Sale of Paper’s premium print & color brands, select paper inventory and certain manufacturing equipment to Neenah Paper was completed on January 31, 2012. Sale proceeds of $21 million and the liquidation of working capital, net of mill closure costs, are expected to generate approximately $20 million in cash during 2012. Permanent closure of the Brokaw mill is expected by mid-year, marking the end of the Company’s material participation in print & color markets.
TIMBERLAND SALESDuring the fourth quarter the Company sold 80,200 acres of its northern Wisconsin timberlands for $42.9 million, generating an after-tax gain of $23.0 million. Available tax offsets are expected to effectively defer the tax obligations associated with the transactions for a period of up to six years. With the fourth-quarter sales, the Company concluded the timberland sales program initiated in 2005.
CONFERENCE CALLWausau Paper’s fourth-quarter conference call is scheduled for 11:00 a.m. (EST) on Tuesday, February 7, and can be accessed through the Company’s website at www.wausaupaper.com under “Investors.” A replay of the webcast will be available at the same site through February 14.
About Wausau Paper:Wausau Paper produces and markets specialty papers for industrial, commercial and consumer end markets as well as a complete line of away-from-home towel and tissue products. The company is headquartered in Mosinee, Wisconsin, and is listed on the NYSE under the symbol WPP. To learn more about Wausau Paper visit: 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 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, 2010. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
|Interim Report - Quarter Ended December 31, 2011|
|(in thousands, except per share amounts)|
|Condensed Consolidated Statements of Operations||Three Months||Twelve Months|
|Ended December 31, (unaudited)||Ended December 31,|
|Cost of sales||269,365||229,619||975,976||925,043|
|Gross (loss) profit||(16,687||)||30,598||58,598||130,645|
|Selling & administrative expenses||20,438||28,292||78,482||86,804|
|Operating (loss) profit||(43,329||)||2,306||(26,088||)||43,841|
|Loss on early extinguishment of debt||-||-||(666||)||-|
|Other income, net||11||49||66||234|
|(Loss) earnings before income taxes||(44,753||)||635||(33,538||)||37,488|
|(Credit) provision for income taxes||(16,035||)||(14,573||)||(11,840||)||632|
|Net (loss) earnings||$||(28,718||)||$||15,208||$||(21,698||)||$||36,856|
|Net (loss) earnings per share (basic and diluted)||$||(0.58||)||$||0.31||$||(0.44||)||$||0.75|
|Weighted average shares outstanding - basic||49,175||48,971||49,160||48,965|
|Weighted average shares outstanding - diluted||49,175||49,369||49,160||49,292|
|Condensed Consolidated Balance Sheets||December 31,||December 31,|
|Property, plant, and equipment, net||369,836||380,801|
|Total Liabilities and Stockholders' Equity||$||678,830||$||677,609|
|Condensed Consolidated Statements of Cash Flows||Twelve Months|
|Ended December 31,|
|Cash flows from operating activities:|
|Net (loss) earnings||$||(21,698||)||$||36,856|
|Provision for depreciation, depletion, and amortization||55,815||56,529|
|Gain on sale of assets||(36,202||)||(9,059||)|
|Impairment of long-lived assets||58,837||536|
|Non-cash inventory, spare parts and other writedowns||13,093||-|
|Deferred income taxes and other non-cash items||(20,454||)||(18,587||)|
|Loss on early extinguishment of debt||666||-|
|Changes in operating assets and liabilities:|
|Accounts payable and other liabilities||(1,558||)||(6,424||)|
|Net cash provided by operating activities||64,484||22,753|
|Cash flows from investing activities:|
|Grants received for capital expenditures||610||1,838|
|Proceeds from property, plant, and equipment disposals||43,830||10,653|
|Net cash used in investing activities||(33,623||)||(30,499||)|
|Cash flows from financing activities:|
|Net payments of commercial paper||(14,590||)||(7,274||)|
|Net payments under credit agreement||-||(33,000||)|
|Borrowings under credit agreement||36,250||-|
|Payments under credit agreement||(36,250||)||-|
|Issuances of notes payable||50,000||50,000|
|Payments under notes payable obligations||(35,000||)||(28||)|
|Payment of premium on early extinguishment of debt||(708||)||-|
|Proceeds from stock option exercises||-||229|
|Net cash (used in) provided by financing activities||(6,203||)||8,452|
|Net increase in cash & cash equivalents||$||24,658||$||706|
|Note 1. On December 16, 2011, we announced that we had entered into definitive agreements for the sale of nearly all of our remaining timberland holdings, totaling approximately 80,200 acres located in Northern Wisconsin. The timberland sales transactions were closed on December 23, 2011, and resulted in a pre-tax gain, net of related selling expenses, of $35.7 million. The gain related to the sale of timberlands is recorded in cost of sales for the three and twelve months ended December 31, 2011.|
