FORM 10-K/A

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended               December 31, 1999
                          ------------------------------------------------------

                           Commission File No. 0-1051

                            CONSOLIDATED PAPERS, INC.
                            (A Wisconsin Corporation)

                   IRS Employer Identification No. 39-0223100

                     Wisconsin Rapids, Wisconsin 54495-8050
                           Telephone No. 715-422-3111
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Securities registered pursuant to Section 12(b) of the Act:

    Title of each class               Name of each exchange on which registered
    -------------------               -----------------------------------------
Common Stock, Par Value $1.00                  New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:   None
-------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                              Yes (X)    No ( )

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)

The aggregate market value of January 31, 2000 of the voting stock held by
nonaffiliates of the registrant was approximately $1.54 billion, based upon the
NYSE closing price on January 31, 2000 and an estimate that 61.4% of the stock
is owned by nonaffiliates.

On January 31, 2000 there were 90,852,385 shares of common stock outstanding.


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Information required by Items 10, 11, and 12 of Form 10-K is incorporated by
reference (except as specifically excepted in the Proxy Statement) into Part III
hereof from the registrant's Proxy Statement to Shareholders for the Annual
Meeting of Shareholders to be held on or prior to June 30, 2000.

This filing is being made to amend Items 1, 7, and 8 to the previously filed
Form 10-K.

ITEM 1.  BUSINESS.

Consolidated Papers, Inc. was incorporated in Wisconsin in 1894. The company and
its subsidiaries (collectively, the "Company") operate primarily in the pulp and
paper industry. Pulp and paper operations involve the manufacture and sale of
coated and supercalendered printing paper for the printed communications
industry, coated specialty papers used largely in the packaging and labeling of
food and consumer products, and the manufacture of pulp and recycled pulp for
use in the manufacture of these papers. The Company also manufactures paperboard
and paperboard products. Integrated in the business are electrical power
operations, which have nominal third party sales.

Approximately 5.5%, or $91.6 million, of the Company's 1999 net sales were made
outside of the United States. Substantially all foreign sales of printing papers
were to Canadian customers, where the Company has two sales offices. Specialty
papers manufactured by the Company's Stevens Point Division are sold throughout
the world through a distribution arrangement with a Swiss company. Sales of
specialty papers outside the United States amounted to $12.8 million in 1999.
The Company has no manufacturing facilities outside of the United States. The
Company owns approximately 300,000 acres of forestland in Canada.

Effective July 1, 1995, the Company acquired Niagara of Wisconsin Paper
Corporation, Niagara, Wisconsin, a manufacturer of coated groundwood publication
papers; Lake Superior Paper Industries, Duluth, Minnesota, a manufacturer of
supercalendered paper; and Superior Recycled Fiber Industries, Duluth,
Minnesota, a producer of high-quality recycled pulp from post consumer office
scrap paper for approximately $235 million in cash and extinguished $52 million
in debt. Effective December 31, 1997, Niagara of Wisconsin Paper Corporation
became a division of the Company.

In October, 1997, the Company acquired Repap Wisconsin, Inc. and Repap Sales
Corporation for approximately $258 million in cash and assumed debt of $419
million and other liabilities of $156 million. The operations are now known as
Inter Lake Papers, a division of the Company. Inter Lake Papers manufactures
groundwood and groundwood-free coated papers for the printing and publishing
industries.

In May, 1999, the Company sold the assets of Castle Rock Container Company, a
division of Consolidated Papers, Inc. and manufacturer of corrugated products,
to St. Laurent Packaging Corp. for approximately $24 million, an amount which
approximated net book value.

The Company's principal product is coated and supercalendered printing papers
for the printing and publishing industries. The Company is North America's
leading manufacturer of these papers. In addition, the Company manufactures
coated specialty papers, paperboard, paperboard products, and kraft and recycled
pulp.

The percent of coated and supercalendered printing paper sales to total sales
was 83.9% (1995), 83.7% (1996), 85.4% (1997), 87.6% (1998), and 87.5% (1999).

Coated and supercalendered printing papers are sold directly to magazine and
catalog publishers and through paper merchants to publishers and commercial
printers. Distribution of other paper products is by means of direct sales to
quantity users.



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    DISTRIBUTION OF COATED AND SUPERCALENDERED PRINTING PAPER SALES IN TONS

                                   Direct
                                  Publisher           Merchant
                                  Accounts            And Other
                 Year                 %                   %
                 ----             ---------           ----------
                 1995                56%                 44%
                 1996                56%                 44%
                 1997                53%                 47%
                 1998                54%                 46%
                 1999                54%                 46%

The Company competes in the coated and supercalendered printing paper market and
the coated specialty paper market (1) by providing paper of high quality
incorporating special properties desired by its customers, (2) by pricing its
products competitively, and (3) by emphasizing service to customers by prompt
attention to orders, timely and reliable delivery of products to customers, and
technical assistance to printers that use the Company's products.

Few paper manufacturers have unique qualities in printing papers or coated
specialty papers, or unique machines or secret processes that give them a strong
competitive advantage over other paper manufacturers. Because of this, price
competition is a more important marketing factor during periods of excess supply
of, or low demand for, this product.

The Company competes in the coated and supercalendered printing paper market
with other paper companies, some of which are substantially larger, more
diversified, and with greater financial resources. However, the Company is the
largest manufacturer of printing papers in North America, having shipped
1,907,069 tons of coated and supercalendered printing papers in 1999, which
represents approximately 19% of the U.S. market for this product. Sales to
Unisource and xpedx, paper merchants, as a percent of net sales, amounted to 14%
and 11%, respectively in 1999. The Company's principal U.S. competitors are
Bowater Incorporated; Champion International Corporation; Crown Vantage Inc.;
International Paper Company; Madison Paper Industries; Mead Corporation; the
Northwest Paper Division of Potlatch Corporation; S.D. Warren, a subsidiary of
Sappi Ltd.; UPM-Kymmene; and Westvaco Corporation.

Merchant customers like Unisource and xpedx are not committed by contract to
purchase any minimum quantity of paper. Instead, the Company has the ability to
decline to sell to any merchant whose performance is believed to be inadequate
over an extended period, or whose competitors present a better opportunity for
the sale of the Company's products in a trading area. Substantially all
merchants receive a 2% discount from the invoice price if payment is made within
twenty days. In competitive situations the Company may make special pricing and
payment arrangements.

Energy
------

The Company's energy sources during 1999 were:

                      Coal                          26.9%
                      Process Waste                 41.4%
                      Natural Gas                   14.7%
                      Electricity                   16.7%
                      Petroleum products              .3%

The Company currently purchases 74% of its coal requirement under two contracts,
one for low-sulfur western U.S. coal, which expires December 31, 2002, and the
other for Kentucky coal, which expires December 31, 2001. The remaining 26% of
its coal requirement is purchased on annual contracts. Coal is currently in
ample supply, and we anticipate no supply problems in 2000.

The Company is in the fourth year of a six-year agreement for the firm
transportation of approximately 64% of its total natural gas supply.


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Approximately 36% of the Company's natural gas consumption is in the
interruptible category, which means it is subject to reduction whenever cold
weather or other events decrease the amount of pipeline space available. When
such reductions occur, production is maintained by substituting fuel oil or
propane, of which the Company has an adequate supply. Natural gas is currently
in good supply and minimal interruption is expected in 2000.

Raw Materials
-------------

The Company is integrated through ownership of forest lands and through its own
pulp-producing facilities. The harvest during 1999 from Company lands produced
11.8% of the wood used in the Company's pulp mills. Wood used in the Company's
pulp mills from non-Company land came from independent producers who obtain
their wood products from public and private lands, and from sawmill residues.
The Company was able to acquire an adequate supply of pulpwood and wood chips
during 1999 and expects that its regular suppliers will be able to furnish it
with an adequate supply of pulpwood and wood chips for 2000 operations.

The Company also purchases market pulp on a regular basis and purchased 34.4% of
the total pulp consumed by the Company's paper mills during 1999. The remainder
of the pulp requirement is produced internally. The Company has been able to
acquire sufficient pulp to operate its mills at planned rates to date and has
contracts and other arrangements for 68% of its anticipated requirements for
2000. Market pulp is currently in critically short supply; however, the Company
expects to acquire sufficient pulp to operate its mills at planned rates in
2000.

The principal raw materials consumed in the manufacture of kraft pulp include
pulpwood, methanol, caustic soda, oxygen, hydrogen peroxide, sulfuric acid,
sodium chlorate, and lime. The principal raw materials consumed in the
manufacture of coated papers include kraft pulp, groundwood pulp,
thermomechanical pulp, post consumer recycled pulp, starch, soya protein, clay,
calcium carbonate, latex, talc, and titanium dioxide pigment.

The Company has multiple sources for all principal raw materials consumed and
purchases most raw materials from domestic sources. The majority of the
purchased kraft pulp is imported from Canada, along with small quantities of
wood chips. During 1999, the Company was able to procure adequate supplies of
all principal raw materials and experienced no interruptions of production due
to materials shortages. Most raw materials remain in good supply. The Company
expects no interruptions of production due to materials shortages in 2000.

Research and Development
------------------------

The Company has various patents but does not believe its business is dependent
on any one patent or group of patents.

The Company spent an estimated $7.5 million in 1999, $7.3 million in 1998, and
$6.8 million in 1997 on research and development. These funds were devoted to
the development of improved processes and new process control systems, the
development of new products and the improvement of existing products,
environmental projects, and sponsored research.

Legal and Environmental
-----------------------

The Company is committed to complying with all state and federal environmental
regulations.

The Company remains in compliance with all conditions and limitations of its
wastewater permits. The Company continues to invest capital funds to upgrade and
maintain wastewater treatment facilities in preparation for production increases
and future regulations. New wastewater treatment solids dewatering equipment for
the Water Quality Center (WQC) was purchased in 1999 and is scheduled to be
installed during 2000. The cost of this upgrade is $745,000. The WQC treats
process wastewater from Biron, Kraft and Wisconsin Rapids divisions. A new mill
effluent pipeline was installed at Inter Lake Papers


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Division at a cost of $1 million. Wastewater permit renewal applications were
completed and submitted to the Wisconsin Department of Natural Resources (WDNR)
during 1997. During 1998, wastewater permits were reissued for Inter Lake Papers
(ILP) and Niagara divisions. Some of ILP's permit limits and monitoring
requirements were judged unreasonable and were adjudicated. The Company
anticipates resolution of ILP permit issues without the need for a hearing. The
Water Renewal Center (WRC) permit is expected to be reissued in the first
quarter of 2000. The WRC treats process wastewaters from Stevens Point and
Wisconsin River divisions. The WQC permit was extended until April 15, 2001. The
renewed wastewater permit requirements are not expected to cause material
changes in the Company's business or impact its competitive position.

The Company continues to operate according to its storm-water discharge permits.
The storm-water permits include a pollution prevention plan, best management
practices and may require storm-water sampling and testing and pollution
control. The storm-water permit requirements are not expected to cause material
changes in the Company's business or affect its competitive position.

Clean Air Act operating permit applications for all of the Company's major
sources have been submitted to the WDNR. The WDNR continues review and issuance
of major source air operating permits. Our facilities are allowed to continue to
operate under their existing permits until the new operating permits are issued.
We are amending our permit applications as necessary to address process changes
or when new emissions information becomes available. To date, Lake Superior
Paper Industries (LSPI), Superior Recycled Fiber Industries (SRFI), Wisconsin
River Division, WRC, and Paperboard Products Division were issued operating
permits. The WDNR is currently reviewing operating permit applications for
Niagara Division, ILP and Stevens Point Division. The air operating permit
requirements are not expected to cause material changes in the Company's
business or affect its competitive position.

