WPP plc
Q4 2008 Earnings Call Transcript

Published: 10 Feb 2009

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Wausau Paper 2008 Fourth Quarter and Year-End Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator instructions). And as a reminder, this conference is being recorded. I would now like to turn the conference over to Perry Grueber. Please go ahead.

[Perry Grueber:]

Thank you, Mary. Good morning, everyone. Thank you for joining us for the Wausau Paper fourth quarter 2008 analyst and investor call. I am pleased to be here today with Tom Howatt, President and Chief Executive Officer of Wausau Paper and Scott Doescher, Executive Vice President and Chief Financial Officer, Those of you viewing the webcast of this call will note we've provided slides to summarize and highlight key elements of our presentation. Commonly requested data points and reconciliations of non-GAAP financial measures to GAAP are presented in the appendix. This morning we will be discussing Wausau Paper's fourth quarter financial results, which we announced yesterday afternoon. Tom will start with a few opening remarks and then discuss the quarterly performance of the Corporation and each of our three business segments. He will highlight market conditions and summarize the steps we've taken to maintain and improve performance in the present recessionary environment. Following those comments, Scott will provide a high level financial review, touch on a few often asked for data points and provide an update on key elements of our balance sheet strategy. Tom will then conclude our prepared remarks this morning with our outlook for the first quarter of 2009, after which we would be happy to address any questions you might have. Before we start, I must remind you that statements made during this conference call, other than those that refer to past events and results are forward-looking statements made pursuant to the Safe Harbor provisions of the Securities Reform Act of 1995. Such statements, including those relating to expectations concerning earnings and price increases involve risks and uncertainties that may cause results to differ materially from those set forth during this discussion. Among other things, these risks and uncertainties include the risks and assumptions described in Item 1A and Item 7 of the company's Form 10-K for the year ended December 31, 2007. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. With those formalities out of the way, I will now turn the call over to Tom Howatt. Tom?

[Thomas J. Howatt:]

Good morning everyone. I will begin this morning with a few comments about market conditions and the steps we are taking to optimize results during a difficult recession. Business conditions deteriorated rapidly in the fourth quarter with abrupt demand declines for both printing and writing and specialty grades and with away-from-home tissue demand flat at best. As we approached the midpoint of the first quarter, we see no evidence of recovery in any of our core markets. As a result, we have taken market-related downtime to match capacity with demand where appropriate and we have implemented a series of initiatives focused on improving our cost structure and cash generation capabilities. We have reduced our salaried workforce by 7%, implemented a plan to reduce fixed costs by $6 million over the first half of the year and are targeting a $15 million reduction in working capital by the end of the third quarter. Adjusted fourth quarter earnings of $0.03 per share were significantly improved over a prior year loss of $0.05 per share. While volume was significantly impacted by recessionary business conditions, our recent restructuring efforts, coupled with a focus on mix improvement in core markets provided a measure of pricing momentum, leading to improve results. Despite exceptionally difficult market conditions, Printing & Writing succeeded in posting a second consecutive profitable quarter in Q4. Product mix gains coupled with pricing leverage achieved as we exited commodity-related business have driven solid margin improvement over the past year. With Uncoated Freesheet demand declining at a dramatic pace in the fourth quarter, Printing & Writing scheduled 7300 tons of market-related downtime to control inventories to target levels. While fiber and energy represented a headwind for the business for much of the year, these circumstances had reversed by year-end, providing a significant benefit to the business. The improvement in the financial performance of Printing and Writing is directly attributable to the execution of our recovery plan for the business initiated in late 2007. The initial phase of the recovery plan, closure of the Groveton mill and establishment of a new East Coast distribution center was completed last spring. The second phase of the recovery plan, a renewed marketing focus on core products and brands, continues to gain momentum and has been well received by our customer base. The third component of the recovery plan, select investment in our facilities to drive an improved cost structure is also well underway with over $20 million committed collectively to a fiber handling system at Brokaw and our converting and distribution consolidation project that will provide substantial benefit by the end of 2009. Recessionary forces most dramatically influenced our Specialty Products business in the fourth quarter as demand in several core markets declined rapidly. In response to these conditions, we scheduled nearly 9000 tons of market downtime in the quarter to keep inventories at appropriate levels. As previously announced, we also permanently idled our release liner machine at Jay, Maine in December, removing 40,000 tons of high cost capacity. We believe our restructuring initiatives combined with our renewed focused on our four core markets of tape, liner, food and industrial grades are providing a significant benefit for the business as evidenced by recent pricing gains. Operating margins at Towel & Tissue improved to their highest level of the year in the fourth quarter, benefiting from favorable product mix and an improving cost structure. Despite a flat demand trend and away from home markets, Towel & Tissue achieved growth of 9% in higher margin value-added grades and full year growth of nearly 2%. We continue to believe that our focus on proprietary dispensing systems and Green Seal-certified products will drive above market growth in this business. The $31 million rebuild of our towel machine at Middletown, Ohio is underway as we speak with total downtime expected to be approximately three weeks. Once the ramp up period for the project is complete, we'll achieve a capacity gain of 16,000 tons of toweling and a reliable manufacturing base for further growth of our Green Seal-certified grades. Scott Doescher will now provide further detail on our financial statements. Scott?