Note 2. In December 2011, we announced that our Board of Directors had approved the sale of our premium Print & Color brands, and the closure of our Brokaw, Wisconsin paper mill. The sale, to Neenah Paper, Inc., closed on January 31, 2012. The Brokaw mill is expected to be permanently closed by mid-year, and will affect approximately 450 hourly and salaried jobs. The cost of sales for the three and twelve months ended December 31, 2011, includes $75.6 million in pre-tax charges primarily as a result of impairment charges on mill assets, an adjustment of mill inventory and spare parts to net realizable value, and a curtailment charge related to an hourly defined benefit pension plan. Pre-tax restructuring expense related to severance and benefit continuation costs and other associated closure costs was $6.2 million for the three and twelve months ended December 31, 2011. Sale of the premium Print & Color brands, select paper inventory, and certain manufacturing equipment to Neenah Paper was completed in late January, generating proceeds of $20.5 million. We expect to incur additional pre-tax closure charges of approximately $5 million in 2012.
|Note 3. During the second quarter of 2011, we settled our obligations related to the $35.0 million unsecured private placement notes scheduled to expire in August 2011. The settlement of these obligations resulted in a loss on early extinguishment of debt of $0.7 million in the year ended December 31, 2011, which reflects the premiums paid to retire the unsecured private placement notes, net of unamortized premiums and issuance costs.|
Note 4. In December 2010, we were approved by the Internal Revenue Service ("IRS") to be registered as a producer of cellulosic biofuel under the Internal Revenue Code. The cellulosic biofuel credit was equal to $1.01 per gallon of black liquor produced in our pulp and paper mill operations. After approval by the IRS, we made the decision to convert the alternative fuel mixtures credit to the cellulosic biofuel credit and claimed the credit for all black liquor gallons produced in 2009. The conversion to the cellulosic biofuel credit resulted in a credit for income taxes in the fourth quarter of 2010 of $13.6 million, and a pre-tax charge to cost of sales of $1.4 million.
|Note 5. In the fourth quarter of 2010, we incurred pre-tax charges of $3.8 million due to a rate adjustment associated with a natural gas transportation contract for a former manufacturing facility in Groveton, New Hampshire. The pre-tax charge is included in selling and administrative expenses in the fourth quarter of 2010.|
|Note 6. In the fourth quarter of 2010, we incurred a pre-tax curtailment charge of $3.1 million due to the freezing of benefits associated with a cash balance pension plan. The pre-tax charge is included in selling and administrative expenses in the fourth quarter of 2010.|
|Note 7. Interim Segment Information|
|We have evaluated our disclosures of our business segments in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 280-10, and as a result we have classified our operations into two principal reportable segments: Tissue and Paper, each providing different products. Separate management of each segment is required because each business unit is subject to different marketing, production, and technology strategies.|
|In 2011 and 2010, the Tissue segment produced a complete line of towel and tissue products that are marketed along with soap and dispensing systems for the "away-from-home" market. Tissue operates a paper mill in Middletown, Ohio and a converting facility in Harrodsburg, Kentucky. The Paper segment produced specialty and fine printing and writing papers for industrial, commercial and consumer end markets. These products were produced at manufacturing facilities located in Brainerd, Minnesota and in Rhinelander, Mosinee, and Brokaw, Wisconsin.|
|Following is asset information, sales, operating profit (loss), and other significant items by segment.|
|(in thousands, except ton data)||
|Corporate & Unallocated*||86,632||37,109|
Ended December 31, (unaudited)
Ended December 31,
|Net sales external customers|
|Operating profit (loss)|
|Corporate & Eliminations||30,170||(8,027||)||18,779||(14,610||)|
|Depreciation, depletion, and amortization|
|Corporate & Unallocated||716||782||2,561||2,616|
|*Segment assets do not include intersegment accounts receivable, cash, deferred tax assets, and certain other assets which are not identifiable with the segments.|
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