In September 1998, the Environmental Protection Agency (EPA) finalized
regulations addressing the formation and transport of ozone across state
boundaries in the eastern half of the United States. These regulations require
22 states (including Wisconsin) to reduce emissions of nitrogen oxides, a
precursor to ozone formation. States must submit an implementation plan to the
EPA within one year and achieve final compliance by May 2003. Court rulings have
granted an indefinite stay on the submittals of the implementation plans
addressing nitrogen oxide (NOx) emission reductions and have invalidated the
EPA's new 8-hour ozone and the fine particulate matter (PM2.5) ambient air
quality standards. Depending on the court's decision and WDNR's implementation
plan, the Company may incur significant capital and operating costs to reduce
nitrogen oxide emissions from its power and recovery boilers. If utilities
serving the Company's operations are required to reduce nitrogen oxides, the
Company may incur additional costs for purchased energy.

On June 20, 1996, the EPA published the final accidental release prevention
rules. The risk management rules required applicable facilities to develop,
submit and register a risk management plan by June 21, 1999. The Company
submitted the required risk-management plans for all of its applicable
facilities in accordance with the June 21, 1999 deadline. On August 5, 1999,
President Clinton signed into law the Chemical Safety Information, Site Security
and Fuels Regulatory Relief Act. This act establishes new provisions for
reporting and disseminating information contained in the risk management plans.
The Company is in compliance with this act.

The Company remains in compliance with the monitoring and reporting requirements
of state groundwater regulations applicable to its active and inactive
landfills. The Company continues to explore solid waste reduction and recycling
alternatives to decrease costs and reliance on landfills. The Company continues
operation of its ConsoGro (Water Quality Center wastewater treatment solids) and
NiaGro (Niagara Division wastewater treatment solids) agricultural landspreading
programs. The ConsoGro and NiaGro programs reduce dependence on landfills and
benefit the local agricultural community and environment. The Company continues
to distribute lime sludge from its Kraft pulp mill as an agricultural liming
agent and for use to neutralize wastewater. Waste residue from LSPI/SRFI is
utilized as daily cover for



<PAGE>

landfills, resulting in significant cost savings. The Company completes landfill
site life evaluations annually to assure adequate lead time for permitting and
constructing required new sites. The planned construction activities at WQC and
WRC landfills were completed during 1999. Future landfill construction will be
completed as required to support the Company's operations. The Company has
adequate landfill capacity at this time to meet projected needs. At this time,
the Company is unable to predict the effect of future landfill or groundwater
regulations.

The Clean Air Act Amendments of 1990 and the Clean Water Act Effluent Guidelines
Limitations will have a significant financial impact on the paper industry. The
U.S. EPA adopted rules in 1998 to reduce the industry's discharge of air and
water pollutants, and has proposed additional rules to further reduce industry
emissions of air pollutants. The air (Maximum Achievable Control Technology
(MACT I)) and water regulations (Effluent Guidelines) are applicable to the
Company's bleached Kraft pulp mill's pulping, bleaching, and wastewater
operations. Additional proposed regulations addressing air pollutants (MACT II)
from Kraft pulp mill recovery boilers, lime kilns and smelt dissolving tanks are
expected to be reproposed in early 2000 and finalized in December 2000 with
compliance required within 3 years. These final and proposed regulations are
commonly referred to as the "Cluster Rules." The Company's review of MACT I and
the Effluent Guidelines indicates that additional capital expenditures of
approximately $2.6 million will be required to assure compliance by April 2001.
Due to the Company's proactive environmental planning and expenditures, we are
well prepared to meet the requirements of MACT I and the Effluent Guidelines. As
a result of the recently completed chlorine-elimination program, the Company is
already in compliance with many of the requirements of MACT I and the Effluent
Guidelines.

The Company has formed a Cluster Rules implementation team to define
requirements and determine the most cost-effective options for compliance.
Compliance with MACT I and the Effluent Guidelines requirements is not expected
to cause material changes in the Company's business or affect its competitive
position.

The Company cannot predict the potential economic impact of MACT II. When MACT
II is reproposed and finalized, the Company will define requirements and
determine the most cost-effective option for compliance.

The Company remains in compliance with all provisions of emergency planning
community right-to-know legislation and federal and state underground storage
tank regulations. Environmental activities are directed at protecting the
environment through both pollution control and pollution prevention. The Company
actively participates in the Wisconsin Paper Council's innovative pollution
prevention partnership with the WDNR. The Company continues to look for
cost-effective pollution prevention opportunities. In 1999, the Company
committed to aligning the environmental management system (EMS) with the ISO
14001 international standard. The goal of aligning the Company's EMS with ISO
14001 is to add value in terms of internal efficiencies, reduced liabilities,
increased customer confidence and progress toward continuous environmental
improvement.

The Company's environmental staff performs annual internal multimedia
environmental audits to assure compliance with environmental laws and
regulations.

The Company continues to follow closely sediment remediation activities underway
on various watershed systems, including the Fox River and Wisconsin River
remediation of sediments containing polychlorinated biphenols (PCBs), which are
believed to have been discharged by companies which manufactured or recycled
carbonless papers in the 1960s and early 1970s. Neither the Company's former
Appleton Division, closed in 1982, nor the Inter Lake Papers facility, acquired
in 1997, was involved in a carbonless paper manufacture or recycling. However,
it is likely that the existing potentially responsible parties on the Fox River
will seek contributions from the Company and others if litigation is initiated.
On the Wisconsin River, the Wisconsin Department of Natural Resources has
prepared a comprehensive management plan (CMP) addressing a


<PAGE>

variety of environmental issues relating to the Petenwell and Castle Rock
flowages, including sediment contamination and water quality. These flowages are
artificial impoundments created by dams downstream of the Company's operations.
The CMP calls for further environmental studies of the flowages, but contains no
mandatory timetables or overall funding mechanism for any remedial actions which
ultimately may be required.

The Company continues to be involved in groundwater monitoring associated with
lagoon closure requirements at Niagara Division. Lagoon closure activities were
completed in 1997. A Consent Order with the Michigan Department Of Environmental
Quality (MDEQ) required that the Company define the vertical and horizontal
extent of groundwater contamination. The approved remedial action plan includes
continued groundwater monitoring and deed restrictions limiting groundwater use.
Active groundwater remediation requirements are not expected.

EPA's industrial boiler MACT rule will be applicable to the Company's power
boilers. EPA is considering subcategorizing boilers into three types, including:
gas fired, liquid fired and solid fuel fired. Current schedule is a proposal in
late 2000, final rule in late 2001 and compliance three years later. EPA's
industrial boiler MACT rules could require significant capital expenditures for
our coal-wood fired boilers. The Company has created a corporate energy work
group and steering committee to define options that cost-effectively address
long-term energy and environmental requirements. At this time, the Company
cannot predict the potential economic impact of EPA's industrial boiler MACT
rule.

The EPA has proposed regulations defining how total maximum daily (wastewater)
loads (TMDL) will be established for every water body that is not meeting water
quality standards. These proposed regulations could significantly impact our
manufacturing and forestry activities. At this time, the Company cannot predict
the potential economic impact of EPA's TMDL rule.

In May 1999, the EPA Office of Enforcement and Compliance, inspected the
Company's Kraft Division. This review is part of a nationwide New Source Review
(NSR) and Prevention of Significant Deterioration (PSD) air compliance audit
program. This nationwide initiative is currently focusing on three industries
including forest products, electric utilities and petroleum refineries. The
review of the Company's Kraft Division is one of many involving the paper
industry. Based on EPA guidance and practice, there are a number of potential
actions which may occur as a result of the inspection. These may include no
action, the issuance of a notice of violation (NOV) or legal action seeking
monetary fines and/or requiring significant capital expenditures for the
installation of additional control equipment. In response to EPA actions, the
Company has a range of options that may include legal challenge.

In June 1999, Niagara Division received a notice of violation (NOV) from the
WDNR. The NOV alleges that the pressurized groundwood facility was constructed
and operated without state and federal air permits. This facility was
constructed and started operation in 1990 under a prior owner. The WDNR advised
the prior owner that the pressurized groundwood facility was exempt from air
permit requirements. However, new methanol air emission data now indicates that
air permits are required. The Company is working with the WDNR to obtain the
necessary permits and resolve the NOV.

As these inspection/enforcement activities proceed, the Company will work with
the regulatory agencies in an effort to resolve issues. At this time, the
Company cannot predict the potential economic impact of EPA's NSR/PSD
enforcement initiative nor the WDNR NOV for Niagara Division. Refer to the MD&A
for additional discussion of the enforcement activities.

The Cluster Rules and the ozone transport regulations are being challenged in
various lawsuits brought by industry, environmental groups and other interested
parties. The outcome of this litigation may significantly affect the Company's
analysis of potential regulatory costs.

The Company cannot predict the potential economic impact of future environmental
regulations or laws. The global warming issue could result in


<PAGE>

mandated reductions of greenhouse gases that would have a negative economic
impact on energy intensive industries including pulp and paper.

Employees
---------

At the end of 1999 the Company employed approximately 6,792 people, essentially
all of whom were full-time employees.

                     EXECUTIVE OFFICERS OF THE REGISTRANT

                                 Current
                                 Position
        Name              Age     Since            Current Position
        ----              ---    --------          ----------------

  George W. Mead           72     1971   Chairman of the Board
  Gorton M. Evans          61     1997   President and Chief Executive Officer
  Richard J. Kenney        59     1997   Senior Vice President, Finance
  Ronald E. Swanson        50     1997   Senior Vice President
  John T. Hurley           65     1997   Senior Vice President, Sales and
                                           Marketing
  James E. Shewchuk        63     1999   Senior Vice President, Administration
  David A. Krommenacker    57     1997   Vice President, Packaging Operations
  John B. Steele           55     1997   Vice President, Free Sheet Operations
  Roger L. Wangen          58     1997   Vice President, Groundwood Operations
  Carl H. Wartman          47     1996   Secretary and General Counsel
  David P. Nimtz           46     1997   Controller
  Donna G. Stephens        51     1999   Treasurer

All executive officers of the Company are elected annually by the Board of
Directors. John T. Hurley retired on December 31, 1999.

All of the executive officers of the Company, except Donna G. Stephens, have
served in executive or managerial positions in the Company for the past five
years. Donna G. Stephens joined the Company's finance department in January 1999
and was elected Treasurer in April 1999. Mrs. Stephens was Vice President and
Treasurer of Deluxe Corporation, Shoreview, Minnesota from 1992 to August 1997.
Deluxe is a supplier of checks and electronic payment services to the finance
and retail industries. She was an independent consultant after leaving Deluxe
and before joining the Company.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.


Financial Condition and Results of Operations
---------------------------------------------

Acquisition.
-----------

Effective October 1997, the company completed the acquisition of Repap USA,
Inc., the holding company for Repap Wisconsin, Inc. and Repap Sales Corporation,
in Kimberly, Wis. The company renamed these operations Inter Lake Papers, Inc.,
Inter Lake Wisconsin, Inc. and Inter Lake Sales Corp., respectively. The
operating results of the acquired companies subsequent to the acquisition dates
are included in the Consolidated Statements of Income. Details of the
acquisition are included in Note 2 of the Notes to Consolidated Financial
Statements.

Asset Impairment and Sale of Assets.
-----------------------------------

In April 1999, the company retired a paper machine production line at its
Niagara Division due to market conditions and production inefficiencies compared
with other production lines. The company recorded a $4.5 million pretax
write-off of these assets in 1999.

In May 1999, the company sold the assets of its Castle Rock Container Company, a
manufacturer of corrugated products, to St. Laurent Packaging Corp. The sale
proceeds approximated net book value.