[Scott P. Doescher:]

Thank you, Tom. I'll begin by providing several financial highlights for the quarter. As Tom mentioned, the economic downturn resulted in significant fourth quarter demand weakness across our three business segments with the most significant declines occurring in Specialty Products and Printing & Writing. As a result, we took approximately 16,000 tons of market-related downtime during the period, affecting net earnings by approximately $0.07 per share. As noted, selling prices remained relatively stable in the fourth quarter despite demand weakness. Business conditions also influenced the price of most commodity products during the quarter. Specifically, fiber and energy prices declined $10 million as compared to the third quarter, helping to offset the impact of seasonal and recession-related demand weakness. Fourth quarter results included $5.8 million in pre-tax charges related to the shutdown of a paper machine at Specialty's Jay facility. Machine shutdown charges are now essentially complete with charges of less than 100,000 expected in 2009. Shutdown of the Jay machine was a continuation of significant restructuring actions taken in 2008 to improve the competitive position of our Specialty Products and Printing & Writing business units. During the year, we also completed the closure of Specialty's unprofitable roll-wrap business, completed the closure and sale of Printing & Writing's Groveton mill and announced the closure of Printing & Writing's Appleton facility in connection with the converting and distribution consolidation initiative. These actions, while resulting in one-time pre-tax charges of $33.8 million in 2008, have improved the profitability and competitiveness of these business units. As expected, capital expenditures increased toward the end of 2008 with fourth quarter and full year spending totaling $24 million and $48 million respectively. Two high return major capital projects, the $31 million towel machine rebuild at Middletown and the $15 million fiber handling project at Brokaw drove spending. I would like to briefly discuss two earnings reconciliation schedules. The first compares fourth quarter 2007 adjusted losses of $0.05 per share with fourth quarter 2008 adjusted earnings of $0.03 per share. Compared with last year, fourth quarter selling prices and product mix improved the equivalent of $0.38 per share with selling price increases accounting for approximately 80% of this total. Although Printing & Writing registered the strongest gains, price and mix improved in each of our business segments. Although improved sales mix increased material costs by $0.06 per share, the higher cost was more than offset by additional revenues. Lower fourth quarter shipments resulted in an unfavorable sales volume variance of about... of approximately $0.05 per share. Although fiber prices declined sharply late in the year, fourth quarter costs were $0.02 per share higher than last year as lower market pulp and waste paper prices could not fully offset the impact of increased Towel & Tissue parent rolls costs. Fourth quarter energy prices were $0.07 per share higher than 2007 with natural gas and coal costs accounting for more than half of the increase. As mentioned, Specially Products and Printing & Writing took market-related downturn during the fourth quarter to match production capacity with reduced customer demand. Although unfavorably affecting earnings by $0.07 per share, disciplined management of our production capacity has allowed us to control inventories and position our businesses to meet challenging market conditions in early 2009. The second reconciliation compares third quarter 2008 adjusted earnings of $0.08 per share with fourth quarter adjusted results. Compared with the third quarter, selling prices and product mix improved $0.07 per share while mix-related material use increased costs by $0.03 per share. Fourth quarter sales volumes were impacted by seasonal and recession-related demand weakness as order volumes declined significantly over the last month and a half of the year. As a result, earnings declined by $0.09 per share on a sequential basis. Declining fiber prices resulted in a favorable quarter-to-quarter variance of $0.10 per share. Market pulp accounted for most of this variance with prices declining approximately 9% or the equivalent of $0.08 per share. Energy prices declined $0.03 per share as compared to the third quarter with natural gas accounting for two-thirds of this total. And finally, market-related and seasonal downtime including both holiday and scheduled maintenance affected the fourth quarter by a combined $0.11 per share compared with the third quarter. Our balance sheet remains solid at year end, despite somewhat higher debt levels associated with increased capital spending and cash costs related to facility closures. Net working capital increased approximately $6 million year-over-year with