Good day ladies and gentlemen, and welcome to the fourth quarter 2007 Neenah Paper Incorporated earnings conference call. My name is Gina, and I will be your coordinator for today. (Operator Instructions) I would now like to remind everyone that this presentation today contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s beliefs and assumptions regarding future events based on currently available information. Listeners are therefore cautioned not to put undue reliance on forward-looking statements as they are not a guarantee of future performance and remain subject to a number of uncertainties and other factors that could cause actual results to differ materially from forecasts. A more detailed description of these uncertainties and risk factors is provided in Neenah Paper’s earnings release and filings with the Securities and Exchange Commission, which you’re encouraged to review. Except to the extent required by applicable security laws, Neenah Paper undertakes no obligation to update or publicly revise any of the forward-looking statements that you may hear today. In addition, the company may make certain statements during the course of this presentation that include references to non-GAAP financial measures and undefined by SEC regulations. As required by those regulations, if that were to happen, a reconciliation of these measures to what management believes are the most direct compatible GAAP measures, it would be posted on the company’s website at www.neenah.com. I would now like to turn today’s presentation over to your host for today’s call, Mr. Bill McCarthy, Vice President, Financial Analysis and Investor Relations. Please proceed.

Thank you. Good morning everyone, and thank you for joining us on our 2007 fourth quarter earnings call. With me today are Sean Erwin, our Chief Executive Officer and Chairman of the Board, and Bonnie Lind, our Chief Financial Officer and Treasurer. We announced fourth quarter and full year earnings yesterday afternoon, and our 10-K was filed this morning. I’ll briefly summarize consolidated results and then turn things over to Sean and Bonnie to review the business performance in detail. For the full year, net sales from continuing operations were almost $1 billion, compared with $600 million in 2006. Adjusted earnings from continuing operations similarly increased by more than 50%, from $1.21 to $1.88 per share. A reconciliation of these non-GAAP adjusted earnings to GAAP earnings can be found in our press release. The change in scale and improved profitability largely reflects our acquisitions over the past year. Our transformation has been even more dramatic if you consider results from Terrace Bay, which was generating losses prior to its sale in August 2006. These changes were evident in fourth quarter as well, as consolidated net sales of $256 million increased 44% over 2006, and operating earnings of $12 million, which included a $5 million charge for settlement of Terrace Bay litigation, were still up 30%. Net income from continuing operations after adjusting for gains from timberlands sales and a Terrace Bay litigation settlement, was $0.34 per diluted common share in the fourth quarter of 2007, and $0.15 per share last year. The $0.34 per share number also reflected higher tax expense booked in the fourth quarter to achieve our full year normalized rate of approximately 29%. Losses from discontinued operations in the fourth quarter of 2007 were $25.4 million, primarily due to an expected non-cash after-tax charge of $23.9 million for final settlement of the Ontario pension plan. I’d like to now turn things over to Bonnie.

Thanks Bill. Good morning everyone. As Bill mentioned, our results in 2007 reflect a company much different than we were a year ago, due to the strategic changes we've made. We consequently have a much more balanced and more profitable platform of businesses from which to grow. Importantly, we have made these changes without compromising our financial strength. In fact, our balance sheet and credit metrics are as strong as they’ve ever been at any time in our history. Our focus is on optimizing results from our businesses and delivering expected synergies. At the same time, you can expect us to maintain a disciplined approach to managing capital, and as Sean will talk about a little later, to complete our transformation to a global manufacturer of premium performance-based papers and specialty products. Now let me start with fourth quarter results for each of our business segments. In Fine Paper, net sales were $95 million versus $55 million last year. The increase was primarily due to added volumes from the Fox River acquisition. Operating income of $12 million in 2007 was similar to last year, but 2007 included $2 million of costs related to the integration of Fox River, and also higher advertising and promotion expenses support from brand re-launches that we did. We began to see benefits of a more full operating schedule at our plants in the fourth quarter, due to the new consolidated manufacturing footprint. In addition, we implemented selling price increases in October on brands that represented about a third of our business. In general, these increases were able to offset higher costs, primarily from rising hardwood pulp prices. Market prices for hardwood averaged $760 per ton in the fourth quarter, and this compared with $685 per ton last year. This represented more than $1 million in…