<PAGE>

Sales and Cost of Sales.
-----------------------

Net sales were $1.8 billion in 1999, compared with record net sales in 1998 of
$2.0 billion and 1997 net sales of $1.7 billion. Shipments of 2,122,000 tons in
1999 were a decrease of 3% from 1998. Shipments in 1998 were a record,
representing a 15% increase over 1997. Gross margin as a percent of sales was
14.5% in 1999, compared with 17.1% in 1998 and 17.5% in 1997. The lower 1999
margin was due primarily to lower selling prices and periodic market-related
downtime. Two small paper machines were temporarily shut down and placed on
standby status during 1999 due to market conditions. Additional downtime was
taken on various other machines, based upon market conditions. During 1999,
total production of printing and specialty papers was reduced by approximately
207,000 tons as part of the Company's efforts to balance production with market
demand. Gross margin declined in 1998 compared to 1997 due to periodic
market-related downtime. The increased domestic demand in 1998 was absorbed by
imports at lower prices from foreign producers taking advantage of low labor
rates and raw material costs, lower currency exchange rates and trade
protectionism. Import sales were up 4% in 1999 compared to 1998, following a 23%
increase in 1998 compared to 1997.

Major components of cost of sales include labor and fringe benefits, pulp and
pulpwood, energy, and depreciation of plant and equipment.

Plant Operations.
----------------

Shipments of printing papers decreased in 1999 by 2%, following an increase of
18% in 1998. In 1999, the increase in shipments of groundwood coated and
supercalendered groundwood papers was more than offset by a decrease in
shipments of groundwood-free papers. The major reason for the increase in
shipments in 1998 was the impact of the acquisition of Inter Lake Papers, which
manufactures a combination of groundwood-free and groundwood coated papers.

Groundwood-free coated shipments (primarily Wisconsin Rapids and Converting
divisions and Inter Lake Papers) decreased 9% in 1999 due to market-related
downtime and the company's rationalization and integration of Inter Lake Papers
products and customer base. Shipments in 1998 increased 35% due to the October
1997 acquisition of Inter Lake Papers and continued productivity improvements on
all paper machines. During 1999, the divisions operated at 88% of available
capacity, compared with 93% in 1998 and 91% in 1997. On average, selling prices
of groundwood-free papers decreased 3% in 1999, following decreases of 1% in
1998 and 5% in 1997.

Groundwood coated shipments (Biron, Wisconsin River and Niagara divisions and
Inter Lake Papers) increased 2% in 1999, following a 16% increase in 1998. The
divisions operated at 91% of available capacity, compared with 95% in 1998 and
96% in 1997. During 1999, selling prices declined 8%, following an improvement
of 8% in 1998 and a decline of 13% in 1997.

Shipments of Lake Superior Paper Industries supercalendered groundwood papers
increased 6% in 1999, compared to a 15% decrease in 1998. The 1999 increase and
1998 decrease in shipments were primarily due to downtime associated with the
machine rebuild in February 1998. Lake Superior Paper Industries operated at
100% of available capacity in both 1999 and 1998, compared with 99% in 1997.
Selling prices declined 2% in 1999, compared with an increase of 8% in 1998 and
a decline of 17% in 1997.

The Stevens Point Division's specialty paper shipments held steady in 1999
compared to 1998, following an increase of 11% in 1998 compared to 1997. In
March 1997, the division's newest paper machine, No. 35, started up, which
increased the division's annual capacity from 116,000 tons to 180,000 tons. The
division operated at 78% of available capacity for 1999, compared with 80% in
1998 and 84% in 1997. Selling prices increased 4% in 1999, following declines of
4% in 1998 and 9% in 1997.

Superior Recycled Fiber Industries, as a result of reduced demand for recycled
pulp, operated at 82% of available capacity in 1999, compared with 89% in both

<PAGE>

1998 and 1997. Selling price reductions of 5% in 1999 compared with a decline of
9% in 1998.

Shipments of paperboard products increased 9% in 1999, following a decrease of
6% in 1998. Shipments of corrugated products decreased 60% in 1999, reflecting
the May 1999 sale of Castle Rock Container Company.

Selling, General and Administrative Expenses.
--------------------------------------------

Selling, general and administrative expenses were $102 million in both 1999 and
1998, following an increase of $18 million in 1998 compared to 1997. The
increase from 1997 to 1998 reflected a full year of expenses in 1998 for the
Inter Lake operations acquired in October 1997. The major component of selling,
general and administrative expenses is salaries and fringe benefits.

Other Income (Expense) and Income Taxes.
---------------------------------------

Other income (expense) was ($54 million) in 1999, ($60 million) in 1998 and ($19
million) in 1997. The improvement in net other expense in 1999 was due,
primarily, to less interest expense on a lower average amount of debt
outstanding during the year. The increase in net other expense in 1998 was due
primarily to interest expense related to additional debt associated with the
October 1997 acquisition of Inter Lake Papers and additional borrowings used for
the early buyout of an operating lease at Lake Superior Paper Industries.

Effective income tax rates were 40.0%, 40.0% and 38.0% in 1999, 1998 and 1997,
respectively. The rate increased in 1998 due, primarily, to nondeductible
goodwill resulting from the acquisition of Inter Lake Papers.

Liquidity and Capital Resources
-------------------------------

Current Account Changes.
-----------------------

The year-end working capital ratio (current assets to current liabilities) was
1.1 at the end of 1999, compared with 1.7 in 1998 and 1.9 in 1997. The reduction
in the working capital ratio reflects both the company's initiative to improve
working capital management and the recognition of previously classified
long-term debt as a current liability at December 31, 1999.

Accounts receivable decreased by $20 million in 1999 and by $14 million in 1998.
The 1999 decrease reflects improvement in the company's collection procedures
and a reduction in receivables of $3 million from the sale of Castle Rock
Container Company. The decrease in 1998 was principally due to lower sales
volume during the fourth quarter of 1998 compared to 1997. The company believes
its collection period is well within the industry's standards.

Inventories decreased $20 million in 1999, including decreases of $11 million in
finished goods and $10 million in raw materials and an increase of $1 million in
stores supplies. The inventory reduction resulted from the implementation of
supply-chain management principles, the sale of $6 million of Castle Rock
Container Company inventory and lower conversion costs. During 1998, inventories
were reduced by $16 million, as finished goods, raw materials and stores
supplies decreased $3 million, $12 million and $1 million, respectively.

Prepaid expenses decreased $16 million in 1999, following an increase of
$22 million in 1998. The 1999 decrease and the 1998 increase were primarily due
to corresponding changes in prepaid income taxes and the current portion of the
deposits associated with the sale and leaseback transactions (see Note 5 of the
Notes to Consolidated Financial Statements).

The current portion of long-term debt was $85 million at December 31, 1999.
There were no current maturities at December 31, 1998 or 1997.

Accounts payable increased $15 million in 1999 as the company improved its
working capital management policies. This compares with a decrease of


<PAGE>

$4 million in 1998 due to timings of payments.

Capital Commitments and Spending.
--------------------------------

At the end of 1999, authorized but uncompleted capital projects totaled
$139 million. A capital approval budget of $106 million is in place for 2000.
The $106 million budget, plus the $139 million carry-over from 1999, less an
anticipated carry-over of $90 million at the end of 2000, will result in planned
capital spending of $155 million in 2000. The 2000 capital approval budget of
$106 million consists of $64 million for essential quality and replacement
projects, $37 million for high-return projects, and $5 million for
environmental-control projects. High return projects are justified based on the
project's expected return being in excess of a corporate target. Essential
quality and replacement projects are projected to not meet the Company's target.
Instead, these projects are deemed necessary in order to meet customer's
requirements and expectations in regard to product characteristics such as
printability, printing press runnability, opacity and gloss or to replace,
improve or extend existing equipment and processes.

Capital expenditures were $159 million in 1999, $349 million in 1998 and
$236 million in 1997. Major capital expenditures in 1999 included $35 million
for the completion of a paper machine rebuild at the Biron Division, $5 million
for cutter and sheeter improvements at the Converting Division, $5 million for a
new roll wrapper at Inter Lake Papers and $4 million for a paper machine
rebuild, also at Inter Lake Papers. The higher level of capital expenditures in
1998 included $149 million for the buyout of an operating lease at Lake Superior
Paper.

Long-term Debt.
--------------

The company's borrowings (current and long-term) at December 31, 1999, were $887
million, a decrease of $167 million, following increases of $186 million and
$596 million in 1998 and 1997, respectively. The decrease in 1999 reflects
reduced financing for capital expenditures in 1999. At December 31, 1999, the
$887 million of debt included $85 million classified as a current liability.
There was no debt classified as a current liability at either December 31, 1998
or 1997.

The increase in debt during 1998 resulted primarily from the completion of the
exercise of the early purchase option to buy out the operating lease on
machinery and equipment at Lake Superior Paper Industries. In 1998, the company
paid $149 million in cash and assumed $120 million of debt to buy out the
remaining four owner-participants. The first of five owner-participants was
bought out in December 1997 by paying $39 million in cash and assuming $30
million of debt. The debt assumed in this transaction, a $144 million face value
term loan, was redeemed in 1998, and the company recorded an extraordinary loss
of $5 million, after taxes. The loss consisted primarily of a prepayment penalty
and costs associated with the early redemption, net of the remaining debt
premium (see Note 4 of the Notes to Consolidated Financial Statements). The
redemption of this 12.08% debt was financed with proceeds from $160 million
private placement notes that were issued in 1998 with interest rates between
6.93% and 7.30%.

As of December 31, 1999, the company had $510 million available for use under
its $700 million revolving credit facility. The company also had $210 million
available from lines of credit of $325 million. In 1999, the company entered
into a $100 million unrated commercial paper program. At December 31, 1999,
commercial paper issued totaled $55 million. These financing arrangements,
together with cash flow from future operations, are expected to be more than
sufficient to fund projected capital commitments.

Total interest expense was $82 million in 1999, compared to $96 million in 1998
and $50 million in 1997. Interest capitalized as part of the cost of related
capital projects was $0.1 million, $1.6 million and $3.1 million in 1999, 1998
and 1997, respectively.

As discussed in Note 5 of the Notes to Consolidated Financial Statements, the
company entered into sale and leaseback transactions for two paper machines

<PAGE>

during 1996. These leases are capital in nature, resulting in lease obligations
of $478 million at December 31, 1999. Because deposits of $456 million at
December 31, 1999, are believed to be adequate for future lease payments, the
company will not need to generate or borrow significant additional funds to make
the required lease payments.

Market Risk.
-----------

In the ordinary course of business, Consolidated Papers, Inc. is exposed to
interest rate risk, currency exchange rate risk and purchase price risk. These
exposures relate to fluctuations in interest rates on outstanding debt, sales of
products to foreign customers and changes in prices on purchases of commodities.
The company neither holds nor issues financial instruments for trading purposes.

Interest Rate and Debt Sensitivity Analysis.
-------------------------------------------

For fixed-rate debt, interest rate changes affect the fair market value but do
not impact earnings or cash flows. The fair value of the company's long-term
fixed-rate debt was estimated to be $488 million at December 31, 1999. The fair
value was less than the carrying value by about $34 million, reflecting the fact
that the company's fixed long-term borrowing rates are lower than rates
currently available in the market. At December 31, 1999, market risk of $33
million is estimated as the potential change in fair value resulting from a
hypothetical 10% change in the company's weighted average long-term borrowing
rate.

Conversely, for floating-rate debt, interest rate changes generally do not
affect the fair market value but do impact future earnings and cash flows,
assuming other factors remain constant. At December 31, 1999, the company's
floating-rate debt approximates fair market value. A hypothetical 10% change in
the company's weighted average borrowing rate for floating-rate debt would cause
a $1.3 million change in after-tax earnings.

Foreign Exchange Rate Risk.
--------------------------

The company's earnings are also affected by fluctuations in the value of the
U.S. dollar as compared to foreign currencies, predominately the Canadian
dollar, as a result of the sales of its products in foreign markets. The company
does not currently enter into any contracts in an attempt to hedge foreign
currency risk. The result of a uniform 10% change in the value of the U.S.
dollar relative to the currencies in which the company's sales are denominated
would have resulted in a change in after-tax earnings of $3.4 million. In
addition to the direct effects of changes in exchange rates, which are reflected
in a changed U.S. dollar value of the resulting sales, changes in exchange rates
also affect the volume of sales or the foreign currency sales price as
competitors' products become more or less attractive. The company's sensitivity
analysis of the effects of changes in foreign currency exchange rates does not
factor in this potential change in sales levels.

