##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-10033
 
 WELLMAN, INC.
 (Exact name of registrant as specified in its charter)
 
 Delaware
    
    04-1671740(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)1041 521 Corporate Center Drive 
Fort Mill, South Carolina
    
    29707(Address of principal executive offices)
    
    (Zip Code)
 (803) 835-2000
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



WELLMAN, INC.
(Debtor-in-Possession)
 INDEX
 Page No.PART I  FINANCIAL INFORMATIONITEM 1  Financial Statements (Unaudited, except where noted)Condensed Consolidated Statements of Operations  For the three and six months ended June 30, 2008 and 2007
    
    
    3Condensed Consolidated Balance Sheets  June 30, 2008 and December 31, 2007 (Audited)
    
    
    4Condensed
Consolidated Statements of Stockholders Deficit  For the six months ended June 30, 2008 and the year ended December 31, 2007 (Audited)
    
    
    5Condensed Consolidated Statements of Cash Flows  For the six months ended June 30, 2008 and 2007
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7ITEM 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24ITEM 3  Quantitative and Qualitative Disclosures About Market Risk
    
    
    38ITEM 4  Controls and Procedures
    
    
    38PART II  OTHER INFORMATIONITEM 1  Legal Proceedings
    
    
    38ITEM 3  Defaults Upon Senior Securities
    
    
    39ITEM 6  Exhibits
    
    
    40SIGNATURES
    
    
    42EX-10.2 First Amendment to the Credit Agreement, dated May 8, 2008EX-10.3 Second Amendment to the Credit Agreement, dated May 14, 2008EX-10.4 Third Amendment to the Credit Agreement, dated May 21, 2008EX-10.5 Fourth Amendment to the Credit Agreement, dated June 5, 2008EX-10.7 Sixth Amendment to the Credit Agreement, dated June 16, 2008EX-10.8 Seventh Amendment to the Credit Agreement, dated  July 30. 2008EX-10.9 Eighth Amendment to the Credit Agreement, dated August 4, 2008EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  2




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##### Table of Contents



ITEM 1. FINANCIAL STATEMENTS
 WELLMAN, INC.
(Debtor-in-Possession)
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    281.1
    
    
    $
    299.9
    
    
    $
    521.1
    
    
    $
    619.1Cost of sales
    
    
    274.2
    
    
    
    291.1
    
    
    
    509.9
    
    
    
    607.3Gross profit
    
    
    6.9
    
    
    
    8.8
    
    
    
    11.2
    
    
    
    11.8Selling, general and administrative expenses
    
    
    6.4
    
    
    
    9.9
    
    
    
    15.9
    
    
    
    21.6Restructuring charges
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    3.1Provision for uncollectible accounts
    
    
    0.6
    
    
    
    0.2
    
    
    
    0.8
    
    
    
    0.3Other income, net
    
    
    (0.3
    )
    
    
    (8.5
    )
    
    
    (0.2
    )
    
    
    (11.2
    )Operating income (loss)
    
    
    0.2
    
    
    
    7.0
    
    
    
    (5.3
    )
    
    
    (2.0
    )Interest expense, net (contractual interest of $13.1
and $28.4 for the three and six-month periods ended
June 30, 2008)
    
    
    3.0
    
    
    
    15.2
    
    
    
    14.1
    
    
    
    30.3Loss from continuing operations before reorganization
items and income tax benefit
    
    
    (2.8
    )
    
    
    (8.2
    )
    
    
    (19.4
    )
    
    
    (32.3
    )Reorganization items, net
    
    
    8.1
    
    
    
    
    
    
    
    14.2
    
    
    
    Loss from continuing operations before income taxes
    
    
    (10.9
    )
    
    
    (8.2
    )
    
    
    (33.6
    )
    
    
    (32.3
    )Income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss from continuing operations
    
    
    (10.9
    )
    
    
    (8.2
    )
    
    
    (33.6
    )
    
    
    (32.3
    )Loss from discontinued operations, net of income taxes
(benefit)
    
    
    
    
    
    
    (3.2
    )
    
    
    
    
    
    
    (3.4
    )Net loss
    
    $
    (10.9
    )
    
    $
    (11.4
    )
    
    $
    (33.6
    )
    
    $
    (35.7
    )Net loss attributable to common stockholders:Net loss
    
    $
    (10.9
    )
    
    $
    (11.4
    )
    
    $
    (33.6
    )
    
    $
    (35.7
    )Accretion
    
    
    
    
    
    
    (3.8
    )
    
    
    (2.3
    )
    
    
    (7.5
    )Net loss attributable to common stockholders
    
    $
    (10.9
    )
    
    $
    (15.2
    )
    
    $
    (35.9
    )
    
    $
    (43.2
    )Basic and diluted net loss per common share:Net loss attributable to common stockholders from
continuing operations
    
    $
    (0.34
    )
    
    $
    (0.37
    )
    
    $
    (1.11
    )
    
    $
    (1.23
    )Net loss attributable to common stockholders from
discontinued operations
    
    
    
    
    
    
    (0.10
    )
    
    
    
    
    
    
    (0.11
    )Net loss attributable to common stockholders
    
    $
    (0.34
    )
    
    $
    (0.47
    )
    
    $
    (1.11
    )
    
    $
    (1.34
    )Dividends per common share
    
    $
    
    
    
    $
    0.02
    
    
    $
    
    
    
