Exhibit 99.1
WAUSAU PAPER ANNOUNCES FIRST-QUARTER RESULTS
MOSINEE, WIS...APRIL 25, 2006...Wausau Paper (NYSE:WPP) today reported a net
loss for the first quarter of $1.3 million, or $0.03 per share, compared with
net earnings of $1.9 million, or $0.04 per share, last year. Net sales rose
percent to $283.7 million, and shipments increased 1 percent to 224,000 tons.
First-quarter results reflect after-tax stock incentive charges of $0.02 per
share, including a cumulative effect charge of $0.01 per share related to the
adoption of Statement of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payments. Prior-year results included after-tax stock incentive
credits of $0.02 per share.
"Net sales reached record first-quarter levels with each of our three business
segments achieving year-over-year improvement," said Thomas J. Howatt,
president and CEO. "Much of this improvement is the result of progress made in
pursuing our proven business strategies - niche markets, product innovation,
benchmark customer service, and operational excellence. For the quarter,
revenues from products developed in the last three years exceeded our target of
25 percent. Production efficiencies improved 2 percent from a year ago, and
cost containment activities delivered meaningful benefits. Along with the
proven contributions from executing our strategies, we are beginning to see
market conditions strengthen, particularly compared with the weak levels of
late last year."
Specialty Products reported first-quarter operating profits of $2.4 million
compared with $3.9 million last year. Net sales increased 3 percent while
shipments declined 2 percent. "Selling price increases and mix gains could
only partially offset energy and other manufacturing cost increases, resulting
in a year-over-year decline in profitability," Mr. Howatt said. "Market
fundamentals are gradually improving with pricing leverage returning in this
sector. Combined with product development successes and strong operations,
this leverage is helping create positive profit momentum in our Specialty
Products business segment."
Printing & Writing reported first-quarter operating losses of $7.1 million
compared with losses of $4.6 million last year. Net sales and shipments
increased 7 percent and 4 percent, respectively. "While the first quarter
benefited from market and productivity gains compared with last year's fourth
quarter, results declined from year-earlier levels, in large part because of
significantly higher energy prices," commented Mr. Howatt. "Uncoated freesheet
markets have clearly improved from late 2005, with year-over-year demand
increasing solidly in the first quarter. These circumstances, coupled with
recent capacity closures and intense selling efforts, resulted in substantial
gains in our target markets, such as consumer products, where shipments
increased 27 percent."
Towel & Tissue operating profits reached record first-quarter levels of $9.0
million compared with operating profits of $7.9 million last year. Net sales
and shipments increased 11 percent and 6 percent, respectively. Mr. Howatt
stated, "Selling price increases, mix improvements and volume gains helped
drive profits. `Away-from-home' towel and tissue markets remain balanced with
first-quarter growth trending up about 2 percent. Executing our value-added
product strategy continues to deliver growth - in both sales and profitability
- - that exceeds the industry. Shipments of value-added and Green
Seal(reg-trade-mark) certified products increased 14 percent and 23 percent,
respectively."
Looking to the second quarter, Mr. Howatt said, "While fiber prices are
increasing modestly, energy prices have moderated from record levels of late
last year. Most encouraging, however, is the pricing leverage that is
beginning to return in our Printing & Writing and Specialty Products
businesses. This leverage, combined with sales mix gains and a seasonal
increase in demand, is expected to drive improvement as compared to the first
quarter. As a result, second-quarter earnings are expected to approximate
prior-year earnings of $0.06 per share, excluding 2005 pulp mill closure
charges."
Discussing the company's timberland sales and stock buy-back programs, Mr.
Howatt noted that approximately 700 acres were sold during the quarter for an
after-tax gain of $1 million and that approximately 75,000 shares of common
stock were repurchased during the quarter. "We will continue to execute
against our earlier timberland sales and stock repurchase plans as a means of
enhancing shareholder value," concluded Mr. Howatt.
Wausau Paper's first-quarter conference call is scheduled for 11:00 a.m. (EDT)
on Wednesday, April 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 May 3.
Wausau Paper produces fine printing and writing papers, technical specialty
papers, and "away-from-home" towel and tissue products. Green
Seal(reg-trade-mark) is a registered trademark of Green Seal, Inc., in
Washington D.C., and is used by permission.
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 under "Information Concerning Forward-Looking Statements" in Item 7
and in Item 1A of the company's Form 10-K for the year ended December 31, 2005.