Environmental Matters.
---------------------

The paper industry is subject to extensive environmental regulations, many of
which require significant capital and operational expenditures.

The Clean Air Act Amendments of 1990 and the Clean Water Act Effluent Guidelines
Limitations will have a significant financial impact on the paper industry. The
U.S. EPA adopted rules in 1998 to reduce the industry's discharge of air and
water pollutants, and has proposed additional rules to further reduce industry
emissions of air pollutants. The air [Maximum Achievable Control Technology
(MACT I)] and water regulations (Effluent Guidelines) are applicable to the
company's kraft pulp mill's pulping, bleaching and wastewater operations.
Additional proposed regulations addressing air pollutants (MACT II) from kraft
pulp mill recovery boilers, lime kilns and smelt dissolving tanks are expected
to be reproposed in early 2000 and final in December 2000, with compliance
required within three years. These final and proposed regulations are commonly
referred to as the 'Cluster


<PAGE>

Rules.' As a result of the recently completed chlorine-elimination program, the
company is already in compliance with many of the requirements of MACT I and the
Effluent Guidelines. Additional capital expenditures of approximately $2.6
million will be required to assure full compliance with these regulations by
April 2001. The company cannot predict the potential economic impact of MACT II
at this time.

In September 1998, the EPA finalized regulations addressing the formation and
transport of ozone across state boundaries in the eastern half of the United
States. The regulations require 22 states (including Wisconsin) to reduce
emissions of nitrogen oxides, a precursor to ozone formation. Wisconsin's
implementation plan was due in 1999, but court rulings have resulted in an
indefinite stay on submittals of state implementation plans. Depending on the
final resolution of this litigation and Wisconsin's implementation plan, the
company may incur significant capital costs to install additional controls on
its power and recovery boilers.

Other statutory and regulatory environmental initiatives now under consideration
could have a material impact on the pulp and paper industry. These initiatives
include: mandated reductions in greenhouse gases by energy-intensive industries;
additional regulations governing industrial boilers; total maximum daily load
(TMDL) standards for water bodies which do not meet water quality standards; and
efforts to further reduce access to fiber sources.

The company continues to closely follow sediment remediation activities under
way on various watershed systems, including the Fox River and Wisconsin River.
On the Fox River, state and federal agencies have focused on study and
remediation of sediments containing polychlorinated biphenyls (PCBs), which are
believed to have been discharged by companies that manufactured or recycled
carbonless papers in the 1960s and early 1970s. Neither the company's former
Appleton Division, closed in 1982, nor the Inter Lake Papers facility, acquired
in 1997, was involved in carbonless paper manufacture or recycling. However, it
is likely that the existing potentially responsible parties on the Fox River
will seek contributions from the company and others if litigation is initiated.
On the Wisconsin River, the Wisconsin Department of Natural Resources has
prepared a comprehensive management plan (CMP) that addresses a variety of
environmental issues relating to the Petenwell and Castle Rock flowages,
including sediment contamination and water quality. These flowages are
artificial impoundments created by dams downstream of the company's operations.
The CMP calls for further environmental studies of the flowages, but contains no
mandatory timetables or overall funding mechanism for any remediation activities
that may ultimately be required.

The EPA has increasingly focused its enforcement efforts on conducting
nationwide audits of compliance with New Source Review/Prevention of Significant
Deterioration ("PSD") rules under the Clean Air Act, particularly in the paper,
utility and petroleum refining industries. In April 1999, the company's kraft
mill received a request for information under Section 114(a) of the Clean Air
Act. The request from the EPA spanned a 23-year period and focused on whether
the mill obtained proper permits under PSD rules governing expansion and other
capital projects during the period. The company complied with the request and
provided voluminous information to the EPA. The company also cooperated with the
EPA's subsequent on-site inspection of the facility. Based on preliminary
indications from the EPA, the company believes the EPA will likely issue a
Notice of Violation (NOV) relating to the kraft mill but does not know what
actions or activities may be alleged to be in violation of the Clean Air Act.

In general, if an NOV is issued, the EPA will provide the company with the
opportunity to discuss the allegations and settle the claim. Any settlement will
need to satisfy the EPA's Clean Air Act penalty policy. This policy requires
settlements to be based on the payment of a penalty that recovers the "economic
savings" and addresses the "gravity" of the alleged violation. Any settlement
would also require the facility to be in compliance or to agree to a compliance
schedule.


<PAGE>

The company has the right to contest any allegations of the EPA in court. Any
case against the company that arises out of this matter would be filed in the
United States District Court for the Western District of Wisconsin.

In June 1999, the Wisconsin Department of Natural Resources (DNR) issued a
Notice of Violation applicable to the pressurized groundwood (PGW) facility at
the company's Niagara Division. The NOV alleges that Niagara constructed and
operated the groundwood facility without first obtaining required construction
and operating permits. Recent data indicates that volatile organic compounds are
emitted from PGW mills. This was not known at the time of construction of
Niagara's facility.

The company has submitted an after-the-fact permit application for the PGW mill.
The permit has not yet been issued. Costs to the company in respect of this NOV
are likely to depend on the DNR's determination of whether control equipment for
the PGW facility would be cost effective. If control equipment is found to be
cost effective, the company would incur costs of purchase, installation,
operation and maintenance. It is also possible the EPA will choose to issue its
own NOV and seek civil penalties. The alleged violations took place prior to the
company's acquisition of the Niagara operations and, if necessary,
indemnification for a portion of the costs or penalties may be available under
the company's agreement with the prior owner.

Management believes that the resolution of existing environmental matters will
not have a material impact on the company's results of operations or financial
position.

Employee Matters.
-----------------

During 1999, the company executed six-year contracts with the Paper,
Allied-Industrial Chemical and Energy Workers' International Union, which
represents approximately 2,800 employees at the company's central Wisconsin
locations (Wisconsin Rapids, Whiting, Stevens Point and Biron), and the Office &
Professional Employees International Union, which represents approximately 270
employees at those locations. In 2000, a six-year labor contract between the
company and the International Brotherhood of Electrical Workers (IBEW) was
ratified. The IBEW represents about 250 employees at the company's central
Wisconsin locations. Negotiations continue with two unions representing craft
employees at the central Wisconsin locations. Five-year contracts with the craft
unions expired April 30, 1999. Key issues in the negotiations include changes to
health care and pension benefits.

Year 2000 Compliance.
--------------------

The company's business systems and process applications made an uneventful
1999-2000 transition. No material disruptions occurred, and manufacturing
continued without interruption during the rollover.

The company expects spending will total approximately $18 million on its overall
Year 2000 project. This included approximately $7 million of previously budgeted
items that were accelerated to meet Year 2000 requirements. The Year 2000 team
was able to reduce costs from earlier estimates by identifying workarounds and
by negotiating with vendors for coverage of costs under pre-existing service
contracts and warranties.

Forward Looking Statements.
--------------------------

Certain statements in Management's Discussion and Analysis and elsewhere in the
company's Annual Report to Shareholders may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Because these forward-looking statements include risks and uncertainties,
actual future results may differ materially from those expressed in or implied
by the statements. Factors that could cause actual results to differ include,
among other things: (1) increased competition from either domestic or foreign
paper producers, including increases in competitive capacity through
construction of new mills or conversion of older facilities to produce
competitive products; (2) variations in demand for the company's products; (3)
changes in the cost or availability of the raw materials used by


<PAGE>

the company, particularly market pulp and wood; (4) costs of compliance with new
environmental laws and regulations; and (5) decisions by the company to make a
significant acquisition or a significant increase in production capacity.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.

CONSOLIDATED BALANCE SHEETS         Consolidated Papers, Inc. and Subsidiaries

                                                   As of December 31
                                                   -----------------
(Dollars in thousands)                   1999          1998           1997
--------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents             $     6,201   $     3,230   $    13,169
Accounts and notes receivable,
  net of reserves of $6,002 in 1999,
  $6,504 in 1998 and $6,374 in 1997       127,801       147,307       160,874
Inventories
  Finished and partly finished
    products                               77,273        89,377        92,245
  Raw materials                            29,872        39,616        51,726
  Stores supplies                          61,476        60,127        61,075
-----------------------------------------------------------------------------
                                          168,621       189,120       205,046
-----------------------------------------------------------------------------
Prepaid expenses                           32,905        48,550        26,506
-----------------------------------------------------------------------------
  Total current assets                    335,528       388,207       405,595
-----------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Investments in affiliates, at cost
  plus equity in undistributed
  earnings                                 41,547        39,668        37,188
Restricted cash related to leases         443,844       438,429       427,026
Other assets                               20,332        19,651        23,877
Goodwill                                  130,593       140,211       148,049
-----------------------------------------------------------------------------
                                          636,316       637,959       636,140
-----------------------------------------------------------------------------
PLANT AND EQUIPMENT
Buildings                                 316,546       323,969       281,988
Machinery and equipment                 3,316,001     3,200,392     2,647,374
-----------------------------------------------------------------------------
                                        3,632,547     3,524,361     2,929,362
  Less-accumulated depreciation         1,185,061     1,048,409       883,265
-----------------------------------------------------------------------------
                                        2,447,486     2,475,952     2,046,097
Land                                       14,448        14,069        13,383
Timber and timberlands, net of
  depletion                                27,681        26,762        26,391
Capital additions in process               64,714        84,537       219,904
-----------------------------------------------------------------------------
                                        2,554,329     2,601,320     2,305,775
-----------------------------------------------------------------------------
                                      $ 3,526,173   $ 3,627,486   $ 3,347,510
=============================================================================
CURRENT LIABILITIES
Current portion of long-term debt     $    85,284   $      -      $      -
Accounts payable                          103,564        88,651        92,330
Payroll and employee benefits              74,796        78,083        65,628
Income taxes                                  730           367         2,844
Property taxes                             10,679        11,661        11,082
Other current liabilities                  36,207        44,199        37,477
-----------------------------------------------------------------------------
  Total current liabilities               311,260       222,961       209,361
-----------------------------------------------------------------------------

NONCURRENT LIABILITIES AND
  DEFERRED CREDITS
Long-term debt                            802,000     1,054,564       868,665
Capital lease obligations                 467,804       465,613       456,321
Deferred income taxes                     390,991       349,573       309,875
Postretirement benefits                   167,118       148,508       152,470
Other noncurrent liabilities               32,870        31,416        33,151
-----------------------------------------------------------------------------
                                        1,860,783     2,049,674     1,820,482
-----------------------------------------------------------------------------
SHAREHOLDERS' INVESTMENT
Preferred stock, authorized and
  unissued 15,000,000 shares                 -             -             -
Common stock, authorized 200,000,000
  shares, par value $1.00 per share;
  issued 91,140,982 shares in 1999,
  90,713,876 shares in 1998 and
  90,009,898 shares in 1997                91,141        90,714        90,010
Capital in excess of par value             71,390        61,657        46,400
Accumulated other comprehensive income     (2,745)       (2,705)       (2,610)
Treasury stock, at cost, 304,025 shares
  in 1999, 409,426 shares in 1998
  and 278,816 shares in 1997               (7,093)       (9,906)       (7,370)
Reinvested earnings                     1,201,437     1,215,091     1,191,237
-----------------------------------------------------------------------------
  Total shareholders' investment        1,354,130     1,354,851     1,317,667
-----------------------------------------------------------------------------
                                      $ 3,526,173   $ 3,627,486   $ 3,347,510
=============================================================================