    $
    0.04
  3




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##### Table of Contents



WELLMAN, INC.
(Debtor-in-Possession)
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)
    
    
    (Note 1)ASSETS:Current assets:Cash and cash equivalents
    
    $
    2.6
    
    
    $
    Accounts receivable, less allowance of $3.9 in 2008 and $3.1 in 2007
    
    
    151.0
    
    
    
    129.0Inventories
    
    
    81.5
    
    
    
    97.0Prepaid expenses and other current assets
    
    
    28.8
    
    
    
    25.0Total current assets
    
    
    263.9
    
    
    
    251.0Property, plant and equipment, at cost:Land, buildings and improvements
    
    
    90.4
    
    
    
    90.4Machinery and equipment
    
    
    339.7
    
    
    
    336.7Construction in progress
    
    
    4.7
    
    
    
    5.4434.8
    
    
    
    432.5Less accumulated depreciation
    
    
    197.8
    
    
    
    190.7Property, plant and equipment, net
    
    
    237.0
    
    
    
    241.8Other assets, net
    
    
    11.5
    
    
    
    10.4$
    512.4
    
    
    $
    503.2LIABILITIES AND STOCKHOLDERS DEFICIT:Current liabilities:Accounts payable
    
    $
    1.2
    
    
    $
    69.7Accrued liabilities
    
    
    21.5
    
    
    
    23.3Debt, current
    
    
    138.6
    
    
    
    554.3Total current liabilities
    
    
    161.3
    
    
    
    647.3Deferred income taxes and other liabilities
    
    
    37.7
    
    
    
    41.5Total liabilities not subject to compromise
    
    
    199.0
    
    
    
    688.8Liabilities subject to compromise
    
    
    531.5
    
    
    
    Stockholders deficit:Series A preferred stock, $0.001 par value, 5,000,000 shares authorized,
4,502,143
shares issued and outstanding
    
    
    74.7
    
    
    
    73.8Series B preferred stock, $0.001 par value; 6,700,000 shares authorized,
issued and
outstanding
    
    
    111.1
    
    
    
    109.7Class A common stock, $0.001 par value; 100,000,000 shares authorized,
35,361,632 shares issued in 2008 and 35,372,382 in 2007
    
    
    
    
    
    
    Class B
common stock, $0.001 par value, 5,500,000 shares authorized; no
shares issued
    
    
    
    
    
    
    Paid-in capital
    
    
    248.3
    
    
    
    248.6Common stock warrants
    
    
    4.9
    
    
    
    4.9Accumulated other comprehensive loss
    
    
    
    
    
    
    (1.4
    )Accumulated deficit
    
    
    (607.6
    )
    
    
    (571.7
    )Less common stock in treasury at cost: 2,500,000 shares
    
    
    (49.5
    )
    
    
    (49.5
    )Total stockholders deficit
    
    
    (218.1
    )
    
    
    (185.6
    )Total liabilities and stockholders deficit
    
    $
    512.4
    
    
    $
    503.2
  4




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##### Table of Contents



WELLMAN, INC.
(Debtor-in-Possession)
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
 Series A
    
    
    Series B
    
    
    Class A
    
    
    
    
    
    
    
    
    
    
    AccumulatedPreferred
    
    
    Preferred
    
    
    Common
    
    
    
    
    
    
    Common
    
    
    OtherStock Issued
    
    
    Stock Issued
    
    
    Stock Issued
    
    
    Paid-In
    
    
    Stock
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Treasury(in millions)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Warrants
    
    
    Income/(Loss)
    
    
    (Deficit)
    
    
    Stock
    
    
    TotalBalance at December 31, 2006
    
    
    4.5
    
    
    $
    67.5
    
    
    
    6.7
    
    
    $
    100.4
    
    
    
    35.2
    
    
    $
    
    
    
    $
    248.3
    
    
    $
    4.9
    
    
    $
    28.4
    
    
    $
    (192.9
    )
    
    $
    (49.5
    )
    
    $
    207.1Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (361.3
    )
    
    
    
    
    
    
    (361.3
    )Currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27.3
    )
    
    
    
    
    
    
    
    
    
    
    (27.3
    )Fair value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.5
    )
    
    
    
    
    
    
    
    
    
    
    (2.5
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (391.1
    )Cash dividends ($0.06 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.9
    )
    
    
    
    
    
    
    (1.9
    )Accretion
    
    
    
    
    
    
    6.3
    
    
    
    
    
    
    
    9.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15.6
    )
    
    
    
    
    
    
    Issuance of restricted stock, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Balance at December 31, 2007
    
    
    4.5
    
    
    
    73.8
    
    
    
    6.7
    
    
    
    109.7
    
    
    
    35.4
    
    
    
    
    
    
    
    248.6
    
    
    
    4.9
    
    
    
    (1.4
    )
    
    
    (571.7
    )
    
    
    (49.5
    )
    
    
    (185.6
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33.6
    )
    
    
    
    
    
    
    (33.6
    )Fair value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    1.4Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32.2
    )Accretion
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.3
    )
    
    
    
    
    
    
    Tax effect of options cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Forfeit of restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )Tax effect of restrictions lapsing
on restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8Balance at June 30, 2008
(unaudited)
    
    
    4.5
    
    
    $
    74.7
    
    
    
    6.7
    
    
    $
    111.1
    
    
    
    35.3
    
    
    $
    
    
    