lower current year cash and receivables balances more than offset by higher inventory levels and reduced payables and other current liabilities. Consistent with prior years, we maintained strong working capital efficiencies in 2008 with average DPO, DSO and inventory turns maintained at prior year levels. Long-term debt increased by $52.6 million during the year, due primarily to higher capital spending and cash costs associated with the restructuring initiatives mentioned earlier. Shareholders equity declined to $207.6 million as we absorbed approximately $21 million of closure-related charges during the year. In addition, we absorbed a $31.5 million after-tax charge due to changes in pension and post-retirement benefit plan valuations, increasing accumulated other comprehensive loss to $57.7 million at year end. The pension charge, which was somewhat higher than expected due to a late year interest rate change, increased our year-end debt to capital ratio by 3.5 percentage points. At year end, $52.5 million was drawn against our $165 million bank credit agreement. This agreement, which expires in 2011, provides the line of credit that backs up the $15.9 million in commercial paper and $19 million in industrial development revenue bonds outstanding at year end. Our senior notes come due in two tranches with $68.5 million of our Series B notes due in August 2009 and $35 million of our Series A notes due in 2011. Long-term debt levels are expected to increase modestly in early 2009 as we complete the $31 million towel machine rebuild before declining later in the year. With this in mind, we will carefully manage cash and target reductions in working capital as we prepare for payment of the $68.5 million of notes in August. While we are planning to manage within the capacity provided us by the current bank credit agreement, we are also likely to pursue refinancing options for a portion of these notes to provide additional credit cushion. Pension assets declined during 2008, due largely to a sharp drop in U.S. and world equity markets, resulting in the previously mentioned charge against shareholders' equity during the fourth quarter. Pension contributions averaged $16 million from 2002 to 2008, well above the minimum required funding levels. In comparison, we expect contributions to our qualified and non-qualified plans to total a very manageable $11 million in 2009. Slide 16 quantifies for you our performance against each of our loan covenants. We remain in full compliance with all loan covenants at year end with comfortable cushions in both our interest coverage and leverage ratios. As mentioned during our last conference call, we expected our minimum net worth cushion to narrow during the fourth quarter, due primarily to non-recurring charges related to facility closures and pensions. Actual pension and post-retirement charges were, however, somewhat higher than earlier projected, due to late year changes in the benchmark interest rates used to establish certain valuation assumptions. As a result, our net worth cushion narrowed to approximately $7 million at year-end. We expect to remain in full compliance with all loan covenants and are currently working with both our bank group and senior note holders with the intent of amending both agreements to provide additional operating room under the net worth covenant. In 2008, we continued progress with our plan announced in 2005 to sell 42,000 acres of non-strategic timberland. Although the pace of sales slowed due to economic conditions, we continued our trend of delivering strong valuations for the land sold. During 2008, we sold approximately 4600 acres at an average selling price exceeding $1500 per acre. Since the inception of the sales program, we have sold 25,000 acres at an average selling price of $1564 per acre. A total of 17,000 acres remains in the sales program with another 78,000 acres of strategic lands retained on our balance sheet. We look forward to 2009 with several priorities in clear focus. First, we are scheduled to complete several major high return capital projects during the year with the $31 million towel machine rebuild currently underway. These projects improve the cost position of our Towel & Tissue and Printing & Writing businesses and do not rely on improved market conditions to deliver returns. These strategic projects represent most of our expected 2009 capital spending of $45 million. As Tom discussed, we recently implemented initiatives to reduce spending and generate cash. These initiatives include trimming fixed manufacturing and administrative spending by $6 million over the first half of year while reducing our salaried workforce by approximately 7%. At the same time, we are targeting a $15 million reduction in inventory levels by the end of the third quarter, freeing cash to fund capital projects and pay down debt. I will now return the call to Tom to discuss our fourth quarter outlook. Tom?

