    
    
    
    
    
    
    33,864
    
    
    
    26,694
    
    
    
    7
    
    
    
    7
    
    
    
    60,572Long-term debt, less current portion
    
    
    
    
    
    
    100,000
    
    
    
    1,761
    
    
    
    
    
    
    
    
    
    
    
    101,761Investment in subsidiary
    
    
    
    
    
    
    71,550
    
    
    
    
    
    
    
    
    
    
    
    (71,550
    )
    
    
    Intercompany payable
    
    
    1,332
    
    
    
    161
    
    
    
    237,114
    
    
    
    
    
    
    
    (238,607
    )
    
    
    Accrued pension and other employee benefits
    
    
    
    
    
    
    12,854
    
    
    
    7,875
    
    
    
    
    
    
    
    
    
    
    
    20,729Other long-term liabilities
    
    
    
    
    
    
    35,844
    
    
    
    38,678
    
    
    
    419
    
    
    
    
    
    
    
    74,941Stockholders equity (deficiency in assets)
    
    
    184,820
    
    
    
    77,066
    
    
    
    (71,550
    )
    
    
    90,793
    
    
    
    (96,309
    )
    
    
    184,820Total liabilities and stockholders equity
    
    $
    186,152
    
    
    $
    331,339
    
    
    $
    240,572
    
    
    $
    91,219
    
    
    $
    (406,459
    )
    
    $
    442,823
 10




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##### Table of Contents



Condensed Consolidating Statement of Operations  Three Months Ended March 31, 2007 (in
thousands)
 PCI
    
    
    Pioneer
    
    
    Other
    
    
    
    
    
    
    PioneerPCI
    
    
    Canada
    
    
    Americas
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    58,702
    
    
    $
    94,349
    
    
    $
    
    
    
    $
    (30,610
    )
    
    $
    122,441Cost of sales
    
    
    
    
    
    
    (45,400
    )
    
    
    (84,261
    )
    
    
    
    
    
    
    30,610
    
    
    
    (99,051
    )Gross profit
    
    
    
    
    
    
    13,302
    
    
    
    10,088
    
    
    
    
    
    
    
    
    
    
    
    23,390Selling, general and administrative expenses
    
    
    (322
    )
    
    
    (3,055
    )
    
    
    (5,906
    )
    
    
    
    
    
    
    
    
    
    
    (9,283
    )Gain on asset dispositions and other, net
    
    
    
    
    
    
    (76
    )
    
    
    125
    
    
    
    
    
    
    
    
    
    
    
    49Operating income (loss)
    
    
    (322
    )
    
    
    10,171
    
    
    
    4,307
    
    
    
    
    
    
    
    
    
    
    
    14,156Interest expense
    
    
    (47
    )
    
    
    (1,958
    )
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    (2,082
    )Interest income
    
    
    
    
    
    
    
    
    
    
    1,325
    
    
    
    
    
    
    
    
    
    
    
    1,325Other expense, net
    
    
    
    
    
    
    (1,108
    )
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    (1,124
    )Income (loss) before income taxes
    
    
    (369
    )
    
    
    7,105
    
    
    
    5,539
    
    
    
    
    
    
    
    
    
    
    
    12,275Income tax expense
    
    
    
    
    
    
    (3,114
    )
    
    
    (1,916
    )
    
    
    
    
    
    
    
    
    
    
    (5,030
    )Net income (loss) before equity in earnings of subsidiaries
    
    
    (369
    )
    
    
    3,991
    
    
    
    3,623
    
    
    
    
    
    
    
    
    
    
    
    7,245Equity in net income of subsidiaries
    
    
    7,614
    
    
    
    3,623
    
    
    
    
    
    
    
    
    
    
    
    (11,237
    )
    
    
    Net income
    
    $
    7,245
    
    
    $
    7,614
    
    
    $
    3,623
    
    
    $
    
    
    
    $
    (11,237
    )
    
    $
    7,245
 Condensed Consolidating Statement of Operations  Three Months Ended March 31, 2006 (in
thousands)
 PCI
    
    
    Pioneer
    
    
    Other
    
    
    
    
    
