Exhibit 99.1
WAUSAU PAPER 2004 EARNINGS INCREASE 29 PERCENT
MOSINEE, WIS..JAN. 26, 2005..Wausau Paper (NYSE:WPP) today reported
fourth-quarter earnings of $5.1 million, or $0.10 per diluted share, compared
with $5.3 million, or $0.10 per diluted share, in the fourth quarter
of 2003. Fourth-quarter 2004 earnings include after-tax losses of $0.02 per
diluted share related to the start-up and operation of Printing & Writing's
newly acquired Brainerd mill, and stock incentive charges of $0.01 per diluted
share. Prior-year fourth-quarter earnings included stock incentive charges of
$0.01 per diluted share. Net sales increased 10 percent to $262.4 million from
$239.3 million last year while shipments increased 3 percent. Average selling
price improved in each of the company's three business segments with the most
significant gains occurring within Towel & Tissue and Specialty Products.
Net earnings for the year increased 29 percent to $20.4 million, or $0.39 per
diluted share, from $15.9 million, or $0.31 per diluted share, in 2003. Net
sales increased 7 percent to $1,040.7 million from $971.4 million last year
while shipments increased 2 percent. Current-year results include after-tax
losses of $0.02 per diluted share related to the start-up and operation of the
Brainerd mill and stock incentive charges of $0.03 per diluted share. Prior-
year earnings included stock incentive charges of $0.02 per diluted share.
"Wausau Paper made strong progress in 2004 despite only modest improvement in
market conditions," commented Thomas J. Howatt, president and CEO. "Full-year
earnings increased nearly 30 percent, with profit improvements in two of our
three business segments, and net sales exceeded $1 billion for the first time
in company history. Much of this improvement can be attributed to continuing
progress in our strategic initiatives - new product development, pursuit of
niche markets, operational excellence, and benchmark service to our customers,"
Mr. Howatt continued. "Revenues from products developed within the last three
years substantially exceeded our corporate goal of 25 percent; productivity
increased 2 percent, double our goal for the year; and cost-reduction results
exceeded our goal of 2 percent of prior year cost of sales."
In the fourth quarter, Specialty Products achieved its 10th consecutive quarter
of year-over-year improvement with operating profits of $6.4 million, more than
double the $2.6 million earned a year ago. Net sales and shipments increased
13 percent and 4 percent, respectively. "Selling price increases, sales mix
improvements and operational efficiency gains helped drive quarterly profits to
their highest level in more than five years," Mr. Howatt said. "Crisp
execution over the last three years has created strong momentum, positioning
Specialty Products as a solid profit contributor."
Printing & Writing reported fourth-quarter operating profits of $0.4 million,
compared with $3.4 million last year. Current-year results included fiber and
energy cost increases of more than $4 million and pre-tax operating losses of
$1.9 million related to the mid-November start-up and fourth-quarter operation
of the Brainerd mill. Net sales and shipments increased 8 percent and 5
percent, respectively. "Despite soft fourth-quarter demand and highly
competitive pricing, Printing & Writing gained share in its target markets,
with consumer products and premium paper shipments increasing 32 percent and 12
percent, respectively," said Mr. Howatt. "While quarterly profits were
unfavorably affected by start-up expenses, the acquisition of the Brainerd mill
will allow us to expand our sales of higher-margin premium papers and improve
long-term profitability."
Towel & Tissue reported fourth-quarter operating profits of $7.9 million,
compared with $8.7 million last year. Net sales increased 8 percent while
shipments declined 2 percent. "Selling price increases and mix improvements
could only partially offset higher costs in the quarter including wastepaper,
purchased paper, and downtime associated with the planned replacement of a
paper machine hood at the Middletown mill," Mr. Howatt explained. For the
year, net sales and shipments increased 6 percent and 1 percent, respectively.
"Shipments of our higher-margin value-added products increased 11 percent for
the year," commented Mr. Howatt. "With only modest growth in the
away-from-home towel and tissue market, this increase demonstrates the value of
our niche-market focus."
