MOSINEE, Wis. Feb. 4, 2008--Wausau Paper today reported a net loss for the fourth quarter of $27.6 million, or $0.55 per share, compared with net earnings of $7.3 million, or $0.14 per share, in the year-earlier period. Net sales increased 1 percent to a record $304.5 million, while shipments decreased 5 percent to 218,000 tons.

Fourth-quarter results include an after-tax charge of $28.8 million, or $0.58 per share, relating to the December 2007 closure of Printing & Writing's paper mill in Groveton, NH; timberland sales gains of $2.0 million, or $0.04 per share; stock incentive credits of $0.6 million, or $0.01 per share; and one-time state tax benefits of $1.2 million, or $0.02 per share. Prior-year fourth-quarter results included after-tax timberland sales gains of $4.9 million, or $0.10 per share, and stock incentive charges of $0.5 million, or $0.01 per share.

For the full-year 2007, Wausau Paper reported a net loss of $1.8 million, or $0.04 per share, compared with net earnings of $17.6 million, or $0.34 per share, in 2006. In addition to after-tax Groveton mill closure charges of $28.8 million, or $0.57 per share, 2007 results included after-tax timberland sales gains of $6.0 million, or $0.12 per share; one-time state tax benefits of $13.3 million, or $0.26 per share, primarily related to the January 1, 2007, restructuring of the company's subsidiaries; and stock incentive credits of $1.2 million, or $0.02 per share. Year-earlier results included after-tax timberland sales gains of $10.8 million, or $0.21 per share, and stock incentive charges of $1.8 million, or $0.04 per share. Net sales increased 4 percent in 2007 to $1.24 billion while shipments decreased fractionally to 917,000 tons.

"Net sales reached record levels in 2007, exceeding $1.2 billion for the first time in company history despite flat-to-declining demand in several of our markets," said Thomas J. Howatt, president and CEO. "In addition, meaningful progress was evident in several other critical areas. For example, sales gains from products developed within the previous three years exceeded our corporate goal of 25 percent by three percentage points, and production efficiencies improved for the seventh consecutive year. Despite this progress, fourth-quarter and full year results were disappointing as weakening demand, influenced by a slowing U.S. economy, and fiber cost increases adversely affected earnings."
Mr. Howatt continued, "During the fourth quarter we announced a three-part recovery plan to improve profitability in our Printing & Writing business and sold the unprofitable roll-wrap portion of our Specialty Products unit. These significant actions address underperforming portions of our business and reflect our commitment and determination to take the necessary steps to reestablish acceptable earnings."

The Specialty Products business reported a fourth-quarter operating loss of $2.7 million compared with an operating loss of $0.1 million last year. Net sales increased 1 percent as shipments declined 6 percent. "Fourth-quarter results were negatively impacted by increased fiber costs, weakness in demand for products sold into the housing and industrial sectors of the U.S. economy, and losses from the non-core roll wrap portion of this business," Mr. Howatt stated. "Despite market and cost pressures, our focus on strategic markets and product innovation continued to deliver meaningful progress as evidenced by growth in specialized portions of the food service packaging and release liner markets. In addition, the sale of the unprofitable roll-wrap business will allow us to focus on core products that drive enhanced product mix and profitability."
Printing & Writing reported a fourth-quarter operating loss of $52.0 million compared with a loss of $1.8 million last year while net sales and shipments declined 5 percent and 9 percent, respectively. Fourth-quarter results included pre-tax Groveton mill closure charges of $45.9 million, consisting primarily of non-cash charges related to depreciation of long-lived assets. "Although uncoated freesheet demand declined more than 3 percent in 2007, recent moves to rationalize capacity across the industry have resulted in broadly supported price increases in early 2008," said Mr. Howatt. "However, it is the execution of our three-part recovery plan that will drive long-term results. This plan, which includes the permanent closure of the Groveton mill, a sales and marketing effort that is focused on core products and brands, and select investment in cost reduction and capability enhancement opportunities, is expected to return this business unit to profitable levels later in 2008."

Towel & Tissue's fourth-quarter operating profits of $10.9 million compare to record profits of $12.5 million in the year-ago period. Net sales and shipments increased 11 percent and 7 percent, respectively. "While rapid input cost increases impacted operating margins in 2007, Towel & Tissue growth continues to outperform the 'away-from-home' market as shipments of higher-margin value-added products increased 14 percent despite nearly flat market demand. This growth is driven by innovative, value-added products such as our environmentally preferable DublNature(R) Green Seal(TM) certified products introduced in 2007," said Mr. Howatt. "The 'away-from-home' market remains in reasonable balance and, with wastepaper cost increases affecting most producers, first-quarter 2008 price increases have been announced across the industry. At the same time, we are expanding towel capacity and reducing manufacturing costs through a $31 million rebuild of a toweling machine in Middletown, Ohio."

The company sold approximately 1,800 acres of timberlands in the fourth quarter, continuing progress on its program to sell 42,000 acres of non-strategic timberlands. A total of 22,000 acres remains in the sales program. Also during the fourth quarter the company repurchased 521,000 shares of common stock at a cost of $4.9 million, and has approximately 543,000 shares remaining under a previous board authorization.

Commenting on the outlook for the first quarter of 2008, Mr. Howatt said, "Fiber prices continue to rise for all three businesses and signs of further economic weakness in the domestic economy add uncertainty to near-term demand. While execution of Printing & Writing's profit recovery plan will provide modest benefit in the first quarter, its impact is expected to build over the balance of the year. Meanwhile, our Towel & Tissue unit continues to outperform the market, and corrective measures in response to product specific economic weakness at our Specialty Products business are underway. As a result, we expect near-breakeven results in the first quarter, excluding timberland sales gains, charges associated with the closure of the Groveton mill and the impact of stock incentives."

Wausau Paper's fourth-quarter conference call is scheduled for 11:00 a.m. Eastern Time on Tuesday, February 5, and can be accessed through the company's Web site at http://www.wausaupaper.com under "Investor Information." A replay of the webcast will be available at the same site through February 12.