    
    PioneerPCI
    
    
    Canada
    
    
    Americas
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    63,588
    
    
    $
    105,495
    
    
    $
    
    
    
    $
    (34,211
    )
    
    $
    134,872Cost of sales
    
    
    
    
    
    
    (45,047
    )
    
    
    (88,802
    )
    
    
    
    
    
    
    34,211
    
    
    
    (99,638
    )Gross profit
    
    
    
    
    
    
    18,541
    
    
    
    16,693
    
    
    
    
    
    
    
    
    
    
    
    35,234Selling, general and administrative expenses
    
    
    (406
    )
    
    
    (2,592
    )
    
    
    (5,079
    )
    
    
    (2
    )
    
    
    
    
    
    
    (8,079
    )Other items
    
    
    
    
    
    
    98
    
    
    
    214
    
    
    
    
    
    
    
    
    
    
    
    312Operating income (loss)
    
    
    (406
    )
    
    
    16,047
    
    
    
    11,828
    
    
    
    (2
    )
    
    
    
    
    
    
    27,467Interest expense
    
    
    
    
    
    
    (2,691
    )
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    (2,729
    )Interest income
    
    
    
    
    
    
    
    
    
    
    263
    
    
    
    
    
    
    
    
    
    
    
    263Other income (expense), net
    
    
    
    
    
    
    (2,354
    )
    
    
    (3,157
    )
    
    
    3,221
    
    
    
    
    
    
    
    (2,290
    )Income (loss) before income taxes
    
    
    (406
    )
    
    
    11,003
    
    
    
    8,895
    
    
    
    3,219
    
    
    
    
    
    
    
    22,711Income tax expense
    
    
    
    
    
    
    (6,301
    )
    
    
    (360
    )
    
    
    
    
    
    
    
    
    
    
    (6,661
    )Net income (loss) before equity in earnings of subsidiaries
    
    
    (406
    )
    
    
    4,702
    
    
    
    8,535
    
    
    
    3,219
    
    
    
    
    
    
    
    16,050Equity in net income of subsidiaries
    
    
    16,456
    
    
    
    8,535
    
    
    
    
    
    
    
    
    
    
    
    (24,991
    )
    
    
    Net income
    
    $
    16,050
    
    
    $
    13,237
    
    
    $
    8,535
    
    
    $
    3,219
    
    
    $
    (24,991
    )
    
    $
    16,050
 11




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows  Three Months Ended March 31, 2007 (in
thousands)
 PCI
    
    
    Pioneer
    
    
    Other
    
    
    PioneerPCI
    
    
    Canada
    
    
    Americas
    
    
    Guarantors
    
    
    ConsolidatedCash flows from (used in) operating activities:Net cash flows from (used in) operating activities
    
    $
    (116,027
    )
    
    $
    24,322
    
    
    $
    96,383
    
    
    $
    6
    
    
    $
    4,684Cash flows used in investing activities:Capital expenditures
    
    
    
    
    
    
    (1,082
    )
    
    
    (2,581
    )
    
    
    
    
    
    
    (3,663
    )(Payments) Proceeds from disposal of assets
    
    
    
    
    
    
    2
    
    
    
    220
    
    
    
    
    
    
    
    222Net cash flows used in investing activities
    
    
    
    
    
    
    (1,080
    )
    
    
    (2,361
    )
    
    
    
    
    
    
    (3,441
    )Cash flows from (used in) financing activities:Repayments of long-term debt
    
    
    
    
    
    
    (25,428
    )
    
    
    (324
    )
    
    
    (6
    )
    
    
    (25,758
    )Proceeds from issuance of convertible notes
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,000Debt issuance costs
    
    
    (3,973
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,973
    )Payment of premium on early debt extinguishment
    
    
    
    
    
    
    (625
    )
    
    
    
    
    
    
    
    
    
    
    (625
    )Proceeds from issuance of stock, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash flows from (used in) financing activities
    
    
    116,027
    
    
    
    (26,053
    )
    
    
    (324
    )
    
    
    (6
    )
    
    
    89,644Effect of exchange rate changes on cash
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Net change in cash and cash equivalents
    
    
    
    
    
    
    (2,801
    )
    
    
    93,698
    
    
    