    $
    248.3
    
    
    $
    4.9
    
    
    $
    
    
    
    $
    (607.6
    )
    
    $
    (49.5
    )
    
    $
    (218.1
    )
  5




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##### Table of Contents



WELLMAN, INC.
(Debtor-in-Possession)
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
 (UNAUDITED)

(In millions)
 2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (33.6
    )
    
    $
    (35.7
    )Adjustments to reconcile net loss to net cash used in operating activities:Loss from discontinued operations, net of tax
    
    
    
    
    
    
    3.4Depreciation
    
    
    6.8
    
    
    
    23.5Amortization
    
    
    0.4
    
    
    
    0.5Amortization in interest expense, net
    
    
    1.6
    
    
    
    1.7Amortization of acquisition costs of long-term raw material contract
    
    
    7.8
    
    
    
    7.8Gain on sale of assets
    
    
    (0.2
    )
    
    
    Deferred income taxes and other
    
    
    0.1
    
    
    
    (0.2
    )Reorganization items
    
    
    14.2
    
    
    
    Payments of reorganization items
    
    
    (9.9
    )
    
    
    Changes in assets and liabilities
    
    
    (11.5
    )
    
    
    (3.1
    )Net cash used in operating activities
    
    
    (24.3
    )
    
    
    (2.1
    )Cash flows from investing activities:Additions to property, plant and equipment
    
    
    (2.1
    )
    
    
    (5.1
    )Proceeds from sale of assets
    
    
    0.3
    
    
    
    Net cash used in investing activities
    
    
    (1.8
    )
    
    
    (5.1
    )Cash flows from financing activities:Proceeds from DIP Credit Agreement, net
    
    
    138.6
    
    
    
    (Repayments) borrowings under pre-petition debt, net
    
    
    (105.2
    )
    
    
    21.6Dividends paid on common stock
    
    
    
    
    
    
    (1.3
    )Debt issuance costs related to the DIP Credit Agreement
    
    
    (4.7
    )
    
    
    Net cash provided by financing activities
    
    
    28.7
    
    
    
    20.3Discontinued Operations:Operating activities
    
    
    
    
    
    
    (8.8
    )Investing activities
    
    
    
    
    
    
    (3.1
    )Financing activities
    
    
    
    
    
    
    (1.2
    )Net cash used in discontinued operations
    
    
    
    
    
    
    (13.1
    )Increase in cash and cash equivalents
    
    
    2.6
    
    
    
    Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    Cash and cash equivalents at end of period
    
    $
    2.6
    
    
    $
    Supplemental cash flow data:Cash paid during the period for:Interest, net
    
    $
    18.0
    
    
    $
    29.2Income taxes
    
    $
    0.5
    
    
    $
    0.6
  6




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##### Table of Contents



WELLMAN, INC.
(Debtor-in-Possession)
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(In millions, except per share data)
 1. BASIS OF PRESENTATION
    ® ® ® ® ® ®
 7




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##### Table of Contents



2. ACCOUNTING CHANGES AND RECENTLY-ISSUED PRONOUNCEMENTS
 New Accounting Standards Adopted
   Recently Issued Accounting Pronouncements
    8




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##### Table of Contents



3. PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
  
  9




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##### Table of Contents



(In millions)Accounts payable  trade
    
    $
    77.7First Lien Term Loan
    
    
    185.0Second Lien Term Loan
    
    
    263.3Accrued interest on First and Second Lien Term Loans
    
    
    2.4Other
    
    
    3.1Total liabilities subject to compromise
    
    $
    531.5
    10




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##### Table of Contents



Minimum EBITDA, as
    
    
    Actual EBITDA, asApplicable Month
    
    defined (cumulative)
    
    

defined (cumulative)March 2008
    
    $
    2.1 million
    
    
    $
    3.97 millionApril 2008
    
    $
    5.61 million
    
    
    $
    6.81 millionMay 2008
    
    $
    10.37 million
    
    
    $
    12.06 millionJune 2008
    
    $
    15.81 million
    
    
    $
    14.19 millionJuly 2008
    
    $
    19.635 millionAugust 2008
    
    $
    22.865 millionSeptember 2008
    
    $
    23.8 millionOctober 2008
    
    $
    27.455 millionNovember 2008
    
    $
    28.56 millionDecember 2008
    
    $
    30.855 millionJanuary 2009
    
    $
    31.5 million
  11




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##### Table of Contents



Month
    
    
    Month
    
    
    Month
    
    
    MonthEnding
    
    
    Ending
    
    
    Ending
    
    
    EndingMarch 31,
    
    
    April 30,
    
    
    May 31,
    
    
    June 30,(In millions)
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008Loss from continuing
operations
    
    $
    (2.4
    )
    
    $
    (4.7
    )
    
    $
    (1.1
    )
    
    $
    (5.1
    )Interest expense, net
    
    
    0.9
    
    
    
    0.9
    
    
    
    1.0
    
    
    
    1.1Depreciation and
amortization
    
    
    2.5
    
    
    
    2.6
    
    
    
    2.4
    
    
    
    2.5Provision for
uncollectible accounts
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.6Permitted Adjustments:Reorganization items
    
    
    2.8
    
    
    
    3.1
    
    
    
    2.6
    
    
    
    2.4Sale of assets
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    Inventory reserves
    
    
    
    
    
    
    1.1
    
    
    
    Other
    
    
    0.1
    
    
    