<PAGE>

CONSOLIDATED STATEMENTS OF INCOME   Consolidated Papers, Inc. and Subsidiaries


                                            For the years ended December 31
(Dollars in thousands, except per           ---------------------------------
  share data)                               1999         1998         1997
-----------------------------------------------------------------------------
Net sales                                $ 1,838,795  $1,989,315   $1,679,311
Cost of goods sold                         1,572,637   1,649,265    1,386,023
-----------------------------------------------------------------------------
  Gross profit                               266,158     340,050      293,288
Selling, general and administrative
  expenses                                   102,374     102,038       83,778
-----------------------------------------------------------------------------
  Income from operations                     163,784     238,012      209,510
-----------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest expense                             (82,219)    (95,918)     (49,576)
Interest income                               23,192      31,168       27,079
Miscellaneous, net                             5,370       5,007        3,381
-----------------------------------------------------------------------------
  Total                                      (53,657)    (59,743)     (19,116)
-----------------------------------------------------------------------------
Income before provision for
  income taxes                               110,127     178,269      190,394
-----------------------------------------------------------------------------
PROVISION FOR INCOME TAXES
Current                                        7,226      36,147       46,922
Deferred                                      36,825      35,162       25,428
-----------------------------------------------------------------------------
  Total                                       44,051      71,309       72,350
-----------------------------------------------------------------------------
Net income before extraordinary item          66,076     106,960      118,044
Loss on debt extinguishment, net of
  tax benefit of $3,069                         -        ( 4,603)        -
-----------------------------------------------------------------------------
Net income                               $    66,076  $  102,357   $  118,044
=============================================================================
Net income per share before
  extraordinary item - basic             $       .73  $     1.19   $     1.32
=============================================================================
Net income per share before
  extraordinary item - diluted           $       .73  $     1.18   $     1.31
=============================================================================
Net income per share - basic             $       .73  $     1.13   $     1.32
=============================================================================
Net income per share - diluted           $       .73  $     1.13   $     1.31
=============================================================================
Average number of common
  shares outstanding                      90,650,922  90,199,750   89,692,396
=============================================================================

<PAGE>

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT

                              Accumu-
                     Capital   lated
                        in     Other                                  Compre-
                      Excess  Compre-   Treas-                         hen-
(Dollars in   Common  of Par  hensive    ury   Reinvested              sive
thousands)    Stock   Value   Income    Stock   Earnings    Total      Income
------------------------------------------------------------------------------
Balance,
  December
  31, 1996   $89,537 $36,049 $(2,290) $(2,020) $1,148,546 $1,269,822
Net income      -       -       -        -        118,044    118,044 $118,044
Cash
  dividends     -       -       -        -        (75,353)   (75,353)    -
Exercise of
  stock
  options        473   9,447    -        -           -         9,920     -
Tax benefit
  related
  to stock
  options       -        962    -        -           -           962     -
Transla-
  tion          -       -     (  320)    -           -       (   320)    (320)
                                                                     ---------
Comprehen-
  sive
  income                                                             $117,724
                                                                     ========
Treasury
  stock
  purchase      -       -       -      (7,646)       -       ( 7,646)
Issuance of
  treasury
  stock         -        (58)   -       2,296        -         2,238
-----------------------------------------------------------------------------
Balance,
  December
  31, 1997   $90,010 $46,400 $(2,610) $(7,370) $1,191,237 $1,317,667
Net income      -       -       -        -        102,357    102,357 $102,357
Cash
  dividends     -       -       -        -        (78,503)   (78,503)    -
Exercise of
  stock
  options        704  13,506    -        -           -        14,210     -
Tax benefit
  related
  to stock
  options       -      1,703    -        -           -         1,703     -
Transla-
  tion          -       -     (   95)    -           -       (    95)    ( 95)
                                                                     --------
Comprehen-
  sive
  income                                                             $102,262
                                                                     ========
Treasury
  stock
  purchase      -       -       -      (5,007)       -       ( 5,007)
Issuance of
  treasury
  stock         -         48    -       2,471        -         2,519
------------------------------------------------------------------------------
Balance,
  December
  31, 1998   $90,714 $61,657 $(2,705) $(9,906) $1,215,091 $1,354,851
Net income      -       -       -        -         66,076     66,076 $ 66,076
Cash
  dividends     -       -       -        -        (79,730)   (79,730)    -
Exercise of
  stock
  options        427   8,988    -        -           -         9,415     -
Tax benefit
  related
  to stock
  options       -        659    -        -           -           659     -
Transla-
  tion          -       -     (   40)    -           -       (    40)    ( 40)
                                                                     --------
Comprehen-
  sive
  income                                                             $ 66,036
                                                                     ========
Issuance of
  treasury
  stock         -         86    -       2,813        -         2,899
-----------------------------------------------------------------------------
Balance,
  December
  31, 1999  $91,141  $71,390 $(2,745) $(7,093) $1,201,437 $1,354,130
=============================================================================

<PAGE>

Consolidated Papers, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              For the years ended December 31
-----------------------------------------------------------------------------
(Dollars in thousands)                          1999        1998       1997
-----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                   $  66,076  $ 102,357   $ 118,044
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
      Depreciation and depletion               179,285    171,156     121,587
      Amortization of goodwill and
        intangibles                             10,048     10,182       7,013
      Debt premium amortization               (    992)  (  7,090)       -
      Undepreciated cost of plant and
        equipment retirements                   10,881      2,577       6,957
      Earnings of affiliates                  (  3,963)  (  4,755)   (  4,557)
      Deferred income taxes                     36,825     35,162      25,428
      (Increase) decrease in accounts
        receivable                              16,492     13,567      11,331
      (Increase) decrease in inventories        15,265     15,926    (  2,508)
      (Increase) decrease in prepaid
        expenses                                20,238   ( 17,508)     11,801
      Increase (decrease) in accounts
        payable                                 14,913   (  3,679)   ( 14,930)
      Increase (decrease) in current
        liabilities, other than current
        portion of long-term debt
        and accounts payable                  ( 12,057)    17,279       1,653
      Increase (decrease) in postretirement
        benefits                                18,610   (  3,962)   (    901)
      Increase (decrease) in other
        noncurrent liabilities                   1,454   (  1,735)   (  6,926)
------------------------------------------------------------------------------
Net cash provided by operating activities      373,075    329,477     273,992
-----------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures                          (158,869)  (348,856)   (236,198)
Proceeds from sale of assets                    24,422       -           -
Acquisitions, net of cash                         -          -       (250,690)
Proceeds from sale and leaseback                  -          -        135,600
Other                                         (  2,612)     1,952         130
-----------------------------------------------------------------------------
Net cash (used in) investing activities       (137,059)  (346,904)   (351,158)
------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends                                ( 79,730)  ( 78,503)   ( 75,353)
Proceeds from long-term debt                      -       160,000     282,000
Repayment of long-term debt                   ( 20,572)  (143,831)   (405,103)
Net borrowings under lines of credit,
  revolvers and commercial paper              (145,716)    56,397     270,389
Common stock issued (net)                       12,973     13,425       5,474
-----------------------------------------------------------------------------
Net cash provided by (used in)
  financing activities                        (233,045)     7,488      77,407
-----------------------------------------------------------------------------
Net increase (decrease) in cash and
  cash equivalents                               2,971    ( 9,939)        241
Cash and cash equivalents - beginning
  of year                                        3,230     13,169      12,928
-----------------------------------------------------------------------------
Cash and cash equivalents - end of year      $   6,201  $   3,230   $  13,169
=============================================================================

Cash paid during the year for:
  Interest                                   $  78,451  $  87,046   $  29,333
  Income taxes                                   4,957     42,838      32,007
-----------------------------------------------------------------------------

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
<PAGE>


Consolidated Papers, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997

 1.    Summary of Accounting Policies.

       Principles of Consolidation - The consolidated financial statements
       include the accounts of Consolidated Papers, Inc. and subsidiaries.
       Investments in companies in which ownership is at least 20%, but less
       than a majority of the voting stock, are accounted for using the equity
       method.

       Use of Estimates - The preparation of financial statements in conformity
       with generally accepted accounting principles requires management to make
       estimates and assumptions that affect the reported amounts of assets and
       liabilities and disclosure of contingent assets and liabilities at the
       date of the financial statements and the reported amounts of revenues and
       expenses during the reporting period. Actual results could differ from
       those estimates.

       Accounting Standards - Effective July 1, 1999, the company adopted
       Statement of Position 98-1, "Accounting for the Costs of Computer
       Software Developed or Obtained for Internal Use," which requires the
       prospective capitalization of certain software development costs which
       the company had historically expensed. The impact was to capitalize $1.4
       million of costs in 1999, which historically would have been expensed.

       The Financial Accounting Standards Board (FASB) recently issued Statement
       of Financial Accounting Standards (SFAS) No. 133, "Accounting for
       Derivative Instruments and Hedging Activities." As amended, SFAS No. 133
       requires derivative instruments to be recorded in the balance sheet as
       either an asset or liability measured at its fair value. The statement
       requires that changes in the derivative's fair value be recognized
       currently in earnings unless specific hedge accounting criteria are met.
       The company will adopt the statement in 2001 and does not expect it to
       have a material impact on the company's financial position, results of
       operations or cash flows.

       Cash and Cash Equivalents - For financial statement purposes, the company
       considers all highly liquid debt instruments purchased with a maturity of
       three months or less to be cash equivalents. Cash and cash equivalents
       are carried at cost, which approximates fair market value.

       Inventories - Inventories accounted for using the last-in, first-out
       (LIFO) cost method (approximately 60% in 1999, 50% in 1998 and 45% in
       1997) are stated at amounts that do not exceed market. If the first-in,
       first-out (FIFO) method of accounting for inventories had been used by
       the company, inventories would have been higher than that reported at
       December 31, 1999, 1998 and 1997, by $16.3 million, $18.2 million and
       $21.5 million, respectively. The remaining inventories are stated at the
       lower of cost or market using the FIFO method, except for stores supplies
       and certain manufacturing supplies, which are accounted for on a moving
       average cost basis.

       Goodwill Resulting from Business Acquisitions - Goodwill resulting from
       business acquisitions consists of the excess of the acquisition cost over
       the fair value of the net assets of the businesses acquired. Goodwill is
       amortized on a straight-line basis over 15 to 20 years. Amortization of
       goodwill resulting from business acquisitions was $9.6 million, $9.1
       million and $5.6 million in 1999, 1998 and 1997, respectively. At
       December 31, 1999, accumulated amortization of goodwill was $30.9
       million. Subsequent to acquisitions, the company continues to evaluate
       whether events and circumstances have occurred that indicate the
       remaining estimated useful life of goodwill may warrant revision or that
       the remaining balance of goodwill is not recoverable. Recoverability is
       determined by comparing the undiscounted net cash flows of the assets to
       which the goodwill applies to the net book value, including goodwill, of
       those assets.

       Plant and Equipment - Plant and equipment are recorded at cost and are
       depreciated over the estimated useful lives of the assets using
       principally the straight-line method for financial reporting purposes and
       accelerated methods for income tax purposes. Useful lives for financial
       reporting purposes are 20 years for land improvements, 33 years for
       buildings, and five to 20 years for machinery and equipment.

<PAGE>

       The company's policy is to capitalize interest incurred on debt during
       the course of major projects that exceed one year in construction.
       Interest capitalized in 1999, 1998 and 1997 was $0.1 million, $1.6
       million and $3.1 million, respectively.

       Maintenance and repair costs are charged to expense as incurred, and
       renewals and improvements that extend the useful life of the assets are
       added to the plant and equipment accounts.

       Research and Development - Research and development costs are charged to
       expense as incurred. Research and development expenses in 1999, 1998 and
       1997 were approximately $7.5 million, $7.3 million and $6.8 million,
       respectively.

       Timber and Timberlands - Timber and timberlands are recorded at cost,
       less depletion for cost of timber harvested. Depletion is computed on the
       units-of-production method. Timber carrying costs are expensed as
       incurred.

       Accounts Payable - The company's banking system provides for the daily
       replenishment of major bank accounts for check-clearing requirements.
       Accordingly, there were negative book cash balances of $28 million, $24
       million and $30 million at December 31, 1999, 1998 and 1997,
       respectively. Such balances result from outstanding checks that had not
       yet been paid by the bank and are reflected in accounts payable in the
       Consolidated Balance Sheets.

