Jul 26, 2005. /Lesprom Network/. Wausau Paper reported on Monday 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% to $275.3 million, and shipments increased less than 1% to 222,000 tonnes. 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 and 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% to $543 million while shipments increased 2% to 443,000 tonnes. 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 and Tissue's OptiCore(TM) tissue and dispensing system and Printing and Writing's Exact Ice(TM) high-brightness paper -- resulted in revenues from products developed within the last three years exceeding our corporate target of 25%." Specialty Products reported second-quarter operating profits of $3.8 million, compared with $4.8 million last year. Net sales and shipments declined 4% and 8%, 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 and 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% and 10%, 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 and 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%, 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 and 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 and Tissue's second-quarter operating profits increased 22% to $9.9 million from $8.1 million last year. Net sales and shipments increased 16% and 7%, respectively. "Despite only modest market growth, our Towel and Tissue business posted impressive sales gains in the first half of 2005 including a 5% increase in total shipments and 9% 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 produces fine printing and writing papers, technical specialty papers, and "away-from-home" towel and tissue products.