Commenting on the outlook for 2005, Mr. Howatt said, "Market conditions remain
mixed with uncoated freesheet demand lagging towel and tissue and specialty
markets. We have proven our ability to gain market share and increase earnings
in challenging market conditions and will once again leverage our strategic
initiatives to drive improvement and fuel growth. Despite expected higher
fiber prices and natural gas costs well above historical averages, we expect
first quarter earnings to modestly exceed prior year results of $0.07 per
share, assuming a first quarter impact from Brainerd operations comparable to
the fourth quarter."
Wausau Paper's fourth-quarter conference call is scheduled for 11:00 a.m. (EST)
on Thursday, January 27, and can be accessed through the Company's web site at
www.wausaupaper.com under "Investor Information." A replay of the webcast will
be available at the same site through February 3.
Wausau Paper produces fine printing and writing papers, technical specialty
papers, and "away-from-home" towel and tissue products.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The
matters discussed in this news release concerning the Company's future
performance or anticipated financial results are forward-looking statements and
are made pursuant to the safe harbor provisions of the Securities Reform Act of
1995. Such statements involve risks and uncertainties which may cause results
to differ materially from those set forth in these statements. Among other
things, these risks and uncertainties include the strength of the economy and
demand for paper products, increases in raw material and energy prices,
manufacturing problems at Company facilities, and other risks and assumptions
described in Item 1 of the Company's Form 10-K for the year ended December 31,
2003. The Company assumes no obligation to update or supplement forward-
looking statements that become untrue because of subsequent events.
(tables follow)
WAUSAU PAPER
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share amounts)
CONDENSED CONSOLIDATED STATEMENTS Three Months Twelve Months
OF OPERATIONS Ended December 31, (unaudited) Ended December 31,
2004 2003 2004(UNAUDITED) 2003
Net Sales $ 262,365 $ 239,256 $ 1,040,717 $ 971,444
Cost of Sales 232,103 210,773 923,176 868,547
Gross Profit 30,262 28,483 117,541 102,897
Selling & Administrative Expense 20,021 17,530 75,817 67,619
Operating Profit 10,241 10,953 41,724 35,278
Interest Expense (2,600) (2,580) (10,285) (10,188)
Other Income / (Expense), Net 456 71 939 90
Earnings Before Income Taxes 8,097 8,444 32,378 25,180
Provision for Income Taxes 3,001 3,125 11,985 9,317
Net Earnings $ 5,096 $ 5,319 $ 20,393 $ 15,863
Net Earnings Per Share-Basic $ 0.10 $ 0.10 $ 0.39 $ 0.31
Net Earnings Per Share-Diluted $ 0.10 $ 0.10 $ 0.39 $ 0.31
Weighted Average Shares Outstanding-Basic 51,687,000 51,556,000 51,662,000 51,549,000
Weighted Average Shares Outstanding-Diluted 52,033,000 51,732,000 51,937,000 51,663,000
CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, December 31,
2004(UNAUDITED) 2003
Current Assets $ 287,292 $ 251,418
Property, Plant & Equipment, Net 551,160 565,722
Other Assets 43,782 40,960
Total Assets $ 882,234 $ 858,100
Current Liabilities $ 147,750 $ 115,004
Long-term Debt 161,833 162,174
Other Liabilities 215,559 230,606
Stockholders' Equity 357,092 350,316
Total Liabilities & Stockholders' Equity $ 882,234 $ 858,100
CONDENSED CONSOLIDATED STATEMENTS Twelve Months
OF CASH FLOW Ended December 31,
2004(UNAUDITED) 2003
Net Cash Provided by Operating Activities $ 70,737 $ 63,105
Cash Provided by (Used in) Investing Activities:
Capital Expenditures (29,565) (24,261)
Acquisitions (9,935) (8,518)
Proceeds on Property, Plant & Equipment Disposals 45 13
(39,455) (32,766)
Cash Provided by (Used in) Financing Activities:
Borrowings Under Credit Agreement 500 0
Payments Under Capital Lease Obligation (112) (89)
Dividends Paid (17,560) (17,527)
Proceeds from Stock Option Exercises 1,499 199
(15,673) (17,417)
Net Increase in Cash and Cash Equivalents $ 15,609 $ 12,922
Note 1. Effective March 3, 2003, the Company acquired certain assets of a
laminated papers producer. The acquisition was accounted for as a
purchase business combination and, accordingly, the purchase price has
been allocated using the fair values of the acquired receivables,
inventory, machinery and equipment, and identifiable intangible assets.