       Environmental Matters - The company recognizes a liability for
       environmental remediation costs when it is probable a liability has been
       incurred and the amount can be reasonably estimated. The liabilities are
       developed based on currently available information and are generally
       recognized no later than completion of a remedial feasibility study. The
       company accrues closure costs and discounted amounts for long-term care
       costs for its landfills over their estimated useful lives. As of December
       31, 1999, the company had accrued $5.9 million of the anticipated $7.0
       million for such costs. Management believes that resolution of existing
       environmental matters will not have a material impact on the company's
       results of operations or financial position.

       Revenue Recognition - The company records revenue according to agreed
       upon terms of sales. Substantially all revenue is recorded upon shipment
       of products, at which time title passes.

       Income Taxes - Deferred income taxes have been provided for temporary
       differences arising from differences in bases of assets and liabilities
       for tax and financial reporting purposes. Deferred income taxes are
       recorded on temporary differences at the tax rate expected to be in
       effect when the temporary differences reverse.

       Net Income per Share - Basic earnings per share is calculated based on
       the weighted average number of common shares outstanding during the year,
       while diluted earnings per share is calculated based on the dilutive
       effect of potential common shares.

       Basic and diluted earnings per share are reconciled as follows:

                         For the Years Ended December 31
    (In thousands, except per share data)   1999          1998         1997
                                            ----          ----         ---
       Net income before extraordinary
       item                                  $ 66,076      $106,960     $118,044
                                             ========      ========     ========

       Basic weighted average common
         shares outstanding                90,650,922    90,199,750   89,692,396
       Effect of exercise of stock
         options                              314,467       355,996      347,510
                                           ----------    ----------   ----------
       Diluted weighted average common
         shares outstanding                90,965,389    90,555,746   90,039,906
                                           ==========    ==========   ==========
       Net income per share before
         extraordinary item - basic           $   .73     $   1.19     $   1.32
                                              =======     ========     ========
       Net income per share before
         extraordinary item - diluted         $   .73     $   1.18     $   1.31
                                              =======     ========     ========

<PAGE>

       Options to purchase an additional 499,000 shares of common stock were
       outstanding during 1999 but were not included in the computation of
       earnings per share because the options' exercise price was greater than
       the average market price of the common shares.

       Stock Split - In April 1998, the board of directors approved a
       two-for-one stock split. The split was completed by distributing one
       additional share of stock for each share held on the record date of May
       8, 1998. The financial statements, notes and other references to share
       and per share data reflect the stock split for all periods presented.

 2.    Acquisitions.  Effective October 1, 1997, the company acquired all of the
       outstanding stock of Repap USA, Inc., a holding company for Repap
       Wisconsin, Inc. and Repap Sales Corporation, for approximately $258
       million in cash and assumed debt of $419 million and other liabilities of
       $156 million. The company renamed these operations Inter Lake Papers,
       Inc., Inter Lake Wisconsin, Inc. and Inter Lake Sales Corp.,
       respectively. This acquisition was accounted for as a purchase and,
       accordingly, the assets and liabilities have been stated at their fair
       values with the excess of purchase price over assets acquired and
       liabilities assumed being recorded as goodwill. Goodwill of $96 million
       resulting from the acquisition will be amortized over 20 years. Results
       of operations of the acquired company are included in the consolidated
       financial statements subsequent to the acquisition.

       During 1997 and 1999, the company repurchased $356 million and $21
       million, respectively, of the $377 million face value public debt of
       Repap Wisconsin, Inc. The difference between the purchase price and fair
       value was not material.

       The unaudited consolidated pro forma results of operations for the period
       ended December 31, 1997, assume the Inter Lake Papers acquisition
       occurred as of January 1, 1997. The pro forma information is provided for
       information purposes only. It is based on historical information and,
       therefore, is not necessarily indicative of either the results that would
       have occurred had the acquisition been made as of that date or of future
       results.

                                                           For the year ended
                                                                 December 31,
                                                                         1997
    (In thousands, except per share data)                         (Unaudited)
     -----------------------------------                           ---------
    Net sales                                                      $2,025,628
    Net income                                                         62,916
    Net income per share - diluted                                        .70

       This pro forma information reflects all adjustments that are, in the
       opinion of management, necessary to a fair statement of the results.

3.     Asset Impairment and Sale of Assets. In April 1999, the company retired a
       paper machine production line at its Niagara Division. The machine was
       retired as a result of market conditions and production inefficiencies
       compared with other production lines. The sales and resulting operating
       profit generated from the previous operations of these assets have been
       moved to other available capacity. In accordance with SFAS No. 121,
       "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
       Assets to Be Disposed Of," the Company charged Cost of Goods Sold for a
       $4.5 million pretax write-off of these assets.

       In May 1999, the company sold the assets of Castle Rock Container
       Company, a division of Consolidated Papers, Inc. and manufacturer of
       corrugated products, to St. Laurent Packaging Corp. The sale proceeds
       approximated net book value.

<PAGE>

4.     Long-term Debt and Lines of Credit.  A summary of long-term debt as of
       December 31 is as follows:

     (In thousands)                          1999            1998      1997
      -------------                          ----            ----      ----
     Term loan from a financial
     institution, unsecured,
     with interest at 7.20%,
     due June 30, 2000                   $  30,000       $  30,000  $  30,000

     Term loan from a financial
     institution, unsecured,
     with interest at 7.65%,
     due June 30, 2005                      55,000          55,000     55,000

     Term loan from a financial
     institution, secured by equipment,
     with interest at 12.08%, due
     January 1, 2007, repurchased in
     May and June 1998                        -               -        30,241

     Senior Notes with interest
     at 6.71% to 7.14%, due October 31,
     2004 to October 31, 2017              277,000         277,000    277,000

     Senior Notes with interest at 6.93%
     to 7.30%, due May 8, 2009
     to May 8, 2023                        160,000         160,000       -

     Industrial Revenue Bonds with
     interest at 5.6% at December
     31, 1999, reset weekly,
     due July 1, 2012                        5,000           5,000      5,000

     First Priority Senior Secured Notes
     of Inter Lake Papers, Inc. with interest
     at 9.25%, due February 1, 2002,
     repurchased in February 1999            -              20,369     20,620

     Second Priority Senior Secured Notes
     of Inter Lake Papers, Inc. with interest
     at 9.875%, due May 1, 2006,
     repurchased in May 1999                  -              1,195      1,204

     Revolving credit agreements with
     financial institutions, unsecured,
     with a weighted average interest
     rate of 6.68%, 5.35% and 5.91%,
     respectively                          190,000         400,000    440,000

     Commercial Paper with a weighted
     average interest rate of 6.28%         55,284            -          -

     Line of credit agreements with
     financial institutions, unsecured,
     with a weighted average interest
     rate of 6.33%, 6.08% and 6.91%,
     respectively                          115,000        106,000       9,600
                                        ----------     ----------   ---------
                                           887,284      1,054,564     868,665
                                        ----------     ----------   ---------
     Less - current portion                 85,284           -           -
                                        ----------     -----------  ------
     Total long-term debt               $  802,000     $1,054,564   $ 868,665
                                        ==========     ==========   =========

       The company has a $700 million unsecured revolving credit agreement with
       14 participating financial institutions with an expiration date of
       September 26, 2002. This agreement has a competitive bid loan option with

<PAGE>

       varying rates of interest. The company pays the banks a facility fee
       under this agreement.

       In 1999, the company entered into a $100 million unrated commercial paper
       program.

       The company has $325 million in unsecured lines of credit with seven
       financial institutions. There are no commitment fees for these lines of
       credit. Amounts due under these lines of credit have been classified as
       long-term debt because the company has the intent and the unused
       facilities to refinance the loans on a long-term basis.

       The debt agreements, as amended in 1999, contain restrictions on net
       worth and other matters.

       In 1998, the company recorded an extraordinary loss of $4.6 million after
       taxes as a result of the early redemption of $143.8 million face value
       term loan. This term loan was assumed as part of the operating lease
       buyout on production equipment at Lake Superior Paper Industries, which
       occurred partly in 1997 and was completed in January 1998 (see Note 5).
       The loss consisted primarily of a prepayment penalty and costs associated
       with the early redemption, net of the write-off of the remaining debt
       premium and net of tax benefits of $3.1 million. The redemption of the
       12.08% debt was financed with proceeds from the $160 million private
       placement notes with interest rates between 6.93% and 7.30%.

       As of December 31, 1999, the maturities of long-term debt are as follows:

      (In thousands)        2000            $  85,284
                           2001                 -
                           2002              190,000
                           2003                 -
                           2004               81,000
                           Thereafter        531,000

5.     Leases. The company sold certain assets for $136 million in December
       1997. The assets were leased back from the purchaser over a period of 16
       years. The lease is being accounted for as an operating lease, and the
       resulting gain of $17 million is being amortized over the life of the
       lease. The lease requires the company to pay customary operating and
       repair expenses and to observe certain operating restrictions and
       covenants. The lease contains renewal options at lease termination and
       purchase options at amounts approximating fair market value in 2005, 2010
       and at lease termination.

       The company also sold certain assets for $253 million and $169 million in
       May 1996 and September 1996, respectively. The assets were leased back
       from the purchaser over a period of 15 years. Under the agreements, the
       company will maintain deposits, initially in the amount of $393 million,
       which together with interest earned are expected to be sufficient to fund
       the company's lease obligations, including the repurchase of the assets.
       These lease agreements contain restrictions on net worth and other
       matters. These transactions are being accounted for as financing
       arrangements, and the resulting gains are amortized over a 15-year
       period. At December 31, 1999, the company recorded assets for the
       deposits from the sale proceeds of $456 million and liabilities for the
       lease obligations of $478 million. $12 million of both the deposits and
       lease obligations are recorded as current. The net amount of capital
       lease assets at December 31, 1999, is $239 million.

       The company also leases certain manufacturing facilities, office space,
       and machinery and equipment under various operating lease agreements,
       which have remaining lease terms of two to 10 years. Rent expense under
       all operating leases was approximately $12.9 million, $11.0 million and
       $33.8 million for 1999, 1998 and 1997, respectively.


<PAGE>

       In January 1998, the company completed the exercise of its early purchase
       option to buy out an operating lease on production equipment at Lake
       Superior Paper Industries by paying $149.3 million in cash and assuming
       $120.4 million in debt. The company had previously purchased a portion of
       the equipment in December 1997 by paying $38.9 million in cash and
       assuming $30.2 million in debt. The total transaction resulted in an
       increase in fixed assets of $338.8 million.

       Future scheduled minimum lease payments under capital and noncancelable
       operating leases as of December 31, 1999, are as follows:

     (In thousands)                      Operating Leases     Capital Leases
      ------------                       ----------------     --------------
     2000                                   $  13,100           $  20,519
     2001                                      11,843              27,792
     2002                                      10,578              29,194
     2003                                       8,052              30,667
     2004                                       7,780              32,040
     Thereafter                                70,230             801,508
                                            ---------           ---------
     Total minimum lease payments           $ 121,583           $ 941,720
                                            =========

     Imputed interest                                            (462,258)
                                                                ---------
     Present value of capitalized lease payments                  479,462
     Less current portion
       (included in other current liabilities)                     11,658
                                                                ---------
     Long-term capitalized lease obligations                    $ 467,804
                                                                =========

 6.    Fair Values of Financial Instruments.  The carrying amounts and fair
       values of the company's financial instruments at December 31 were as
       follows:

                         1999                1998                 1997
                    ---------------     ---------------       --------
                   Carrying     Fair   Carrying     Fair     Carrying    Fair
  (In thousands)    Amount      Value   Amount      Value     Amount     Value
   ------------    --------     -----  --------     -----    --------    -----
Restricted cash
  related to
  leases           $455,502 $455,502  $  457,012 $  457,012 $439,675  $439,675
Current portion
  of long-term
  debt               85,284   86,422        -         -        -         -
Long-term debt      802,000  766,992  1,054,564   1,072,071  868,665   875,534

       The following methods and assumptions were used by the company in
       estimating fair values:

       Cash, cash equivalents, accounts receivable and accounts payable - The
       carrying amount approximates fair value due to the relatively short
       period to maturity of these instruments.