    
    
    
    
    90,897Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    3,049
    
    
    
    112,167
    
    
    
    
    
    
    
    115,216Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    248
    
    
    $
    205,865
    
    
    $
    
    
    
    $
    206,113
 Condensed Consolidating Statement of Cash Flows  Three Months Ended March 31, 2006 (in
thousands)
 PCI
    
    
    Pioneer
    
    
    Other
    
    
    PioneerPCI
    
    
    Canada
    
    
    Americas
    
    
    Guarantors
    
    
    ConsolidatedCash flows from (used in) operating activities:Net cash
flows from (used in) operating activities
    
    $
    (218
    )
    
    $
    53,795
    
    
    $
    (33,893
    )
    
    $
    
    
    
    $
    19,684Cash flows from (used in) investing activities:Capital expenditures
    
    
    
    
    
    
    (1,160
    )
    
    
    (1,927
    )
    
    
    
    
    
    
    (3,087
    )Proceeds from disposal of assets
    
    
    
    
    
    
    67
    
    
    
    65
    
    
    
    
    
    
    
    132Net cash flows used in investing activities
    
    
    
    
    
    
    (1,093
    )
    
    
    (1,862
    )
    
    
    
    
    
    
    (2,955
    )Cash flows from (used in) financing activities:Repayments of long-term debt
    
    
    
    
    
    
    (50,852
    )
    
    
    (279
    )
    
    
    (4
    )
    
    
    (51,135
    )Payments of premium on early debt extinguishment
    
    
    
    
    
    
    (2,500
    )
    
    
    
    
    
    
    
    
    
    
    (2,500
    )Proceeds
from issuance of stock, net
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218Net cash flows from (used in) financing activities
    
    
    218
    
    
    
    (53,352
    )
    
    
    (279
    )
    
    
    (4
    )
    
    
    (53,417
    )Effect of exchange rate changes on cash
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    (17
    )Net change in cash and cash equivalents
    
    
    
    
    
    
    (667
    )
    
    
    (36,034
    )
    
    
    (4
    )
    
    
    (36,705
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    1,580
    
    
    
    61,217
    
    
    
    (7
    )
    
    
    62,790Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    913
    
    
    $
    25,183
    
    
    $
    (11
    )
    
    $
    26,085
 12




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##### Table of Contents



10. Pension and Other Postretirement Benefits
  PCI
    
    
    Pioneer
    
    
    PioneerThree Months Ended March 31, 2007
    
    Canada
    
    
    Americas
    
    
    ConsolidatedComponents of net periodic benefit cost:Service cost
    
    $
    339
    
    
    $
    
    
    
    $
    339Interest cost
    
    
    668
    
    
    
    794
    
    
    
    1,462Expected return on plan assets
    
    
    (918
    )
    
    
    (953
    )
    
    
    (1,871
    )Amortization of net actuarial loss
    
    
    95
    
    
    
    147
    
    
    
    242Net periodic benefit cost
    
    $
    184
    
    
    $
    (12
    )
    
    $
    172
 PCI
    
    
    Pioneer
    
    
    PioneerThree Months Ended March 31, 2006
    
    Canada
    
    
    Americas
    
    
    ConsolidatedComponents of net periodic benefit cost:Service cost
    
    $
    360
    
    
    $
    
    
    
    $
    360Interest cost
    
    
    684
    
    
    
    766
    
    
    
    1,450Expected return on plan assets
    
    
    (874
    )
    
    
    (854
    )
    
    
    (1,728
    )Amortization of net actuarial loss
    
    
    148
    
    
    
    272
    
    
    
    420Net periodic benefit cost
    
    $
    318
    
    
    $
    184
    
    
    $
    502
   PCI
    
    
    Pioneer
    
    
    PioneerThree Months Ended March 31, 2007
    
    Canada
    
    
    Americas
    
    
    ConsolidatedComponents of net periodic benefit cost:Service cost
    
    $
    83
    
    
    $
    
    
    
    $
    83Interest cost
    
    
    123
    
    
    
    6
    
    
    
    129Amortization of prior service costs
    
    
    (8
    )
    
    
    (156
    )
    
    
    (164
    )Amortization of net actuarial loss (gain).
    
