Exhibit 99.1
WAUSAU PAPER ANNOUNCES SECOND-QUARTER EARNINGS
MOSINEE, WIS..JULY 25, 2005..Wausau Paper (NYSE:WPP) today reported a net loss
for the second quarter of 2005 of $2.7 million, or $0.05 per share, compared to
earnings of $3.7 million, or $0.07 per share, last year. Net sales rose 4
percent to $275.3 million, and shipments increased less than 1 percent to
222,000 tons.
Second-quarter operating results included after-tax charges of $6.0 million, or
$0.12 per share, related to the previously announced closure of Printing &
Writing's sulfite pulp mill in Brokaw, Wisconsin, and after-tax losses of $2.4
million, or $0.05 per share, related to operation of its recently acquired
paper mill in Brainerd, Minnesota. Also included in the current quarter were
after-tax stock incentive credits of $0.5 million, or $0.01 per share, compared
with charges of $1.3 million, or $0.02 per share last year.
For the first half of 2005, the Company reported a net loss of $0.8 million, or
$0.01 per share, compared with net earnings of $7.2 million, or $0.14 per
share, during the comparable period in 2004. In addition to sulfite pulp mill
closure costs of $0.12 per share, results for the first half of 2005 included
after-tax losses of $5.6 million, or $0.11 per share, for the Brainerd mill,
and stock incentive credits of $0.03 per share, compared with charges of $0.03
per share last year. Net sales increased 5 percent to $543 million while
shipments increased 2 percent to 443,000 tons.
In regard to second-quarter results, Thomas J. Howatt, president and CEO,
stated, "Top-line growth was achieved despite challenging business conditions,
demonstrating the value of our niche market strategy. Our focused product
development efforts -- and the continued introduction of new products such as
Towel & Tissue's OptiCore{trademark} tissue and dispensing system and Printing
& Writing's Exact Ice{trademark} high-brightness paper -- resulted in revenues
from products developed within the last three years exceeding our corporate
target of 25 percent."
Specialty Products reported second-quarter operating profits of $3.8 million,
compared with $4.8 million last year. Net sales and shipments declined 4
percent and 8 percent, respectively. "Selling price increases and mix
enhancement could only partially offset the impact of reduced sales volume and
higher manufacturing costs -- most notably market pulp and energy," Mr. Howatt
explained. He pointed out that 2004 shipments were a record for any quarter.
Printing & Writing reported second-quarter operating losses of $13.1 million,
compared with operating profits of $0.6 million last year. Net sales and
shipments increased 8 percent and 10 percent, respectively. Second-quarter
results included pre-tax pulp mill closure charges of $9.5 million, consisting
primarily of non-cash charges related to the write-down of inventory and
accelerated depreciation of long-lived assets. In addition, second-quarter
results included operating losses of $3.8 million at Brainerd. "Our Printing &
Writing business continues to face weak market conditions as uncoated freesheet
demand declined in each of the first six months of 2005," Mr. Howatt commented.
"Despite this weakness, we grew market share while increasing shipments by 10
percent, remaining focused on building the sales volume and product mix
necessary to profitably position Brainerd. Success in developing new products
and reducing costs are critical to improving Printing & Writing's financial
performance. We are actively pursuing both -- as evidenced by the recent
introduction of Exact Ice and the announced changes at Brokaw -- to help
achieve this improvement."
Towel & Tissue's second-quarter operating profits increased 22 percent to $9.9
million from $8.1 million last year. Net sales and shipments increased 16
percent and 7 percent, respectively. "Despite only modest market growth, our
Towel & Tissue business posted impressive sales gains in the first half of 2005
including a 5 percent increase in total shipments and 9 percent gain in higher-
margin value-add products," Mr. Howatt said. "Together with improved selling
prices, these gains more than offset higher purchased parent roll costs,
helping drive operating profits to record second-quarter levels."
Looking to the third quarter, Mr. Howatt noted, "Towel and tissue market
conditions remain solid while demand for specialty products and printing papers
has clearly softened. Uncoated freesheet markets remain the industry's weakest
segment with no sign of near-term improvement and, although market pulp costs
have eased slightly, energy and chemical costs remain at elevated levels. We
expect third-quarter earnings, assuming continued improvement at Brainerd, to
only modestly exceed second-quarter levels of $0.06 per share, excluding
sulfite pulp mill charges."
Wausau Paper's second-quarter conference call is scheduled for 11:00 a.m. (EDT)
on Tuesday, July 26, 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 August 2.
Wausau Paper produces fine printing and writing papers, technical specialty
papers, and "away-from-home" towel and tissue products. To learn more about
Wausau products go to www.wausaupaper.com.
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,
2004. The Company assumes no obligation to update or supplement forward-
looking statements that become untrue because of subsequent events.