       Restricted cash - The carrying value approximates fair value due to the
       nature of these instruments.

       Long-term debt (including current portion) - The fair value of the
       company's long-term debt is estimated based on current rates offered to
       the company for debt of the same remaining maturities.

7.     Risk Management. The company periodically uses forward contract
       agreements to manage its exposure to market pricing for certain commodity
       purchases. Payments or receipts for fluctuations in market pricing under
       these agreements are recorded as adjustments to cost of sales and were
       not material in any period. The company neither holds nor issues
       financial instruments for trading purposes.

 8.    Employee Pension and Other Benefit Plans. The company and its
       subsidiaries sponsor noncontributory pension plans covering substantially
       all employees. Retirement benefits are provided based on employees' years
       of service and earnings. Normal retirement age is 65, with


<PAGE>

       provisions for earlier retirement. It is the policy of the company to
       fund at least the minimum required amount in accordance with the Employee
       Retirement Income Security Act of 1974 (ERISA). This policy generally
       includes amortization of unfunded prior service costs in accordance with
       minimum ERISA standards.

       The company also provides certain contributory and noncontributory
       medical, dental and life insurance benefits to qualifying retirees.
       Benefits for some of the plans are paid from trusts that hold corporate
       and U.S. Treasury debt securities and corporate equities.

       The postretirement benefits for both active and retired employees of
       Inter Lake Papers, Inc. and related subsidiaries were continued after the
       acquisition. The amounts herein reflect the assumption of these
       additional liabilities and costs.

       Summarized information on the company's postretirement plans as of
       December 31 is as follows:

                       Pension Benefits                  Other Benefits
                       ----------------                  --------------
(In thousands)   1999       1998       1997       1999       1998       1997
                 ----       ----       ----       ----       ----       ----
Change
  in benefit
  obligation
  Benefit
    obligation
    at
    begin-
    ning of
    year     $ 529,584  $ 480,029  $ 444,637  $ 238,248  $ 221,325  $ 157,705
  Service
    cost        19,529     16,769     13,760      6,532      5,792      4,619
  Interest
    cost        35,359     33,117     31,247     15,583     15,039     11,736
  Amendments     7,876      2,648       -        (3,966)      -          -
  Acquisition     -          -          -          -          -        54,610
  Net
    actuar-
    ial
    loss/
    (gain)     (64,191)    21,592     13,172    (35,728)     5,313       (399)
  Benefits
    paid       (26,629)   (24,571)   (22,787)   (11,195)    (9,221)    (6,946)
             ---------  ---------  ---------  ---------  ---------  ---------

  Benefit
    obliga-
    tion
    at end
    of year  $ 501,528  $ 529,584  $ 480,029  $ 209,474  $ 238,248  $ 221,325
             =========  =========  =========  =========  =========  =========

Change in
    plan
    assets
  Fair
    value
    of plan
    assets
    at be-
    ginning
    of year  $ 633,092  $ 615,648  $ 514,314  $  57,059  $  52,637  $  39,463

  Actual
    return on
    plan
    assets      91,812     41,815    123,937     12,013        741      9,076
  Employer
    contri-
    butions        251        200        184      2,911     12,902     11,044
  Benefits
    paid       (26,629)   (24,571)   (22,787)   (11,195)    (9,221)    (6,946)
             ---------  ---------  ---------  ---------  ---------  ---------

<PAGE>


  Fair
    value
    of plan
    assets
    at end
    of year  $ 698,526  $ 633,092  $ 615,648  $  60,788  $  57,059  $  52,637
             =========  =========  =========  =========  =========  =========

Net amount
 recognized
  Funded
    status   $ 196,998  $ 103,508  $ 135,619  $(148,686) $(181,189) $(168,688)
  Unrecog-
    nized
    prior
    service
    cost        24,342     19,151     19,072   ( 19,229)  ( 16,657)  ( 18,051)
  Unrecog-
    nized
    tran-
    sition
    (asset)   ( 11,349)  ( 14,188)  ( 17,027)      -          -          -
  Unrecog-
    nized
    net
    actu-
    arial
    loss/
    (gain)    (223,169)  (121,526)  (148,938)   (13,264)    30,166     21,830
             ---------  ---------  ---------  ---------  ---------  ---------
  (Accrued)
    benefit
    cost     $ (13,178) $ (13,055) $ (11,274) $(181,179) $(167,680) $(164,909)
             =========  =========  =========  =========  =========  =========

Amounts
  recog-
  nized
  in the
  statement
  of fin-
  ancial
  position
  consist
  of
  Prepaid
    benefit
    cost     $  30,614  $  22,605  $  17,415  $    -     $    -     $    -
  Accrued
    benefit
    lia-
    bility     (43,792)   (35,660)   (28,689)  (181,179)  (167,680)  (164,909)
             ---------  ---------  ---------  ---------  ---------  ---------
  Net
    amount
    recog-
    nized    $ (13,178) $ (13,055) $ (11,274) $(181,179) $(167,680) $(164,909)
             =========  =========  =========  =========  =========  =========

Weighted-
  average
  assump-
  tions at
  end of
  year
  Discount Rate   7.75%      6.75%      7.00%       7.75%     6.75%      7.00%
  Expected
    return
    on
    plan


<PAGE>

    assets        9.00%      9.00%      9.00%       9.00%     9.00%      9.00%
  Rate of
    compen-
    sation
    increase      5.00%      5.00%      5.00%       5.00%     5.00%      5.00%

       The increase in discount rate from 6.75% at the end of 1998 to 7.75% at
       the end of 1999, accounted for $66.8 million of the net actuarial gain on
       the change in benefit obligation in the pension benefits and $30.5
       million of the net actuarial gain on the change in benefit obligation in
       the other benefits.

       For measurement purposes, the health care cost trend rates are as
       follows:

       For participants who retired before January 1, 1995, an 8% annual rate of
       increase in the per capita cost of covered health care benefits was
       assumed through 2000. The rate was assumed to decrease to 5% for 2001 and
       remain at that level thereafter.

       For participants who retired after January 1, 1995, a 5.25% annual rate
       of increase in the per capita cost of covered health care benefits was
       assumed through 2000. The rate was assumed to decrease to 4% for 2001 and
       remain at that level thereafter.

       The net periodic benefit cost as of December 31 is as follows:

                       Pension Benefits                  Other Benefits
                       ----------------                  --------------
(In thousands)   1999       1998       1997       1999       1998       1997
                 ----       ----       ----       ----       ----       ----
Components
  of net
  periodic
  benefit
  cost
  Service
    cost     $  19,529  $  16,769  $  13,760  $   6,532  $   5,792  $   4,619
  Interest
    cost        35,359     33,117     31,247     15,583     15,039     11,736
  Expected
    return
    on
    plan
    assets     (52,780)   (46,855)   (41,990)    (4,946)    (4,446)    (3,490)
  Amortiza-
    tion of
    prior
    service
    cost         2,688      2,568      2,568     (1,394)    (1,394)    (1,394)
  Amortiza-
    tion of
    transi-
    tion
    (asset)     (2,839)    (2,839)    (2,839)      -          -          -
  Recognized
    net actu-
    arial
    loss/
    (gain)      (1,583)    (  779)    (  172)       635        682        702
             ---------  ---------  ---------  ---------  ---------  ---------
  Net peri-
    odic
    benefit
    cost     $     374  $   1,981  $   2,574  $  16,410  $  15,673  $  12,173
             =========  =========  =========  =========  =========  =========

       The net actuarial loss/(gain) in excess of a 10% corridor, the prior
       service cost and the transition (asset) are being amortized on a
       straight-line basis over the average remaining service period of active
       participants at the date established.


<PAGE>

       The projected benefit obligation, accumulated benefit obligation and fair
       value of plan assets for the pension plans with accumulated benefit
       obligations in excess of plan assets were $9.5 million, $5.8 million and
       $0, respectively, as of December 31, 1999, $8.6 million, $4.1 million and
       $0, respectively, as of December 31, 1998, and $8.5 million, $3.9 million
       and $0, respectively, as of December 31, 1997.

       Assumed health care cost trend rates have a significant effect on the
       amounts reported for the health care plan. A 1% change in assumed health
       care cost trend rate would have the following effects:

    (In thousands)                             1% Increase       1% Decrease
                                               -----------       -----------
       Effect on total of service and interest
         cost components                            $3,397           ($2,711)
       Effect on postretirement benefit
         obligation                                 27,156           (22,189)

9.     Shareholders' Investment.  In April 1989, the shareholders approved a
       Stock Option Plan providing for granting of options to directors,
       officers and all other nonunion employees. In April 1998, the company
       adopted a similar plan, the 1998 Incentive Compensation Plan. This plan
       provides for the granting of options, stock appreciation rights, stock or
       cash awards to directors, officers and all other nonunion employees. The
       company accounts for these plans under Accounting Principles Board
       Opinion No. 25, under which no compensation cost has been recognized. Had
       compensation cost for these plans been determined consistent with FASB
       Statement No. 123, the impact on net income after taxes, basic earnings
       per share and diluted earnings per share for the years ended December 31,
       1999, 1998 and 1997 would have been as follows:

                                               For the period ended December 31,
                                               ---------------------------------
                                               1999          1998         1997
                                               ----          ----         ----

       Net income after taxes      (dollars in thousands, except per share data)
       As reported                           $66,076       $102,357     $118,044
       Pro forma                              61,576        101,457      116,444

       Basic earnings per share
       As reported                              $.73          $1.13        $1.32
       Pro forma                                 .68           1.12         1.30

       Diluted earnings per share
       As reported                              $.73          $1.13        $1.31
       Pro forma                                 .68           1.12         1.29

       Because the Statement No. 123 method of accounting has not been applied
       to options granted prior to January 1, 1995, the resulting pro forma
       compensation cost may not be representative of that to be expected in
       future years.

       The plans reserved 10 million shares of common stock to be issued at
       prices equal to 100% of the fair market value of the shares on the date
       the option is granted. Options are exercisable not earlier than six
       months and not later than 10 years after the date of the grant.

       Of the 2,550,308 options outstanding at December 31, 1999, 1,321,430 have
       exercise prices between $19.44 and $23.38, with a weighted average
       exercise price of $21.38 and a weighted average remaining contractual
       life of 5.90 years. 703,639 of these options are exercisable with a
       weighted average exercise price of $20.79. The remaining 1,228,878
       options have exercise prices between $24.06 and $32.97, with a weighted
       average exercise price of $26.97 and a weighted average remaining
       contractual life of 7.19 years. 801,841 of these options are exercisable
       with a weighted average exercise price of $26.58.


<PAGE>

       The fair value of each option grant is estimated on the date of grant
       using the Black-Scholes option pricing model with the following weighted
       average assumptions used for grants in 1999, 1998 and 1997, respectively:
       risk-free interest rates of 6.68%, 4.95% and 5.79%; expected dividend
       yields of 2.77%, 3.20% and 3.15%; expected lives of 10, 10 and 10 years;
       and expected volatility of 105.91% and 30.14% for 1999 options, 26.05%,
       27.75% and 29.50% for 1998 options, and 19.25% and 18.81% for 1997
       options.