    
    
    
    
    0.4
    
    
    
    0.6Total permitted
adjustments
    
    
    2.9
    
    
    
    4.0
    
    
    
    3.0
    
    
    
    3.0EBITDA, as defined
    
    $
    4.0
    
    
    $
    2.8
    
    
    $
    5.3
    
    
    $
    2.1
   12




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##### Table of Contents




    
    have our Disclosure Statement approved by the Bankruptcy Court by August
15th,
2008;
    
    obtain an order confirming the Plan by September 26,
2008; and
    
    emerge from
bankruptcy prior to October 6, 2008.
  13




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##### Table of Contents



14




---



##### Table of Contents



4. INVENTORIES
  June 30,
    
    
    December 31,(In millions)
    
    2008
    
    
    2007Raw materials
    
    $
    29.0
    
    
    $
    29.7Finished and semi-finished goods
    
    
    48.5
    
    
    
    63.0Supplies
    
    
    4.0
    
    
    
    4.3$
    81.5
    
    
    $
    97.0
 5. JOHNSONVILLE FIBERS CLOSURE
   (In millions)Impairment on asset disposals
    
    $
    13.6Impairment on assets held-for-sale
    
    
    8.2Inventory write-downs
    
    
    6.7Employee restructuring charges
    
    
    3.9Miscellaneous
    
    
    0.9$
    33.3
   15




---



##### Table of Contents



EmployeeRestructuring(In millions)
    
    ChargesAccruals during the third quarter of 2006
    
    $
    4.1Adjustments to accrual in fourth quarter of 2006
    
    
    (0.2
    )Payments during 2006
    
    
    (1.6
    )Remaining accrual at December 31, 2006
    
    
    2.3Payments in first quarter of 2007
    
    
    (1.9
    )Remaining accrual at March 31, 2007
    
    
    0.4Payments in second quarter of 2007
    
    
    (0.2
    )Remaining accrual at June 30, 2007
    
    
    0.2Adjustments to accrual
    
    
    (0.1
    )Payments during the remainder of 2007
    
    
    (0.1
    )Remaining accrual at December 31, 2007
    
    $
    
 6. RESTRUCTURINGS
 Research & Development Realignment
  Severance(In millions)
    
    AccrualAccruals recorded in fourth quarter of 2007
    
    $
    0.4Payments during 2007
    
    
    (0.1
    )Accrual balance at December 31, 2007
    
    
    0.3Payments during the first quarter of 2008
    
    
    (0.2
    )Accrual balance at March 31 and June 30, 2008
    
    $
    0.1
 2007 Organizational Restructuring
  16




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##### Table of Contents



Severance(In millions)
    
    AccrualAccruals recorded during the first quarter 2007
    
    $
    2.9Payments in first quarter 2007
    
    
    (1.5
    )Accrual balance at March 31, 2007
    
    
    1.4Payments in second quarter 2007
    
    
    (1.2
    )Accrual balance at June 30, 2007
    
    
    0.2Payments during remainder of 2007
    
    
    (0.1
    )Adjustments to accrual during remainder of 2007
    
    
    (0.1
    )Accrual balance at December 31, 2007
    
    $
    
 7. DISCONTINUED OPERATIONS
    For the Three Months
    
    
    For the Six MonthsEnded June 30, 2007
    
    

Ended June 30, 2007European
    
    
    
    
    
    
    European(In millions)
    
    WIL
    
    
    PET Resins
    
    
    WIL
    
    
    PET ResinsNet sales
    
    $
    33.8
    
    
    $
    13.2
    
    
    $
    69.1
    
    
    $
    33.0Earnings (loss) from discontinued operations before
income tax expense
    
    $
    0.4
    
    
    $
    (0.4
    )
    
    $
    1.2
    
    
    $
    (0.9
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    Earnings (loss) from discontinued operations, net
    
    
    0.4
    
    
    
    (0.4
    )
    
    
    1.1
    
    
    
    (0.9
    )Loss on disposal of business
    
    
    
    
    
    
    (3.2
    )
    
    
    
    
    
    
    (3.6
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on disposal of business, net
    
    
    
    
    
    
    (3.2
    )
    
    
    
    
    
    
    (3.6
    )Earnings (loss) from discontinued operations, net
    
    $
    0.4
    
    
    $
    (3.6
    )
    
    $
    1.1
    
    
    $
    (4.5
    )
 17




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##### Table of Contents



8. OTHER INCOME, NET
  Three months
    
    
    Six monthsended June 30,
    
    
    ended June 30,(in millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Hurricane Katrina (proceeds) costs, net
    
    $
    
    
    
    $
    (6.1
    )
    
    $
    0.1
    
    
    $
    (5.9
    )Johnsonville fibers closure costs, net (See Note 5)
    
    
    
    
    
    
    (1.1
    )
    
    
    
    
    
    
    (2.1
    )Legal and settlement costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.9
    )Gain on sale of assets
    
    
    (0.2
    )
    
    
    (1.4
    )
    
    
    (0.2
    )
    
    
    (1.4
    )(Proceeds) costs relating to anti-dumping activities, net
    
    
    (0.1
    )
    
    
    0.1
    
    
    
    (0.1
    )
    
    
    0.1$
    (0.3
    )
    
    $
    (8.5
    )
    
    $
    (0.2
    )
    