    
    68
    
    
    
    (10
    )
    
    
    58Net periodic benefit cost
    
    $
    266
    
    
    $
    (160
    )
    
    $
    106
 PCI
    
    
    Pioneer
    
    
    PioneerThree Months Ended March 31, 2006
    
    Canada
    
    
    Americas
    
    
    ConsolidatedComponents of net periodic benefit cost:Service cost
    
    $
    79
    
    
    $
    1
    
    
    $
    80Interest cost
    
    
    113
    
    
    
    7
    
    
    
    120Amortization of prior service costs
    
    
    (8
    )
    
    
    (156
    )
    
    
    (164
    )Amortization
of net actuarial loss (gain)
    
    
    70
    
    
    
    (13
    )
    
    
    57Net periodic benefit cost
    
    $
    254
    
    
    $
    (161
    )
    
    $
    93
 11. Commitments and Contingencies
 Environmental Liabilities
  13




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##### Table of Contents



See
  Litigation
  St. Gabriel Mercury Vapor Emissions Release
  Claude Frazier, et al. v. Pioneer
Americas, LLC and State of Louisiana through the Department of Environmental Quality
 Albany, N.Y. Mercury Refining Superfund Site.
 St. Gabriel Asbestos Premises Liability Lawsuits
 14




---



##### Table of Contents



12. Income Taxes
       13. Subsequent Events
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  15




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##### Table of Contents



Financial Results Summary for First Quarter of 2007
  Three months endedMarch 31,2007
    
    2006Revenues
    
    $
    122,441
    
    
    $
    134,872Operating income
    
    
    14,156
    
    
    
    27,467Net income
    
    
    7,245
    
    
    
    16,050Net cash flows from operating activities
    
    
    4,684
    
    
    
    19,684Total debt as of March 31*
    
    
    196,979
    
    
    
    103,461Average ECU netback prices
    
    
    522
    
    
    
    616
 
 *
    
    March 31, 2007 debt does not reflect the redemption of $75.0 million of the 10% Senior
Notes on April 24, 2007.  
    
    During the first quarter of 2007, our production rate was 93% of our production
capacity. The average production rate during the same period for the chlor-alkali
industry was 91%.
    
    In April and May 2007, we announced that we had entered into three key contracts for
the planned expansion at St. Gabriel.
    
    In January 2007, we voluntarily redeemed $25.0 million of principal of our 10%
Senior Secured Guaranteed Notes due December 2008 (10% Senior Notes). The note
holders were paid the principal amount, plus a redemption premium of 2.5% of the
principal amount, or $0.6 million, and interest accrued to the date of payment.
    
    On March 26, 2007, we closed the sale of $120.0 million aggregate principal amount
of 2.75% Convertible Senior Subordinated Notes due 2027 (Convertible Notes).
    
    Also on March 26, 2007, we announced the redemption of the remaining $75.0 million
of principal of our 10% Senior Notes, using a portion of the proceeds of the
Convertible Notes financing. On April 24, 2007, the note holders were paid the
principal amount, plus a redemption premium of 2.5% of the principal, or $1.9 million,
plus interest accrued to the date of payment. The financial impact of the April 2007
redemption will be reflected in our consolidated financial statements in the second
quarter of 2007.
 Planned Expansion of St. Gabriel, Louisiana Plant
    16




---



##### Table of Contents



Pricing
   2006:First Quarter
    
    $
    616Second Quarter
    
    
    577Third Quarter
    
    
    557Fourth Quarter
    
    
    5342007:First Quarter
    
    
    522
   Chlorine
    
    Caustic Soda2006:First Quarter
    
    $
    25
    (1)
    
    $
    Second Quarter
    
    
    
    
    
    
    35Third Quarter
    
    
    25
    
    
    
    Fourth Quarter
    
    
    
    
    
    
    402007:First Quarter
    
    $
    25
    
    
    $
    40
    (2)Second Quarter (through May 8)
    
    
    
    
    
    
    50
    (3)
 
 (1)
    