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 MARCH 31, 2006
(in thousands, except share amounts)
CONDENSED CONSOLIDATED STATEMENTS Three Months
OF OPERATIONS (UNAUDITED) Ended March 31,
2006 2005
Net sales $283,663 $267,741
Cost of sales 261,338 244,606
Gross profit 22,325 23,135
Selling & administrative expense 20,976 17,527
Restructuring 132 0
Operating profit 1,217 5,608
Interest expense (2,713) (2,650)
Other income/(expense), net 42 115
(Loss) earnings before income taxes and
cumulative effect of a change in accounting principle (1,454) 3,073
(Credit) provision for income taxes (538) 1,137
(Loss) earnings before cumulative effect
of a change in accounting principle (916) 1,936
Cumulative effect of a change in accounting
principle (net of income taxes) (427) 0
Net (loss) earnings $ (1,343) $ 1,936
(Loss) earnings per share before cumulative effect
of a change in accounting principle (basic and diluted) $ (0.02) $ 0.04
Cumulative effect of a change in accounting
principle (net of income taxes) (0.01) 0
Net (loss) earnings per share (basic and diluted) $ (0.03) $ 0.04
Weighted average shares outstanding-basic 51,041 51,690
Weighted average shares outstanding-diluted 51,041 51,991
CONDENSED CONSOLIDATED BALANCE SHEETS (NOTE 1) March 31, December 31,
2006 2005
Current assets $285,243 $279,684
Property, plant and equipment, net 487,009 494,228
Other assets 47,251 46,601
Total Assets $819,503 $820,513
Current liabilities $137,100 $148,965
Long-term debt 170,536 161,011
Other liabilities 202,353 200,318
Stockholders' equity 309,514 310,219
Total Liabilities and Stockholders' Equity $819,503 $820,513
CONDENSED CONSOLIDATED STATEMENTS Three Months
OF CASH FLOW (UNAUDITED) Ended March 31,
2006 2005
Net cash (used in) provided by operating activities $(10,409) $(17,118)
Cash flows from investing activities:
Capital expenditures (4,912) (8,633)
Proceeds from property, plant and equipment disposals 1,655 0
Net cash used in investing activities (3,257) (8,633)
Cash flows from financing activities:
Borrowings of notes payable 9,484 0
Payments under capital lease obligation (19) (28)
Dividends paid (4,340) (4,394)
Proceeds from stock option exercises 1,405 0
Excess tax benefits related to stock options 94 0
Payments for purchase of company stock (967) 0
Cash provided by (used in) financing activities 5,657 4,422)
Net decrease in cash & cash equivalents $ (8,009) $(30,173)
Note 1. Balance sheet amounts at March 31, 2006, are unaudited. The December
31, 2005, amounts are derived from audited financial statements.
Note 2. Effective January 1, 2006, Wausau Paper adopted Statement of Financial
Accounting Standard No. 123 (revised 2004), "Share-Based Payment."
This accounting standard requires compensation cost relating to share-
based payment transactions be recognized in the financial statements.
We elected the modified prospective transition method to implement
this new standard. Share-based payment awards that are settled in
cash continue to be classified as a liability; however, rather than
remeasuring the award at the intrinsic-value each reporting period,
the award is remeasured at its fair value each reporting period. The
difference between the liability as previously computed (i.e.,
intrinsic value) and the fair value of the liability award on the date
of adoption, net of any related tax effects, is recorded as a
cumulative effect of a change in accounting principle.
Note 3. In July 2005, Wausau Paper announced plans to permanently close the
sulfite pulp mill at our Brokaw, Wisconsin, facility. The pulp mill
was closed in November 2005 and the related long-lived assets were
abandoned. Pre-tax restructuring expense related to certain assets
disposed as a direct result of the closure and other associated costs
were $0.1 million for the three months ended March 31, 2006.
Note 4. Interim Segment Information
Wausau Paper'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) March 31, December 31,
2006 2005
Segment assets (Note 1)
Specialty Products $331,855 $333,482
Printing & Writing 257,043 254,528
Towel & Tissue 178,387 175,134
Corporate & Unallocated* 52,218 57,369
$819,503 $820,513
Three Months
Ended March 31,
2006 2005
Net sales external customers (unaudited)
Specialty Products $121,492 $118,364
Printing & Writing 99,318 92,604
Towel & Tissue 62,853 56,773
$283,663 $267,741
Operating profit (loss) (unaudited)
Specialty Products $ 2,350 $ 3,940
Printing & Writing (7,105) (4,569)
Towel & Tissue 9,016 7,884
Corporate & Eliminations (3,044) (1,647)
$ 1,217 $ 5,608
Depreciation, depletion and amortization (unaudited)
Specialty Products $ 6,043 $ 6,208
Printing & Writing 3,078 4,048
Towel & Tissue 5,134 4,778
Corporate & Unallocated 303 287
$ 14,558 $ 15,321
Tons sold (unaudited)
Specialty Products 102,287 104,788
Printing & Writing 83,631 80,160
Towel & Tissue 38,289 36,287
224,207 221,235
<FN>
*Segment assets do not include intersegment accounts receivable, cash,
deferred tax assets and certain other assets which are not
identifiable with the segments.