    $
    (11.2
    )
 1 2
   9. NET LOSS PER COMMON SHARE
  18




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,(In millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator for basic and diluted net loss attributable to common
stockholders per common share:Loss from continuing operations
    
    $
    (10.9
    )
    
    $
    (8.2
    )
    
    $
    (33.6
    )
    
    $
    (32.3
    )Accretion (a)
    
    
    
    
    
    
    (3.8
    )
    
    
    (2.3
    )
    
    
    (7.5
    )Net loss attributable to common stockholders from continuing
Operations
    
    
    (10.9
    )
    
    
    (12.0
    )
    
    
    (35.9
    )
    
    
    (39.8
    )Net loss attributable to common stockholders from
discontinued
Operations
    
    
    
    
    
    
    (3.2
    )
    
    
    
    
    
    
    (3.4
    )Net loss attributable to common stockholders
    
    $
    (10.9
    )
    
    $
    (15.2
    )
    
    $
    (35.9
    )
    
    $
    (43.2
    )Denominator:Denominator for basic net loss attributable to common
stockholders per common share  weighted-average shares
    
    
    32.4
    
    
    
    32.3
    
    
    
    32.4
    
    
    
    32.3Effect of dilutive securities:Employee stock options, warrants, and restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Preferred stock  if converted (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted net loss attributable to common
stockholders per common share  adjusted weighted-average
shares
    
    
    32.4
    
    
    
    32.3
    
    
    
    32.4
    
    
    
    32.3
 
 (a)
    
    Accretion is recorded based on the fair market value of the increase in the liquidation
preference of the preferred stock. Subsequent to our filing voluntary petitions in the United
States Bankruptcy Court on February 22, 2008, no accretion has been recorded. The liquidation
preference of the preferred stock was $192.2 million at June 30, 2008. For additional information
regarding the bankruptcy, see Note 3.(b)
    
    These shares were not included in the EPS calculation, since their effect would have been
anti-dilutive, but may be included under the if-converted method in future calculations. 10. DEFINED BENEFIT PLANS
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,(In millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Service cost
    
    $
    
    
    
    $
    
    
    
    $
    0.1
    
    
    $
    Interest cost
    
    
    0.9
    
    
    
    0.9
    
    
    
    1.8
    
    
    
    1.8Expected return on assets
    
    
    (1.0
    )
    
    
    (0.9
    )
    
    
    (2.0
    )
    
    
    (1.8
    )Total net periodic pension cost
    
    $
    (0.1
    )
    
    $
    0.0
    
    
    $
    (0.1
    )
    
    $
    
 Employer contributions
  19




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##### Table of Contents



11. COMMITMENTS AND CONTINGENCIES
     Six Months endedJune 30,(In millions)
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    5.4
    
    
    $
    5.1Changes in remediation costs
    
    
    0.8
    
    
    
    0.5Expenditures
    
    
    (0.1
    )
    
    
    (0.2
    )Balance at end of period
    
    $
    6.1
    
    
    $
    5.4
    20




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##### Table of Contents



12. FOREIGN CURRENCY TRANSLATION AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  13. SEGMENT INFORMATION
   
    
    PermaClear®, PermaClear HP®, and Thermaclear Ti®
solid-stated PET resin from chemical-based raw materials for use in the manufacturing of
plastic beverage bottles and other food packaging and Fortrel® chemical-based
polyester staple fiber for use in home furnishing, non-woven, apparel, and industrial
products.
  
    
    Wellamid® and Wellamid Ecolon® recycled-based nylon engineering
resin for use in the injection molding industry.
   21




---



##### Table of Contents



Chemical-
    
    Recycled-(In millions)
    
    Based Segment
    
    Based Segment
    
    TotalThree months ended June 30, 2008Revenues
    
    $
    268.8
    
    
    $
    12.3
    
    
    $
    281.1Segment profit
    
    
    10.1
    
    
    
    0.1
    
    
    
    10.2Depreciation and amortization from continuing
operations
    
    
    7.5
    
    
    
    
    
    
    
    7.5Assets
    
    
    445.8
    
    
    
    29.9
    
    
    
    475.7Three months ended June 30, 2007 (Restated)Revenues
    
    $
    284.0
    
    
    $
    15.9
    
    
    $
    299.9Segment profit (loss)
    
    
    16.7
    
    
    
    (2.0
    )
    
    
    14.7Depreciation and amortization from continuing
operations
    
    
    15.4
    
    
    
    0.6
    
    
    
    16.0Assets
    
    
    773.1
    
    
    
    47.9
    
    
    
    821.0Six months ended June 30, 2008Revenues
    
    $
    495.3
    
    
    $
    25.8
    
    
    $
    521.1Segment profit (loss)
    
    
    14.3
    
    
    
    (0.6
    )
    
    
    13.7Depreciation and amortization from continuing
operations
    
    
    14.8
    
    
    
    0.2
    
    
    
    15.0Six months ended June 30, 2007 (Restated)Revenues
    
    $
    579.8
    
    
    $
    39.3
    
    
    $
    619.1Segment profit (loss)
    
    
    21.5
    
    
    
    (2.5
    )
    
    
    19.0Depreciation and amortization from continuing
operations
    
    
    30.7
    
    
    
    1.1
    
    
    
    31.8
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Segment ProfitTotal for reportable segments
    
    $
    10.2
    
    
    $
    14.7
    
    
    $
    13.7
    
    
    $
    19.0Interest expense, net
    
    
    (3.0
    )
    