Thank you, Bonnie, and good morning everyone. As usual, let me start with a quick comment on safety. Our combined reportable incident rate in 2007 was 2.2, which is up from 1.5 in 2006. The increase was primarily due to the inclusion of acquired facilities that tended to have higher rates than our existing sites. While our overall incident rate in 2007 is still half that of industry averages, it was not of the world class level we are targeting. Safety programs and initiatives remain active at all of our locations, and are part of our integration efforts. In addition, safety performance directly effects compensation for both hourly and salary employees. Working safely remains a top priority and we expect to see improvements in our performance in 2008. I'd like to next comment on each of our businesses. In Fine Paper, our focus is on maintaining the value of our strong core business while delivering synergies from the Fox River purchase, and that's just what we're doing. Our integration efforts have been completed on, or ahead, of plan, and position us to realize future benefits. While the uncoated paper market was particularly challenging last year, we are now the clear leader in the premium segment. We are supporting our brands, including successful re-launches of key Fox River brands. We are also very pleased with our Neenah Green Initiative. We're finding ways to substitute more green energy at our mills, reducing our carbon footprint and thereby able to offer an ever widening selection of environmentally friendly grades. Demand for these offerings is strong and we are benefiting from this trend in building on our reputation as a leader in this area. Brand integration and distribution changes were implemented in 2007 and we feel good about relationships and programs in place with…

(Operator Instructions) Your first question comes from the line of Chip Dillon with Citi. You may proceed.

Morning, Chip.

Hi, good morning Sean and Bonnie and Bill; a question for you about the pulp situation. I think I heard you say that you would still see it as likely that that business would be sold this year. I'm not too concerned about the timing. I'm really more concerned about the net integration issue for the company. I know Terrace, I believe, is selling 280,000 tons or so a year. I might have that wrong. I'm sorry, 250,000 to 260,000. And yet I know you buy pulp primarily in Fine Paper and probably also in Technical Products. And so would the Fox River deal – can you just give us a rough idea as to how much pulp you will be buying, or maybe do buy – just ignoring Pictou. Did I say Terrace? I meant Pictou. And hardwood, softwood – just give us an idea of what you'll be buying in the future.

The order of magnitude, Chip, with Terrace Bay gone and with the Fox River and German acquisitions we're about long 30,000 tons in terms of pulp, with Pictou up at a little over 270,000 tons of production last year. We currently don't use directly any of the Pictou pulp in any of our operations, but that gives you the balance, the fiber balance.

So, meaning that you use about - you're a buyer of 240,000 tons.

Right.

And all your competitors, I guess, are also buyers of pulp, but none of them are backward integrated, right?

No, not direct competitors. Maybe some overlap with firms. As you know, Finch has a little bit. But not direct competitors.

Okay. Given the situation with financing being a challenge these days, does that affect your confidence level of selling the pulp mill? And given that the US dollar continues to go down every day, and not really versus the Canadian dollar - we've gone all the way clear from $1.42 to $1.56 this morning, and the C-dollar has, sort of, hung out at parity - which tells me that the profitability of Pictou, likely if pulp response to the US dollar weakening versus everything else, continues to go up, are there any changes in your thoughts about that? And then maybe, secondly, is there anything that will be different in the first quarter at Pictou versus the fourth, as we try to forecast that mill, whether it's down-time, or any other factor, hedging, or anything else.

Let me work my way through it. There's a couple in there. We, maybe, begin in reverse order. As Bonny highlighted, Chip, in her comments, major changes at Pictou in the first quarter could be the ending of the price cap that we had with Kimberly-Clark. We don't have significant, really, very few hedges remaining from a currency standpoint as we went into the first quarter. So you've got a plus and a minus there. The mill continues to work very diligently on wood-sourcing, because there have been sawmill closures in Nova Scotia, and they've gone, for instance, in the latter part of last year, from 100% of their chips coming from sawmills, to doing custom chipping of about a third of their fiber needs. So they've been very creative in fiber sourcing at the mill. In terms of a potential transaction with Canada, obviously, we won't comment on that in any detail. However, the 10-K has the statement, because we now feel a transaction will be probable in Canada.

Okay, and again just looking at the first quarter, you said that the cap coming off with Kimberly is worth, like 30 bucks a ton here, or at least?

It was based in the fourth quarter on those prices. It was a $2 million impact in the fourth quarter. Our pricing with Kimberly goes with a one-month lag. So we'll see that flux a little more in the first.

Right. And then the hedge that you lose was how much, again?

Three million.

Okay. And last question is, I seem to remember when you bought Fox, there was accumulative, and I might be exaggerating this, so please beat me down. But there seemed like there was accumulative potential benefit of, I think, up to $15 million, because of the shut down of Housatonic, and I think one other mill, the lack of SG&A, and I think moving grades around. Is that still roughly correct? And how much of a run-rate did we see, if at all, any, from that in the fourth quarter, when you offset the costs - expenses, of getting your synergies?