(tables follow)
WAUSAU PAPER
INTERIM REPORT - QUARTER ENDED JUNE 30, 2005
(in thousands, except share amounts)
CONDENSED CONSOLIDATED STATEMENTS Three Months Six Months
OF OPERATIONS (UNAUDITED) Ended June 30, Ended June 30,
2005 2004 2005 2004
Net sales $275,291 $264,109 $543,032 $515,924
Cost of sales 258,445 235,973 503,051 461,090
Gross profit 16,846 28,136 39,981 54,834
Selling & administrative expense 18,376 19,754 35,903 38,638
Restructuring 177 0 177 0
Operating profit (loss) (1,707) 8,382 3,901 16,196
Interest expense (2,687) (2,550) (5,337) (5,077)
Other income/(expense), net 122 98 237 292
Earnings (loss) before income taxes (4,272) 5,930 (1,199) 11,411
Provision (credit) for income taxes (1,581) 2,193 (444) 4,222
Net earnings (loss) $ (2,691) $ 3,737 $ (755) $ 7,189
Net earnings (loss) per share-basic $ (0.05) $ 0.07 $ (0.01) $ 0.14
Net earnings (loss) per share-diluted $ (0.05) $ 0.07 $ (0.01) $ 0.14
Weighted average shares outstanding-basic 51,589,000 51,663,000 51,640,000 51,640,000
Weighted average shares outstanding-diluted 51,589,000 51,929,000 51,640,000 51,867,000
CONDENSED CONSOLIDATED BALANCE SHEETS (NOTE 1) JUNE 30, December 31,
2005 2004
Current assets $287,871 $287,292
Property, plant & equipment, net 536,347 551,160
Other assets 45,812 43,782
Total Assets $870,030 $882,234
Current liabilities $148,022 $147,750
Long-term debt 161,449 161,833
Other liabilities 215,604 215,559
Stockholders' equity 344,955 357,092
Total Liabilities & Stockholders' Equity $870,030 $882,234
CONDENSED CONSOLIDATED STATEMENTS Six Months
OF CASH FLOW (UNAUDITED) Ended June 30,
2005 2004
Net cash (used in) provided by operating activities $ (4,498) $40,085
Cash flows from investing activities:
Capital expenditures (15,631) (9,471)
Proceeds on property, plant & equipment disposals 222 12
Cash used in investing activities (15,409) (9,459)
Cash flows from financing activities:
Payments under capital lease obligation (47) (55)
Dividends paid (8,787) (8,773)
Payments for purchase of company stock (2,738) 0
Proceeds from stock option exercises 0 1,279
Cash used in financing activities (11,572) (7,549)
Net (decrease) increase in cash & cash equivalents $(31,479) $23,077
Note 1. Balance sheet amounts at June 30, 2005, are unaudited. The December
31, 2004, amounts are derived from audited financial statements.
Note 2. Pulp Mill Closure
In July 2005, the Company announced plans to permanently close the
sulfite pulp mill at its Brokaw, Wisconsin, facility. The pulp mill
closure is expected to be substantially completed by the end of 2005
and will result in the elimination of approximately 60 jobs, or 11
percent of the facility's workforce. The related long-lived assets
will be abandoned. The cost of sales for the period ended June 30,
2005, as reflected in the Condensed Consolidated Statements of
Operations, include $9.3 million in pre-tax charges for accelerated
depreciation and an adjustment of pulp mill inventory to net realizable
value. Restructuring expense for the period ended June 30, 2005,
reflects a pre-tax charge of $0.2 million for certain assets disposed
as a direct result of the closure. Additional pre-tax closure charges
of approximately $35 million are expected to be recognized over the
next 12 months, with $23 million in the third quarter of 2005, $11
million in the fourth quarter of 2005, and $1 million in the first half
of 2006.
Note 3. Interim Segment Information
The Company has reclassified certain prior-year interim segment
information to conform to the 2005 presentation. The reclassification
is the result of a reporting change, effective January 1, 2005, for two
converting facilities from the Printing & Writing segment to the
Specialty Products segment.
The Company's operations are classified into three principal reportable
segments: Specialty Products, Printing & Writing, 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.
Specialty Products produces specialty papers at its manufacturing
facilities in Rhinelander, Wisconsin; Mosinee, Wisconsin; and Jay,
Maine. Specialty Products also includes two converting facilities that
produce laminated roll wrap and related specialty finishing and
packaging products. 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 a converting facility that converts
printing and writing grades. 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) JUNE 30, December 31,
2005 2004
Segment assets (Note 1)
Specialty Products $346,207 $342,724
Printing & Writing 290,909 281,378
Towel & Tissue 173,503 171,080
Corporate & Unallocated* 59,411 87,052
$870,030 $882,234
Three Months Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
Net sales external customers (unaudited)
Specialty Products $ 113,981 $ 118,528 $ 232,345 $ 232,665
Printing & Writing 95,246 88,424 187,850 175,319
Towel & Tissue 66,064 57,157 122,837 107,940
$ 275,291 $ 264,109 $ 543,032 $ 515,924
Operating profit (loss) (unaudited)
Specialty Products $ 3,829 $ 4,760 $ 7,769 $ 9,743
Printing & Writing (13,100) 586 (17,669) 1,605
Towel & Tissue 9,922 8,131 17,806 13,432
Corporate & Eliminations (2,358) (5,095) (4,005) (8,584)
$ (1,707) $ 8,382 $ 3,901 $ 16,196
Depreciation, depletion and amortization (unaudited)
Specialty Products $ 6,209 $ 6,266 $ 12,417 $ 12,584
Printing & Writing 7,376 3,883 11,424 7,766
Towel & Tissue 4,902 4,506 9,680 9,002
Corporate & Unallocated 284 285 571 570
$ 18,771 $ 14,940 $ 34,092 $ 29,922
Tons sold (unaudited)
Specialty Products 100,404 109,704 205,192 216,339
Printing & Writing 80,411 72,903 160,571 146,093
Towel & Tissue 41,266 38,710 77,553 74,133
222,081 221,317 443,316 436,565
<FN>
*Segment assets do not include intersegment accounts receivable, cash,
deferred tax assets and certain other assets which are not identifiable
with the segments.