    
    (15.2
    )
    
    
    (14.1
    )
    
    
    (30.3
    )Depreciation and amortization
    
    
    (7.5
    )
    
    
    (16.0
    )
    
    
    (15.0
    )
    
    
    (31.8
    )Permitted Adjustments (1)
    
    
    (10.6
    )
    
    
    8.3
    
    
    
    (18.2
    )
    
    
    10.8Loss from continuing operations before income tax
Benefit
    
    $
    (10.9
    )
    
    $
    (8.2
    )
    
    $
    (33.6
    )
    
    $
    (32.3
    )AssetsTotal for reportable segments
    
    $
    475.7
    
    
    $
    821.0Corporate assets (2)
    
    
    36.7
    
    
    
    162.5$
    512.4
    
    
    $
    983.5
 22




---



##### Table of Contents



(1)
    
    Permitted Adjustments are adjustments specified in our debt agreements, which are used in the
calculation of EBITDA, as defined, that is used to report our segment profit (loss). Permitted
adjustments included the following for the periods indicated: Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Permitted Adjustments:Reorganization items
    
    $
    8.1
    
    
    $
    
    
    
    $
    14.2
    
    
    $
    Johnsonville fibers disposal costs, net (See Note 5)
    
    
    
    
    
    
    (1.1
    )
    
    
    
    
    
    
    (2.1
    )Hurricane Katrina proceeds (costs), net (See Note 8)
    
    
    
    
    
    
    (6.1
    )
    
    
    0.1
    
    
    
    (5.9
    )Legal and settlement costs (See Note 8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.9
    )Gain on sale of assets (See Note 8)
    
    
    (0.2
    )
    
    
    (1.4
    )
    
    
    (0.2
    )
    
    
    (1.4
    )Non-cash inventory reserves
    
    
    1.1
    
    
    
    
    
    
    
    2.3
    
    
    
    Provision for uncollectible accounts
    
    
    0.6
    
    
    
    0.2
    
    
    
    0.8
    
    
    
    0.3Other
    
    
    1.0
    
    
    
    0.1
    
    
    
    1.0
    
    
    
    0.2Total Permitted Adjustments
    
    $
    10.6
    
    
    $
    (8.3
    )
    
    $
    18.2
    
    
    $
    (10.8
    )
 (2)
    
    Corporate assets include cash, certain prepaid expenses, construction
in progress, and certain other assets not allocated to the segments. 23




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING INFORMATION
   RECENT DEVELOPMENTS
 Proceedings Under Chapter 11 of the Bankruptcy Code
  24




---



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25




---



##### Table of Contents




    
    have our Disclosure Statement approved by the Bankruptcy Court by August
15th,
2008;
    
    obtain an order confirming the Plan by September 26,
2008; and
    
    emerge from
bankruptcy prior to October 6, 2008.
     26




---



##### Table of Contents



GENERAL
  ® ®
 ® ®
   IMPACT OF ACCOUNTING CHANGES AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 New Accounting Standards Adopted
   27




---



##### Table of Contents



Recently Issued Accounting Pronouncements
      28




---



##### Table of Contents



RESULTS OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2008 COMPARED TO THREE MONTHS ENDED JUNE 30, 2007
  Chemical-
    
    
    Recycled-(In millions)
    
    Based
    
    
    Based
    
    
    TotalNet SalesSales volumes
    
    $
    (45.9
    )
    
    $
    (4.7
    )
    
    $
    (50.6
    )Net selling prices
    
    
    30.7
    
    
    
    1.1
    
    
    
    31.8Decrease in net sales
    
    
    (15.2
    )
    
    
    (3.6
    )
    
    
    (18.8
    )Cost of SalesVolume effect
    
    $
    (42.8
    )
    
    $
    (2.6
    )
    
    $
    (45.4
    )Raw material unit costs
    
    
    35.5
    
    
    
    (0.1
    )
    
    
    35.4Plant-added unit costs
    
    
    (4.5
    )
    
    
    (2.4
    )
    
    
    (6.9
    )Decrease in cost of sales
    
    
    (11.8
    )
    
    
    (5.1
    )
    
    
    (16.9
    )Increase (decrease) in gross profit
    
    $
    (3.4
    )
    
    $
    1.5
    
    
    $
    (1.9
    )
    29




---



##### Table of Contents



Three MonthsEnded June 30,(In millions)
    
    2008
    
    
    2007Hurricane Katrina proceeds, net
    
    $
    
    
    
    $
    (6.1
    )Johnsonville fibers closure costs
    
    
    
    
    
    
    (1.1
    )Gain on sale of assets
    
    
    (0.2
    )
    
    
    (1.4
    )Other
    
    
    (0.1
    )
    
    
    0.1$
    (0.3
    )
    
    $
    (8.5
    )
        30




---



##### Table of Contents



SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO SIX MONTHS ENDED
JUNE 30, 2007
  Chemical-
    
    

Recycled-(In millions)
    
    Based
    
    
    Based
    
    
    TotalNet SalesSales volumes
    
    $
    (145.9
    )
    
    $
    (14.8
    )
    
    $
    (160.7
    )Net selling prices
    
    
    61.4
    
    
    
    1.3
    
    
    
    62.7Decrease in net sales
    
    
    (84.5
    )
    
    
    (13.5
    )
    