    A February 2006 price increase for chlorine of $25 per ton was
subject to a temporary voluntary allowance for the full amount. Under a
temporary voluntary allowance, we reserve the right to remove all or any
portion of the temporary voluntary allowance at any time following the
effective date of the price increase, upon notice to our customers.(2)
    
    The $40 increase announced in February 2007 is for diaphragm and
chemical grade liquid caustic soda. We also increased the price by $50 for
membrane and rayon grade liquid caustic soda.(3)
    
    The $50 increase announced on May 1, 2007 is for both grades of
liquid caustic soda.    17




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##### Table of Contents



Production
  ECUs (In Tons)2006:First Quarter
    
    
    165,359Second Quarter
    
    
    169,759Third Quarter
    
    
    178,205Fourth Quarter
    
    
    172,3092007:First Quarter
    
    
    166,426
   18




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##### Table of Contents



Energy Costs
   Percentage ofTotal Power Costs
    
    Cost of Sales(in thousands)2006:First Quarter
    
    $
    29,963
    
    
    
    30
    %Second Quarter
    
    
    26,226
    
    
    
    26
    %Third Quarter
    
    
    28,945
    
    
    
    28
    %Fourth Quarter
    
    
    26,076
    
    
    
    25
    %2007:First Quarter
    
    
    25,158
    
    
    
    25
    %
  Transportation Costs
   Product
    
    Percentage ofTransportation Costs
    
    Cost of Sales(in thousands)2006:First Quarter
    
    $
    23,981
    
    
    
    24
    %Second Quarter
    
    
    24,914
    
    
    
    24
    %Third Quarter
    
    
    27,361
    
    
    
    26
    %Fourth Quarter
    
    
    25,290
    
    
    
    24
    %2007:First Quarter
    
    
    26,242
    
    
    
    26
    %
  19




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##### Table of Contents



Liquidity and Capital Resources
 2.75% Convertible Senior Subordinated Notes due 2027
         20




---



##### Table of Contents



st
 10% Senior Secured Guaranteed Notes due December 2008
   Revolving Credit Facility
     21




---



##### Table of Contents



Three
    
    
    Three
    
    
    Three
    
    
    Three
    
    
    TwelveMonths
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30,
    
    
    September 30,
    
    
    December 31,
    
    
    March 31,
    
    
    March 31,2006
    
    

2006(1)
    
    

2006(2)
    
    
    2007
    
    
    2007(1)(2)Net income
    
    $
    15,414
    
    
    $
    31,515
    
    
    $
    4,266
    
    
    $
    7,245
    
    
    $
    58,440Income tax expense
    
    
    2,125
    
    
    
    14,582
    
    
    
    8,095
    
    
    
    5,030
    
    
    
    29,832Income before income taxes
    
    
    17,539
    
    
    
    46,097
    
    
    
    12,361
    
    
    
    12,275
    
    
    
    88,272Depreciation and amortization
    
    
    5,968
    
    
    
    6,051
    
    
    
    6,286
    
    
    
    6,131
    
    
    
    24,436Interest expense
    
    
    2,555
    
    
    
    2,623
    
    
    
    2,498
    
    
    
    2,082
    
    
    
    9,758Lender-Defined EBITDA
    
    $
    26,062
    
    
    $
    54,771
    
    
    $
    21,145
    
    
    $
    20,488
    
    
    $
    122,466
 
 (1)
    
    Includes gains of approximately $1.6 million and $22.5 million from the
sales of land in Pittsburg, California completed in July 2006 and in
Henderson, Nevada completed in September 2006, respectively.(2)
    
    Includes the gain of approximately $2.2 million from the
sale of land in Henderson, Nevada completed in December 2006.    Future Payment Commitments
  22




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##### Table of Contents



Retirement Plan Liabilities
  Taxes
 Tax Liability Upon Payment of 10% Senior Notes
 Adoption of FIN 48.
  Net Operating Loss Carryforward.
 Net Cash Flows
 Net Cash Flows
from Operating Activities .
 Net Cash Flows Used in Investing Activities.
 Net Cash Flows From (Used in) Financing Activities.
 Off Balance Sheet Arrangements
  23