[Thomas J. Howatt:]

In the face of severe recessionary business conditions, Wausau Paper has taken the necessary and aggressive steps to restructure the business for improved results. While the ultimate depth and duration of the recession are uncertain, we have confidence in our strategies for each of our business segments. With respect to the first quarter, we expect results from operations to approximate breakeven levels, exclusive of the impact that of a $0.04 per share expense associated with our towel machine rebuild. We will be happy to answer any questions at this time.

[Operator:]

Thank you. (Operator Instructions). Our first question is from the line Mark Wilde from Deutsche Bank. Please go ahead.

[Mark Wilde:]

Good morning, Tom. Good morning, Scott, Perry.

[Thomas Howatt:]

Good morning, Mark.

[Scott Doescher:]

Hi Mark.

[Mark Wilde:]

Tom, I wondered, can you, just starting off, can you talk a little bit about the year-over-year decline in the tissue volumes, whether that's the market, something with you guys or whether you kind of -- you made a decision to move away from some parts of the market there?

[Thomas Howatt:]

I thank your latter comment is really fairly accurate in terms of the action that we've taken. We ultimately made the decision in the latter portion of the year to hold price and we chose not to pursue some business that ultimately was in the more commoditized segments of that marketplace, deteriorating from a price standpoint. If you look at the performance for the quarter, you would see that our higher margin value-added grades grew business high single digit percentages. At the same time, the standard or commoditized grades fell off significantly. So that ultimately was what drove the decline in overall volume for the quarter.

[Mark Wilde:]

Tom, can you talk at all about sort of what type of reductions you are seeing in price in some of those commoditized grades?

[Thomas Howatt:]

Well I think what's happened here is as parent roll pricing escalated through 2008, it put us quite frankly in a position where we just felt there wasn't sufficient margin left. So I don't know that it was so much that there was a significant decline in absolute pricing as it was cost pressures as parent rolls moved up, put us in a position where margins were insufficient to pursue the volume.

[Mark Wilde:]

Okay. And then if we can just switch over to the two paper businesses, can give us an estimate of sort of what you see going on in the niche markets that you are in? Because sometimes it's kind of hard from the outside to get a real good sense of what exactly your niches look like from a volume perspective. And maybe you could overlay that by kind of breaking apart what you view as cyclical and what you view as structural in terms of generating those numbers.

[Thomas Howatt:]

We are in the midst of an extraordinary recessionary environment for many of the grades, particularly as it relates to the specialty side of the business. Products related to housing, to industry and to construction have fallen off dramatically. And that's principally grades such as tape, to a lesser extent liner. But those types of grades have fallen off quite dramatically. Industrial grades such as steel interleaver that are directly related to the steel markets, siding facer related to the housing markets and construction. Some of those markets are off as much as 30% to 50% from what would be typical run rates for those businesses. So that to me, that is what I would view as a cyclical circumstance that we are dealing with in those businesses. I think that the numbers we are seeing in terms of decline over the last 60 to 90 days perhaps have an element of inventory destocking associated with them. I think all our customers are absolutely trying to get the coverage there at this point. And so I think that what we are seeing in terms of drop off is probably beyond what the demand decline might be, but is really a part of a destocking effort at this point, because there is simply no visibility in terms of demand... future demand in these markets.

[Mark Wilde:]

Okay. In Printing & Writing, I mean I guess what I am thinking about there is just sort of the trend in grades like text and cover and opaques versus sort of what the cycle is doing.

[Thomas Howatt:]

If you look at the full year for 2008, the overall uncovered free sheet market was down about 8%. Probably equal 2001 for magnitude of decline. If you were to look within that marketplace, you would perhaps see a greater decline in some of those premium markets, text and cover type markets. And that is in part what has driven our approach to pursue some of these non-traditional markets that we have been looking at such as scrapbooking and those types of markets. But I would... and of course, we don't have the year-end number here, but I would believe that we are going to see that the text and cover markets again declined at a greater pace than the overall market. As it relates to opaques, I think in general, colors seem to be holding up reasonably well. We have an industry leading position in Astrobrights. We are seeing some decline there, but certainly not as dramatic as perhaps the text and cover end of the marketplace. And I think the premium light opaque end of the market is holding up reasonably well on a relative basis to the declines we have seen elsewhere in this marketplace.

[Mark Wilde:]

Okay. And then Tom also in Printing & Writing, you had the plan to... you have the plan to turn the business around. The goal had been kind of cost of capital returns by the end of 2009. How should we think about those objectives given what we are dealing with from a macro perspective?