    
    (98.0
    )Cost of SalesVolume effect
    
    $
    (138.6
    )
    
    $
    (13.6
    )
    
    $
    (152.2
    )Raw material unit costs
    
    
    59.8
    
    
    
    0.7
    
    
    
    60.5Plant-added unit costs
    
    
    (4.1
    )
    
    
    (1.6
    )
    
    
    (5.7
    )Decrease in cost of sales
    
    
    (82.9
    )
    
    
    (14.5
    )
    
    
    (97.4
    )Increase (decrease) in gross profit
    
    $
    (1.6
    )
    
    $
    1.0
    
    
    $
    (0.6
    )
    31




---



##### Table of Contents



Six Months EndedJune 30,(In millions)
    
    2008
    
    
    2007Hurricane Katrina (proceeds) costs, net
    
    $
    0.1
    
    
    $
    (5.9
    )Legal and settlement costs
    
    
    
    
    
    
    (1.9
    )Johnsonville fibers closure costs
    
    
    
    
    
    
    (2.1
    )Gain on sale of assets
    
    
    (0.2
    )
    
    
    (1.4
    )Other
    
    
    (0.1
    )
    
    
    0.1$
    (0.2
    )
    
    $
    (11.2
    )
       32




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##### Table of Contents



CAPITAL RESOURCES AND LIQUIDITY
 Historical Flow of Funds
    Our Liquidity in Bankruptcy
   33




---



##### Table of Contents



Minimum EBITDA, as
    

        Actual EBITDA, asApplicable Month
    

    defined (cumulative)
    


defined (cumulative)March 2008
    
    $
    2.1 million
    
    $
    3.97 millionApril 2008
    
    $
    5.61 million

    
    $
    6.81 millionMay 2008
    
    $

    10.37 million
    
    $
    12.06 millionJune 2008
    
    $
    15.81 million
    
    $
    14.19 millionJuly 2008
    
    $
    19.635 millionAugust 2008
    
    $
    22.865 millionSeptember 2008
    
    $

    23.8 millionOctober 2008
    

    $
    27.455 millionNovember 2008
    
    $

    28.56 millionDecember 2008
    
    $
    30.855 millionJanuary 2009
    
    $
    31.5 million
   34




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##### Table of Contents



Month
    
    
    Month
    
    
    Month
    
    
    MonthEnding
    
    
    Ending
    
    
    Ending
    
    
    EndingMarch 31,
    
    
    April 30,
    
    
    May 31,
    
    
    June 30,(In millions)
    
    2008
    
    
    2008
    
    
    2008
    
    
    2008Loss from continuing
operations
    
    $
    (2.4
    )
    
    $
    (4.7
    )
    
    $
    (1.1
    )
    
    $
    (5.1
    )Interest expense, net
    
    
    0.9
    
    
    
    0.9
    
    
    
    1.0
    
    
    
    1.1Depreciation and
amortization
    
    
    2.5
    
    
    
    2.6
    
    
    
    2.4
    
    
    
    2.5Provision for
uncollectible accounts
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.6Permitted Adjustments:Reorganization items
    
    
    2.8
    
    
    
    3.1
    
    
    
    2.6
    
    
    
    2.4Sale of assets
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    Inventory reserves
    
    
    
    
    
    
    1.1
    
    
    
    Other
    
    
    0.1
    
    
    
    
    
    
    
    0.4
    
    
    
    0.6Total permitted
adjustments
    
    
    2.9
    
    
    
    4.0
    
    
    
    3.0
    
    
    
    3.0EBITDA, as defined
    
    $
    4.0
    
    
    $
    2.8
    
    
    $
    5.3
    
    
    $
    2.1
    35




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
    
    have our Disclosure Statement approved by the Bankruptcy Court by August
15th,
2008;
    
    obtain an order confirming the Plan by September 26,
2008; and
    
    emerge from bankruptcy prior to October 6, 2008.
  36




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37




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 (a)
    
    Based on an evaluation of the effectiveness of the Companys
disclosure controls and procedures as of June 30, 2008, both the Chief
Executive Officer and the Chief Financial Officer of the Company
concluded that the Companys disclosure controls and procedures, as
defined in Rules 13a14(c) and 15d14(c) promulgated under the
Securities Exchange Act of 1934, were effective on that date.(b)
    
    Based on an evaluation of whether any change in the Companys internal
control over financial reporting (as defined in Rule 13a-15(f)
promulgated under the Exchange Act) that materially affected, or is
reasonably likely to materially affect, such internal control occurred
during the period covered by this Report, both the Chief Executive
Officer and the Chief Financial Officer of the Company concluded that
no such change occurred.
 