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##### Table of Contents



Critical Accounting Policies and Estimates
  RESULTS OF OPERATIONS
 Three Months Ended March 31, 2007, Compared to Three Months Ended March 31, 2006
 Revenues.
 Three Months EndedMarch 31,2007
    
    
    2006Chlorine and caustic soda
    
    $
    92,435
    
    
    $
    103,614Other products
    
    
    30,006
    
    
    
    31,258$
    122,441
    
    
    $
    134,872Average ECU netback*
    
    $
    522
    
    
    $
    616
 
 *
    
    The average ECU netback relates only to sales of chlorine and caustic
soda, and not to sales of other products.  Cost of Sales
     24




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##### Table of Contents



Selling, General and Administrative Expenses.
 Gain on Asset Dispositions and Other, Net.
 Interest Expense.
 Interest Income.
 Other Expense, Net.
 Income Tax Expense.
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 See
 25




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ITEM 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  St. Gabriel Mercury Vapor Emissions Release
  Claude Frazier, et al. v. Pioneer
Americas, LLC and State of Louisiana through the Department of Environmental Quality
 Albany, N.Y. Mercury Refining Superfund Site.
 26




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St. Gabriel Asbestos Premises Liability Lawsuits
 
 ITEM 1A. RISK FACTORS
  The Convertible Notes contain repurchase rights and a related make-whole premium that are triggered
by a change of control and could make an acquisition of the Company more expensive for a potential
acquiror.
  Conversion of our Convertible Notes may dilute the ownership interest of existing stockholders and
hedging activities may depress the trading price of our common stock.
   
 ITEM 5. OTHER INFORMATION
 Forward-Looking Statements
   27




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
    
    general economic, business and market conditions, including economic instability or a
downturn in the markets served by us;
    
    the cyclical nature of our product markets and operating results;
    
    competitive pressures affecting selling prices and volumes;
    
    the supply/demand balance for our products, including the impact of excess industry
capacity or the construction of new industry capacity;
    
    the occurrence of unexpected manufacturing interruptions and outages, including those
occurring as a result of production hazards or an interruption in the supply of
electricity, salt or other raw materials;
    
    failure to comply with financial covenants contained in our debt instruments;
    
    inability to make scheduled payments on or refinance our indebtedness;
    
    loss of key customers or suppliers;
    
    increased prices for raw materials, including electricity;
    
    disruption of transportation or higher than expected transportation or logistics costs;
    
    the occurrence of accidents in the manufacturing, handling, storage or transportation
of chlorine, including chemical spills or releases at our facilities or railcar
accidents that result in a chlorine release;
    
    environmental costs and other expenditures in excess of those projected;
    
    increased costs for litigation and other claims;
    
    changes in laws and regulations inside or outside the United States;
    
    uncertainty with respect to interest rates and fluctuations in currency exchange rates;
    
    the occurrence of extraordinary events, such as Hurricanes Katrina and Rita, the
attacks on the World Trade Center and the Pentagon that occurred on September 11, 2001,
or the war in Iraq;
    
    increases in costs or delays in the completion of the St. Gabriel project, and
    
    our Convertible Notes could make an acquisition of the Company more expensive for a
potential acquiror or could cause the dilution of the ownership interest of existing
stockholders.
  28




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##### Table of Contents



ITEM 6. EXHIBITS
 4.1
    
    Indenture dated as of March 26, 2007 for 2.75% Convertible Senior
Subordinated Notes due 2027 between Pioneer Companies, Inc. and
Wells Fargo Bank, National Association, as Trustee (incorporated
by reference to Exhibit 4.1 to Pioneers Current Report on Form
8-K filed on March 28, 2007, File No. 1-09859)4.2
    
    Registration Rights Agreement dated as of March 26, 2007 for 2.75%
Convertible Senior Subordinated Notes due 2027 between Pioneer
Companies, Inc., as issuer, and CIBC World Markets Corp. and CRT
Capital Group LLC, as initial purchasers (incorporated by
reference to Exhibit 4.2 to Pioneers Current Report on Form 8-K
filed on March 28, 2007, File No. 1-09859)4.3
    
    Ninth Amendment to Loan and Security Agreement dated as of March
19, 2007, between and among the lenders identified on the
signature pages thereof, Foothill Capital Corporation, PCI
Chemicals Canada Company and Pioneer Americas LLC.4.4
    