No goodwill was recorded as a result of this acquisition. The acquired
assets are included in the Printing & Writing business segment.
Note 2. During the second quarter of 2003, the Company's Towel & Tissue Group
reached a settlement of all claims of the parties in its previously
announced patent litigation. As a result of the settlement, the
Company recognized $4.2 million in pre-tax income as a fee for
licensing certain patented dispenser technologies.
Note 3. On October 21, 2004, the Company acquired the assets of the Brainerd,
Minnesota paper mill of the Missota Paper Company, LLC, for
approximately $9.9 million. The purchase price has been allocated
using the fair values of the acquired property, plant, and equipment.
The Company assumed no liabilities of the mill. No goodwill or other
intangible assets resulted from the transaction. The acquired assets
are included in the Printing & Writing business segment.
Note 4. Interim Segment Information
The Company's operations are classified into three principal reportable
segments: Printing & Writing, Specialty Products and Towel & Tissue,
each providing different products. Separate management of each segment
is required because each business unit is subject to different
marketing, production and technology strategies.
Printing & Writing produces a broad line of premium printing and
writing grades at manufacturing facilities in Brokaw, Wisconsin;
Groveton, New Hampshire; and Brainerd, Minnesota. Printing & Writing
also includes two converting facilities that produce laminated roll
wrap and related specialty finishing and packaging products, and a
converting facility that converts printing and writing grades.
Specialty Products produces specialty papers at its manufacturing
facilities in Rhinelander, Wisconsin; Mosinee, Wisconsin; and Jay,
Maine. Towel & Tissue produces a complete line of towel and tissue
products that are marketed along with soap and dispensing systems for
the "away-from-home" market. Towel & Tissue operates a paper mill in
Middletown, Ohio, and a converting facility in Harrodsburg, Kentucky.
Sales, operating profit, and asset information by segment is as
follows:
(in thousands, except ton data) DECEMBER 31, December 31,
2004(UNAUDITED) 2003
Segment Assets
Printing & Writing $ 299,694 $ 283,711
Specialty Products 324,408 334,079
Towel & Tissue 171,080 165,199
Corporate & Unallocated* 87,052 75,111
$ 882,234 $ 858,100
Three Months Twelve Months
Ended December 31,(unaudited) Ended December 31,
2004 2003 2004(UNAUDITED) 2003
Net Sales External Customers
Printing & Writing $ 100,987 $ 93,896 $ 404,859 $ 395,836
Specialty Products 102,153 90,585 410,206 362,935
Towel & Tissue 59,225 54,775 225,652 212,673
$ 262,365 $ 239,256 $1,040,717 $ 971,444
Operating Profit
Printing & Writing $ 392 $ 3,425 $ 10,038 $ 12,880
Specialty Products 6,404 2,566 18,434 6,586
Towel & Tissue 7,861 8,669 29,148 28,691
Total Reportable Segment Operating Profit 14,657 14,660 57,620 48,157
Corporate & Eliminations (4,416) (3,707) (15,896) (12,879)
Interest Expense (2,600) (2,580) (10,285) (10,188)
Other Income/(Expense), Net 456 71 939 90
Earnings Before Income Taxes $ 8,097 $ 8,444 $ 32,378 $ 25,180
Three Months Twelve Months
Ended December 31,(unaudited) Ended December 31,
2004 2003 2004(UNAUDITED) 2003
Depreciation, Depletion and Amortization
Printing & Writing $ 4,214 $ 4,255 $ 16,682 $ 17,211
Specialty Products 5,962 6,086 23,917 24,613
Towel & Tissue 4,627 4,574 18,177 18,218
Corporate & Unallocated 310 215 1,189 781
$ 15,113 $ 15,130 $ 59,965 $ 60,823
Tons Sold
Printing & Writing 89,114 85,145 362,265 359,712
Specialty Products 85,772 82,869 348,887 334,183
Towel & Tissue 38,311 39,126 151,903 150,845
213,197 207,140 863,055 844,740
<FN>
*Segment assets do not include intersegment accounts receivable, cash,
deferred tax assets and certain other assets which are not identifiable
with the segments.