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
   (In millions)
 Principal at
    
    
    Interest Owed atDescription
    
    June 30, 2008
    
    
    June 30, 2008 (c)First Lien Term Loan that matures on
February 10, 2009 and has an annual
interest rate of three-month LIBOR
plus 4.00% due quarterly
    
    $
    185.0
    
    
    $
    5.5Second Lien Term Loan that matures on
February 10, 2010 and has an annual
interest rate of three-month LIBOR
plus 6.75% due quarterly (a)
    
    
    265.0
    
    
    
    10.9Senior Secured Superpriority
Debtor-In-Possession Credit
Agreement, dated as of February 26,
2008, that matures on February 25,
2009 and bears interest at the
Debtors option of the Prime Rate ply
1.75% per annum or at the Adjusted
LIBOR Rate plus 2.75% per annum (b)
    
    
    138.6
    
    
    
    0.1Other
    
    
    1.0
    
    
    
    $
    589.6
    
    
    $
    16.5
 
 (a)
    
    This amount at June 30, 2008, is before any unamortized
portion of the original issue discount. Subsequent to our proceedings
under Chapter 11 of the Bankruptcy Code, we ceased amortization
of the original issue discount, since the liability is compromised.
The unamortized portion of the original issue discount was
$1.7 million at February 22, 2008, and June 30, 2008.(b)
    
    We did not achieve the minimum cumulative EBITDA, as defined, requirement for the month
ending June 2008 and obtained a waiver for the period July 16, 2008 through August 15,
2008, from the Administrative Agent, on behalf of the Majority Lenders. This waiver does
not modify any monthly cumulative EBITDA, as defined, amounts.(c)
    
    Interest expense recorded subsequent to February 22, 2008, consists only of interest
related to our DIP Credit Agreement. These amounts represent contractual interest owed at
June 30, 2008, shown as compromised liabilities.  39




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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
  10.1
    
    Credit Agreement, dated as of February 26, 2008, among Wellman, Inc.
and the other Borrowers Named Herein, Debtors and Debtors in
Possession as Borrowers, with Wellman, Inc. as Funds Administrator,
the Lenders Signatory Hereto From Time to Time, as Lenders, and
Deutsche Bank Securities, Inc. as Lead Arranger and Book runner, JP
Morgan Chase Bank, National Association, as Syndication Agent,
General Electric Capital Corporation, LaSalle Business Credit, LLC,
Wachovia Capital Finance Corporation (Central) as Co-Documentation
Agents (Exhibit 10.1 of the Companys Form 8-K filed March 4, 2008,
incorporated by reference herein)10.2
    
    First Amendment to the Credit Agreement, dated May 8, 2008, by and
among Wellman, Inc. as Funds Administrator and the other borrowers
under the Credit Agreement party hereto, each as Debtor and
Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto.10.3
    
    Second Amendment to the Credit Agreement, dated May 14, 2008, by and
among Wellman, Inc. as Funds Administrator and the other borrowers
under the Credit Agreement party hereto, each as Debtor and
Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto.10.4
    
    Third Amendment to the Credit Agreement, dated May 21, 2008, by and
among Wellman, Inc. as Funds Administrator and the other borrowers
under the Credit Agreement party hereto, each as Debtor and
Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto.10.5
    
    Fourth Amendment to the Credit Agreement, dated June 5, 2008, by and
among Wellman, Inc. as Funds Administrator and the other borrowers
under the Credit Agreement party hereto, each as Debtor and
Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto.10.6
    
    Fifth Amendment to the Credit Agreement, dated June 18, 2008, by and
among Wellman, Inc. as Funds Administrator and the other borrowers
under the Credit Agreement party hereto, each as Debtor and
Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto (Exhibit 99.2 of the Companys Form 8-K filed June 19, 2008,
incorporated by reference herein).10.7
    
    Sixth Amendment to the Credit Agreement, dated July 16, 2008, by and
among Wellman, Inc. as Funds Administrator and the other borrowers
under the Credit Agreement party hereto, each as Debtor and
Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto.10.8
    
    Seventh Amendment to the Credit Agreement, dated July 30, 2008, by
and among Wellman, Inc. as Funds Administrator and the other
borrowers under the Credit Agreement party hereto, each as Debtor
and Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto.
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10.9
    
    Eighth Amendment to the Credit Agreement, dated August 4, 2008, by
and among Wellman, Inc. as Funds Administrator and the other
borrowers under the Credit Agreement party hereto, each as Debtor
and Debtor-in-possession, Deutsche Bank Trust Company Americas, as
Administrative Agent, and the other financial institutions party
hereto.10.10
    
    Security Agreement, dated as of February 26, 2008, between Wellman,
Inc. and certain of its subsidiaries and Deutsche Bank Trust Company
Americas as collateral agent (Exhibit 10.2 of the Companys Form
10-K for the year ended December 31, 2007, incorporated by reference
herein)10.11
    
    Grant of Security Interest in U.S. Trademarks and Patents between
Wellman, Inc. and Fiber Industries, Inc. as Debtors and Debtors-in-possession and Deutsche Bank Trust Company Americas as collateral
agent (Exhibit 10.3 of the Companys Form 10-K for the year ended
December 31, 2007, incorporated by reference herein)10.12
    
    Grant of Security Interest in U.S. Copyrights between Wellman, Inc.
MRF, Inc., and Fiber Industries, Inc. as Debtors and Debtors-in-possession and Deutsche Bank Trust Company Americas as collateral
agent (Exhibit 10.4 of the Companys Form 10-K for the year ended
December 31, 2007, incorporated by reference herein)10.13
    
    Financing Commitment Letter between Wellman, Inc., together with
certain subsidiaries of the Company and Ableco Finance, LLC, as
Lender (Exhibit 10.1 of the Companys Form 8-K filed
August 8, 2008,
incorporated by reference herein)31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200231.2
    
    Certification of the Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 200232.1
    
    Certification of the Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 200232.2
    
    Certification of the Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
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SIGNATURES
  WELLMAN, INC.Dated August 11, 2008
    By /s/ Keith R. PhillipsChief Financial Officer andVice President
(Principal Financial Officer and Principal
Accounting Officer) 42