    Tenth Amendment to Loan and Security Agreement dated April 23,
2007, between and among the lenders identified on the signature
pages thereof, Foothill Capital Corporation, PCI Chemicals Canada
Company and Pioneer Americas LLC.10.1
    
    Purchase Agreement dated March 20, 2007 for 2.75% Convertible
Senior Subordinated Notes due 2027 between Pioneer Companies, Inc.
and CIBC World Markets Corp. (incorporated by reference to Exhibit
10.1 to Pioneers Current Report on Form 8-K filed on March 22,
2007, File No. 1-09859)31.1
    
    Certification of Michael Y. McGovern required by Rule 13a-14(a) or
Rule 15d-14(a) under the Securities Exchange Act of 1934.31.2
    
    Certification of Gary L. Pittman required by Rule 13a-14(a) or
Rule 15d-14(a) under the Securities Exchange Act of 1934.32.1
    
    Certification of Michael Y. McGovern required by Rule 13a-14(b) or
Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350.32.2
    
    Certification of Gary L. Pittman required by Rule 13a-14(b) or
Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350.99.1
    
    Items incorporated by reference from the Pioneer Companies, Inc.
Form 10-K/A for the year ended December 31, 2006: Item 1A. Risk
Factors.
 
 
    
    Indicates exhibit previously filed with the Securities and Exchange Commission as indicated
and incorporated herein by reference 29




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##### Table of Contents



SIGNATURES
  PIONEER COMPANIES, INC.Date: May 9, 2007
    By:
    /s/ Gary L. PittmanGary L. PittmanSenior Vice President and Chief Financial Officer
(Principal Financial Officer) 30




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Exhibit Index
 4.1
    
    Indenture dated as of March 26, 2007 for 2.75% Convertible Senior
Subordinated Notes due 2027 between Pioneer Companies, Inc. and
Wells Fargo Bank, National Association, as Trustee (incorporated
by reference to Exhibit 4.1 to Pioneers Current Report on Form
8-K filed on March 28, 2007, File No. 1-09859)4.2
    
    Registration Rights Agreement dated as of March 26, 2007 for 2.75%
Convertible Senior Subordinated Notes due 2027 between Pioneer
Companies, Inc., as issuer, and CIBC World Markets Corp. and CRT
Capital Group LLC, as initial purchasers (incorporated by
reference to Exhibit 4.2 to Pioneers Current Report on Form 8-K
filed on March 28, 2007, File No. 1-09859)4.3
    
    Ninth Amendment to Loan and Security Agreement dated as of March
19, 2007, between and among the lenders identified on the
signature pages thereof, Foothill Capital Corporation, PCI
Chemicals Canada Company and Pioneer Americas LLC.4.4
    
    Tenth Amendment to Loan and Security Agreement date April 23,
2007, , between and among the lenders identified on the signature
pages thereof, Foothill Capital Corporation, PCI Chemicals Canada
Company and Pioneer Americas LLC.10.1
    
    Purchase Agreement dated March 20, 2007 for 2.75% Convertible
Senior Subordinated Notes due 2027 between Pioneer Companies, Inc.
and CIBC World Markets Corp. (incorporated by reference to Exhibit
10.1 to Pioneers Current Report on Form 8-K filed on March 22,
2007, File No. 1-09859)31.1
    
    Certification of Michael Y. McGovern required by Rule 13a-14(a) or
Rule 15d-14(a) under the Securities Exchange Act of 1934.31.2
    
    Certification of Gary L. Pittman required by Rule 13a-14(a) or
Rule 15d-14(a) under the Securities Exchange Act of 1934.32.1
    
    Certification of Michael Y. McGovern required by Rule 13a-14(b) or
Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350.32.2
    
    Certification of Gary L. Pittman required by Rule 13a-14(b) or
Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350.99.1
    
    Items incorporated by reference from the Pioneer Companies, Inc.
Form 10-K/A for the year ended December 31, 2006: Item 1A. Risk
Factors.
 
 
    
    Indicates exhibit previously filed with the Securities and Exchange Commission as indicated
and incorporated herein by reference. 31