[Thomas Howatt:]

Well, I think that we will have the cost structure in place that we intended to by the end of 2009. I do think that the recessionary environment and the duration of this and ultimately the demand, as we come out of it, is going to have an impact on the timing of our ability to achieve cost of capital returns. But there is nothing with respect to our recovery plan at this point absent the marketplace that is not in line with what we intended to do with this business.

[Mark Wilde:]

Okay. I guess I'll turn it over for right now. Thanks. Operator

[Jonathan Lichter:]

Good morning guys.

[Thomas Howatt:]

Good morning, Jonathan.

[Scott Doescher:]

Good morning, Jonathan.

[Jonathan Lichter:]

Can you talk about the conditions in January and thus far in February relative to Q4?

[Thomas Howatt:]

Yes, I would be happy to. I would say that mid fourth quarter, there was a almost dramatic change in order entry activity broadly across most businesses, most profound or most pronounced at Specialty with Printing & Writing not far behind, but even tissue markets easing. And I have heard recent or seen recent forecasts that would suggest the away-from-home market will decline by perhaps 1.5% to 2% in 2009 with more significantly that coming from tabletop or napkins where we are not actually playing. But that decline was quite pronounced as it started mid fourth quarter. I can tell you we have seen nothing different in the first month of this current calendar year than what we saw over the last month to month and a half of 2008. There is really no visibility at this point in terms of when there might be an uptick. If I take a look at behavior out there, we see survival behavior occurring with respect to competitors, with respect to customers. Competitors are scrambling for volume. Customers are willing to sacrifice reliability in some cases and product performance simply to benefit from a short-term price gain. So there is that type of behavior that is occurring in this market over the last 60 to 90 days. And I can tell you, we just see no visibility at this point beyond that.

[Jonathan Lichter:]

So are expecting pricing pressure even in Towel & Tissue going forward here?

[Thomas Howatt:]

Well I think that these circumstances with easing commodity prices make the situation right for price pressure. As noted in response to the earlier questions, we've been disciplined to this point and will continue to do so, because we worked very hard over the last couple of years as we've restructured and narrowed our base to premium grades in these markets to achieve the pricing leverage in these markets. So our intent is to try and hold on to that.

[Jonathan Lichter:]

And how much downtime do you expect to take in Q1 relative to Q4?

[Thomas Howatt:]

We have, we've taken some downtime to this point both in Printing & Writing and in Specialty. What we've taken so far is less than what we took in each of those businesses in the fourth quarter. But the potential exists for further downtime yet here within the quarter based on what we see in the way of order activity over the next 30 to 45 days.

[Jonathan Lichter:]

Okay. Thank you.

[Operator:]

Thank you. (Operator Instructions) And we go back to the line of Mark Wilde. Please go ahead.

[Mark Wilde:]

Thanks. A couple of other issues. Scott, can you just give us a sense in terms of pension expense, what the change from '08 to '09 might be?

[Scott Doescher:]

Sure, Mark. If you look at pension expense in 2008, that was in the neighborhood of $8 million.

[Mark Wilde:]

Okay.

[Scott Doescher:]

That number will increase modestly in the current year by about $2 million.

[Mark Wilde:]

Okay. All right. Can you also, Scott, or maybe Tom, give us some sense of what you're seeing in the land sale market? I think you've done a great job of kind of... as you've sold this stuff, cleaving it up into kind of smaller blocks to get the better pricing. Is that kind of recreational markets showing some signs of flagging here?

[Thomas Howatt:]

It's not showing signs; it has flagged.

[Mark Wilde:]

Okay.

[Thomas Howatt:]

And that probably was occurring by spring of 2008, the summer of 2008. It had clearly slowed down by about point in time. So sales over the second half of 2008 into those retail markets were relatively modest. I would say that we are not necessarily seeing other sales that would suggest people are dropping price on land. I think it is more a matter of, in the retail market, lack of access to capital to be able to buy land and a concern about the economy that's really holding back activity in that area.

[Mark Wilde:]

Okay. And Tom, could you also... can you give us a sense, what is left now at Jay, Maine? Is that just a single machine up there?

[Thomas Howatt:]

That is correct. Just the one machine.

[Mark Wilde:]

And how much volume is being produced up there?

[Thomas Howatt:]

Mark, that's producing about 80 to 90 tons a day currently.