In the fourth quarter, I think Bonnie mentioned, we were between $1 million to $2 million in terms of benefits, and we still had some integration costs in the quarter that exceeded that. I think in total there was about $5 million of integration in the year. And as Bonnie mentioned we probably have no more than $1 million of integration costs this year. On the savings, or the benefits that you mentioned, let's say that two million rate will carry into the early part of this year, and as we complete the remaining items including the final closure of Urbana and the integration of distribution, getting them up on the ERP, a run-rate of between $3 to 4 million a quarter. So your number that is right in the middle, is a pretty good guess.

Got you. Okay, thank you.

The next question comes from the line of (Jonathan Lewison with Anchorage Capital Group). Please proceed.

Good morning.

Hi, good morning guys. Just a quick question on capital expenditures in the various segments. If I look back historically, the Technical Products segment, had been spending 1%, then 2% of sales in CapEx – this is in '04,'05. In '06 you see it jumping up to about 3.7% and now this year you got around $17 million in CapEx, which is a little over 4%. My question is, in terms of going forward and understanding what the Technical Products business is going to do, how can I think of it? If we look at some of your competitors, their numbers are significantly higher, in terms of percentage of sales for technical products. Maybe there's a reason yours is lower, or a better way to think about it than just as a percentage of sales?

Yeah, good question. We have said in past calls that with pulp, our run-rate for maintaining investments, really replacement, would be about $25 million a year. If you exclude Pictou from that, that would put it down to roughly let's say $20 million a year, and that would include the German and the remaining Fox River mills.

Was that twenty split equally in your view? Between Fine Paper and Technical?

About a little over $2 million a mill, just on average for maintaining investments, and then on top of that, I think you heard Bonnie say our spending is going to be $45 million this year. So spending above that base level is really for strategic projects, that either give us cost savings that are substantial, or increase our capacity or capabilities. So we'll manage those separately. And when we get into really any strategic investments, in terms of assets on capital, expect us to highlight those in upcoming calls. As we have in the past.

Do you believe you have a strategic advantage relative to your competitors then, because their numbers, even on a maintenance basis, seem to be higher.

We do a pretty good job on capital planning. In particular, I'm very pleased with the programs for this year. We review it in detail, and two thirds of the budgeted capital this year was committed to projects that either deliver significant cost savings or improve our process capability or capacity. So spending money just to replace assets that don't provide other benefits - they've done a good job of holding that down.

Great. And there's one other quick thing: Have you seen any trend of increased competitiveness in the release papers and other similar type of products, where companies that have been in declining grades are making capital investments to convert their machines and compete with you guys?

Not dramatic. But it is a big world out there, and we do see some knock-on effects. We've seen some competitors, not necessarily in the US, that would do products, in let's say the photo paper market. And as that has declined they've tried to move in to other markets with their assets. So we do see sometimes a ripple effect. And very candidly in some of the situations that I've alluded to in the comments we've given up pieces of business. Not huge pieces, but we've given up pieces of business because we didn't want to match pricing as someone trying to come into the market. And we do a pretty effective job of managing that. The key to us is to provide premium products that have a technical advantage to our customers, because they can't switch these out quickly because of the relationship we have and the technical knowledge we have of their needs. So the more specialized we are, the less commodity-oriented we are, the stronger our long term position is.

Great, thanks.

(Operator Instructions) You have a follow-up question from the line of Chip Dillon, with Citi. Please proceed.

Hi there. I know you probably don't look at it this way, because you make so many different products in Fine Papers, and, of course, Technical Products. But is it fair to say, if you look at it just on a pure tonnage basis that you're running somewhere around 42,000 ton a quarter kind of sales rate. Is that a good guess?

I'll defer to you, Chip. We tend to look at each of our businesses differently. Fine Paper, we tend to look at in a pound basis. In Technical Products we tend to look at it on a square meter, square yard basis because we have things that will sell for $0.20 a square yard, up to $2 a square yard. So we really look at value per machine hour in that business. So I'll have to defer to you in terms of what units you want to use, because we're all over the map.

How about this way: How are the volumes progressing? What I'm asking is, what kind of market changes have you seen out there? I know that you guys are obviously moving around your product mix, etcetera. But are you seeing relative to your plan, as you're well into the first quarter, and looking into the second quarter - we are of course in a recession at this point - how is that impacting your volumes, if at all?

I'll address that specifically. In Fine Paper, with the consolidation of our asset footprint, we're currently running about six days in the mills. So we're at about 85% utilization, which is a sweet spot for us. We don't want to run them at 100% so we can respond to some businesses. In Technical Products we're essentially running full. We are taking a little bit of downtime, and we've adjusted staffing accordingly.

Gotcha. Okay, thank you.

That concludes the Q&A session. I'd like to take the call back to Sean Erwin for a closing statement.

Well thank you again for joining in on the call, we look forward to updating you on our progress throughout 2008 as we execute our strategy, and at our next earnings call scheduled for May 8, so thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.