Letter to Shareholders, continued

In addition to the progress we made with product mix enhancements, I am pleased to report a number of other noteworthy events in 2004:

• The South Carolina Chamber of Commerce and the National Association of Manufacturers named our Catawba operation as the state’s 2004 Manufacturer of the Year. This honor recognizes world-class standards achieved in the area of manufacturing, environmental stewardship, employee and community programs.
• Taking advantage of strong coated paper markets, the Catawba mill achieved a record level of production. We believe that our 2003 conversion of a large newsprint machine at this site has made Catawba the lowest-cost coated paper operation in North America.
• We had our best safety performance in the past five years, and we remain committed to excellence in this area across all of our operations.
• We expanded the recycling facility at Calhoun, Tennessee, thereby increasing the mill’s recycled newsprint content to 35%, well above the industry average.
• In connection with the 50th anniversary of our Calhoun mill, we announced plans to contribute more than 3,700 acres of pristine woodlands in Tennessee to the state’s Cumberland Trail system.
• As part of the 75th anniversary of our Mersey mill, we also designated almost 1,200 acres of Nova Scotia forestland for environmental protection.
• We took advantage of favorable capital markets to improve liquidity by refinancing a portion of our debt with a $250 million floating rate note issue and successfully replacing our credit facilities.