[Mark Wilde:]

Okay. Is any of that stuff that could be done at Rhinelander or at Mosinee?

[Thomas Howatt:]

Generally speaking, those grades could be manufactured elsewhere. There are issues related to trim and so on that ultimately make that machine suitable for certain product activities at this point.

[Mark Wilde:]

Okay. And can you give us a sense, the project... the pulp handling project at Brokaw, where you're at in that project and what exactly we're going to be getting for that $15 million?

[Thomas Howatt:]

That project, Mark, included in automated bale handling system, which is going to be reducing labor within that business unit. And it also improved further efficiencies in making down those fibers. So we expect a substantial benefit from that project, returns in excess of our 17% after-tax internal rate of return, which, as you know, we have established for major projects of this kind.

[Mark Wilde:]

Okay. And where are you right now in terms of how much of that capital has been spent?

[Scott Doescher:]

If you look, Mark, at those two large projects, the $15 million fiber handling system and the $31 million towel machine rebuild, roughly half of that has been spent at this point. Maybe a little less than that, but somewhere right in that neighborhood. So the $45 million number and the guidance that we've provided for 2009 for capital spending is largely driven by those capital projects, those large projects in conjunction with the converting and distribution initiative at Printing & Writing.

[Thomas Howatt:]

But from a timing standpoint, Mark, I think it's fair to say from the fiber handling system, we'll be seeing the benefits of that project in the third quarter of this year. And with respect to the converting and distribution consolidation project, we would expect to have those benefits in place by the end of the year.

[Mark Wilde:]

Okay. And finally, on the Towel & Tissue rebuild over Middletown, I think you've mentioned about four pennies of drag from that in the first quarter. Do you have any sense of how that may influence the second quarter?

[Thomas Howatt:]

We would expect those expenses would be largely behind us at the completion of the first quarter. The machine will run several weeks prior to the end of the first quarter, during which time we should get largely back to pre-rebuild production levels, Mark. To the degree that there is some overhang into the second quarter, we'd seen some impact. But I would tell you that that's going to be significantly less than what we are experiencing in the first quarter.

[Mark Wilde:]

Okay. And Scott, do you guys have any kind of estimate if you net out first quarter costs against the benefits that you should pick up in the remaining three quarters of the year, the impact of that for the full year?

[Scott Doescher:]

For that...

[Mark Wilde:]

Of the rebuild project, yes.

[Scott Doescher:]

Towel machine rebuild? What I can say about that, Mark, is the design capacity of the rebuild is to add an additional 16,000 tons of production capacity, which we'll utilize to reduce outside parent roll purchases. And that of course, that incremental production capacity will come at a much lower cost than what we are buying rolls for on the outside. Once again, rather than get too specific, I would say that that project exceeded that hurdle rate of a 17% after-tax internal rate of return. And we would expect to see full benefits as we would get into the later stages of the year in the third and fourth quarter.

[Mark Wilde:]

And is the benefit, Scott, is it simply the extra 16,000 tons of parent roll purchases that you displaced or do you also pick up anything on sort of the overall cost structure at Middletown or in terms of kind of product quality, in terms of what you are producing there?

[Scott Doescher:]

There were certainly some additional labor savings associated with that project. But the bulk of the return is driven by those 16,000 tons per year of additional capacity. Also Mark, I think important to note is that that capacity increases our capability to produce Green Seal-certified products. And that's one of the critical grades that we've had great success with in recent years in terms of growing. So not only is it capacity which lowers our cost, but it's in one of our targeted areas within our Towel & Tissue business.

[Mark Wilde:]

Okay. All right, I think that's what I needed. Thanks Scott.

[Operator:]

Thank you. And there no further questions at this time.

[Thomas Howatt:]

Despite the impact of recessionary business conditions over the near term, we remain confident that our focus on strategic markets, product innovation and a disciplined approach to operations will continue to produce improved results. We look forward to reporting our first quarter results on Monday, April 27th. Our next scheduled conference call is set for 11.00 AM Eastern Time on Tuesday, April 28th. We appreciate your taking part in today's discussion and your interest in Wausau Paper. Thank you for your participation.

[Operator:]

Thank you. Ladies and gentlemen, this conference will be available for replay after noon Central Time today through midnight February 24th. You may access the replay service by dialing 1-800-475-6701 and entering the excess code 981458. Again, that does conclude our conference for today. Thank you for using AT&T Executive TeleConference. You may now disconnect.