       An analysis of the stock option plans at December 31, 1999, 1998 and 1997
       follows:

                          Weighted              Weighted             Weighted
                           Average               Average              Average
                  1999    Exercise     1998     Exercise     1997    Exercise
                 Shares     Price     Shares      Price     Shares     Price
                 ------   ---------   ------    ---------   ------   --------
Outstanding at
  beginning of
  year          2,302,480   $24      2,411,328   $ 22     2,331,104    $ 21
Granted           641,477    22        534,728     29       475,258      24
Exercised        (316,420)   20       (617,664)    19      (338,358)     19
Expired or
  canceled       ( 77,229)   25       ( 25,912)    27      ( 56,676)     24
                ---------            ---------            ---------
Outstanding at
  end of year   2,550,308    24      2,302,480     24     2,411,328      22
                ---------            ---------            ---------
Exercisable at
  end of year   1,505,480    24      1,389,427     22     1,611,150      20

Weighted
  average fair
  value of
  options
  granted       $   15.59             $   8.09             $   6.30

       There are also 15 million shares of Class A Preferred Stock authorized
       with a par value of $.01 per share, to be issued at the discretion of the
       Board of Directors. As of December 31, 1999, none of the shares had been
       issued.

10.    Income Taxes.

       The provision for income taxes includes the following components:

    (In thousands)                  1999           1998          1997
     ------------                   ----           ----          ----
Current:
       Federal                    $  3,409       $ 29,383     $ 39,040
       State                         3,817          3,695        7,882
                                  --------       --------     --------
         Total current               7,226         33,078       46,922
                                  --------       --------     --------

     Deferred:
       Federal                      37,987         33,311       23,591
       State                       ( 1,162)         1,851        1,837
                                  --------       --------     --------
         Total deferred             36,825         35,162       25,428
                                  --------       --------     --------

     Total provision              $ 44,051       $ 68,240     $ 72,350
                                  ========       ========     ========

       The following summarizes the major differences between the U.S. statutory
       tax rates and the company's effective tax rates:

                                      1999         1998          1997
                                      ----         ----          ----

     Statutory federal tax rates      35.0%        35.0%         35.0%
     State income taxes                1.6          2.7           3.3
     Other items                       3.4          2.3           (.3)
                                      ----         ----          ----

     Effective tax rates              40.0%        40.0%         38.0%
                                      ====         ====          ====


<PAGE>

       Deferred taxes are determined based on the estimated future tax effects
       of differences between the financial statement and tax bases of assets
       and liabilities given the provisions of the enacted tax laws. The net
       deferred tax liability is comprised of the following:

      (In thousands)                         1999         1998        1997
       ------------                          ----         ----        ----
       Deferred tax assets:
         Postretirement benefits           $  71,931    $  66,524   $  65,395
         Accrued vacation                     13,696       12,866      10,029
         Net operating loss carryforward      41,145       51,191      50,322
         AMT credit                            4,379        3,546       1,403
         Tax credit carryforward              10,706       11,757       7,875
         Capital loss carryforward             7,574        8,974       8,449
         Valuation allowance                (  7,841)    ( 10,504)   (  7,907)
         Other                                47,280       20,321      23,184
                                           ---------    ---------   ---------
       Total deferred tax assets             188,870      164,675     158,750
                                           ---------      -------   ---------
       Deferred tax liabilities:
         Plant and equipment                (516,400)    (476,184)   (432,265)
         Equity method investments          ( 10,683)    ( 10,140)   ( 10,576)
         Other                              ( 37,960)    ( 11,778)   ( 13,428)
                                           ---------    ---------   ---------
       Total deferred tax liabilities       (565,043)    (498,102)   (456,269)
                                           ---------    ---------   ---------

       Net deferred tax liability          $(376,173)   $(333,427)  $(297,519)
                                           =========    =========   =========

       The consolidated balance sheets reflect current deferred income taxes of
       $14.8 million, $16.2 million and $12.4 million in prepaid expenses and a
       long-term deferred income tax liability of $391.0 million, $349.6 million
       and $309.9 million at December 31, 1999, 1998 and 1997, respectively.

       As of December 31, 1999, the Company has net operating loss carryforwards
       of $226.7 million which expire from 2001 to 2004, AMT credit
       carryforwards of $5.3 million which do not expire, tax credit
       carryforwards of $15.1 million which expire from 2000 to 2014 and capital
       loss carryforwards of $21.6 million which expire in 2001. Due to the
       uncertainty of the realization of certain tax carryforwards, the company
       has established a valuation allowance against these carryforwards. This
       valuation allowance reduced the deferred tax asset to a net amount that
       the company believed more likely than not that it would realize based on
       the company's estimates of its future earnings and the expected timing of
       temporary difference reversals.

11.    Other Commitments.  The company has agreed to purchase paper mill process
       steam from the City of Duluth Steam District No. 2 Cooperative
       Association at a unit cost to be determined based upon operating,
       maintenance and capital costs of the steam plant. In addition, the
       company pays an amount equal to the principal and interest requirements
       on $5.4 million of outstanding Steam Utility Revenue Bonds as of December
       31, 1999, which mature at various times through April 1, 2002, and
       certain other costs through April 1, 2008, principally capital
       expenditures. The company paid $2.8 million in 1999, 1998 and 1997, to
       service these bonds. Annual payments for the principal and interest
       portion of these bonds are expected to be $2.8 million in 2000 and 2001,
       with a final payment of $0.7 million in 2002.

       As of December 31, 1999, the company had capital expenditure commitments
       outstanding of approximately $139 million.

12.    Segment Information.  The company's principal business is the manufacture
       of paper and paper-related products. Consolidated Papers, Inc. is a
       leading manufacturer of coated and supercalendered printing papers. The
       company is also the nation's leading manufacturer of specialty papers
       used in consumer product packaging and labeling. Other products and
       services include recycled pulp made from printed, preconsumer and
       postconsumer scrap paper, paperboard, paperboard products, and
       hospitality and lodging services provided at a company-owned hotel.


<PAGE>

       The company's headquarters and major operating facilities are all located
       in the United States. Some forestlands are located in Canada. These
       Canadian operations account for $0.6 million of consolidated total
       assets.

       The principal markets for the company's products are in the United
       States. Export sales, primarily to Canada, amounted to $91.6 million in
       1999, $88.2 million in 1998 and $65.8 million in 1997.

       Sales to one customer amounted to 13.6%, 13.6% and 14.3% of consolidated
       net sales in 1999, 1998 and 1997, respectively. Sales to another customer
       amounted to 11.1%, 10.1% and 10.2% of net sales in 1999, 1998 and 1997,
       respectively.

       The company is managed along product lines including coated and
       supercalendered printing papers, specialty papers and paperboard
       products. Several operating divisions producing groundwood-free,
       groundwood and supercalendered papers have been aggregated into the
       coated and supercalendered printing papers reportable segment because
       these operating segments are similar in economic characteristics,
       products, production processes, type of customer and distribution
       methods. The specialty papers and paperboard products operating segments
       do not meet the quantitative thresholds for a reportable segment and thus
       are included in the "Other" category. The 1997 and 1998 "Other" category
       also included corrugated products from the company's Castle Rock
       Container Company, which was sold in 1999.

       The coated and supercalendered printing papers reportable segment derives
       revenues from the sale of printing papers used by commercial printers and
       publishers for magazines, annual reports, advertising brochures,
       catalogs, coupons and newspaper inserts. The "Other" category includes
       the sales of specialty papers (used for flexible packaging,
       pressure-sensitive labels and technical papers), recycled pulp and
       paperboard products as well as revenues from the company-owned hotel.

       Segment sales include intersegment sales valued at arm's-length transfer
       prices. Segment operating profit is revenue less direct and allocable
       operating expenses. Segment identifiable assets are those which are
       directly used in or identified to segment operations. Corporate items
       include nonoperating overhead, selling, general and administrative
       expense, research and development expenditures, interest expense,
       inter-segment eliminations, and other income and deductions items.
       Corporate assets are principally cash and cash equivalents, certain
       nontrade receivables, prepaid items, equity method investments, and
       certain nonoperating fixed assets.

       Financial information by business segment follows:

                                 Printing               Corporate
     (In thousands)               Papers      Other      Items        Total
                                 --------     -----    ---------      -----
     1999
     Revenues                  $1,615,215  $  266,237  $( 42,657)  $1,838,795
     Segment profit (loss)        240,642      25,516   (156,031)     110,127
     Total assets               2,665,953     299,447    560,773    3,526,173
     Capital expenditures         137,112      13,720      8,037      158,869
     Depreciation and
       amortization               167,429      18,027      2,885      188,341

     1998
     Revenues                  $1,751,226  $  281,690  $( 43,601)  $1,989,315
     Segment profit (loss)        323,475      16,575   (161,781)     178,269
     Total assets               2,754,789     325,538    547,159    3,627,486
     Capital expenditures         315,459      29,663      3,734      348,856
     Depreciation and
       amortization               160,514      18,168   (  4,434)     174,248

<PAGE>

     1997
     Revenues                  $1,440,005  $  284,820  $( 45,514)  $1,679,311
     Segment profit (loss)        264,710      28,578   (102,894)     190,394
     Total assets               2,514,870     313,684    518,956    3,347,510
     Capital expenditures         181,582      50,338      4,278      236,198
     Depreciation and
       amortization               105,063      21,248      2,289      128,600

13.    Subsequent Event.  On February 22, 2000, the Company and Stora Enso Oyj
       executed a definitive agreement for Stora Enso to acquire Consolidated
       Papers, Inc. for approximately $4.8 billion. Under the terms of the
       agreement, all of the issued and outstanding shares of Consolidated
       Papers will be converted, at the election of the holder, into cash or
       Stora Enso ADR's (American Depositary Receipts representing an interest
       in underlying Series R shares of Stora Enso), or a combination of cash
       and ADRs, with a targeted value of $44.00 per Consolidated Papers share.
       The transaction has been unanimously approved by the boards of directors
       of both companies. The consummation of the sale, which is subject to
       regulatory approval and the approval of the shareholders of both
       companies, is expected to occur in August 2000.

QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of selected quarterly financial data for 1999 and
1998:

(Dollars in
thousands, except        First     Second      Third     Fourth
per share data)         Quarter    Quarter    Quarter    Quarter      Year
------------------------------------------------------------------------------
1999
----
Net sales              $ 459,233  $ 435,119  $ 471,431  $ 473,012  $ 1,838,795
Gross profit              61,177     56,339     71,117     77,525      266,158
Net income                13,970     10,080     19,442     22,584       66,076
Net income per share -
  diluted                    .15        .12        .21        .25          .73

1998
----
Net sales              $ 517,009  $ 508,437  $ 491,580  $ 472,289  $ 1,989,315
Gross profit             104,127     94,045     69,584     72,294      340,050
Net income after
  extraordinary item      39,043     27,100     17,179     19,035      102,357
Net income per share
  after extraordinary
  item-diluted               .43        .30        .19        .21         1.13

Per share amounts have been restated in 1998 to reflect the two-for-one stock
split of May, 1998.

1998 amounts reflect a $4.6 million after taxes extraordinary loss on debt
extinguishment.

Net income per share is based upon the weighted average number of shares
outstanding during the period.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and the Board of Directors of
Consolidated Papers, Inc.:


We have audited the accompanying consolidated balance sheets of Consolidated
Papers, Inc. (a Wisconsin corporation) and subsidiaries as of December 31, 1999,
1998 and 1997, and the related consolidated statements of income, shareholders'
investment and cash flows for each of the years in the three-year period ended
December 31, 1999. These financial statements and the schedule referred to below
are the responsibility of the Company's management.


<PAGE>

Our responsibility is to express an opinion of these financial statements and
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinions.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Consolidated Papers,
Inc. and subsidiaries as of December 31, 1999, 1998 and 1997, and the results of
its operations and its cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.

Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in the
index at item 14 is the responsibility of the Company's management and is
presented for the purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic consolidated financial statements
taken as a whole.



/s/ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP Milwaukee, Wisconsin, January 14, 2000 (except with respect
to the matter discussed in Note 13, as to which the date is February 22, 2000).


Consent of Independent Public Accountants



As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K/A, into Consolidated Papers, Inc.'s previously
filed Registration Statement File No. 2-87423, Registration Statement File No.
33-28786, Registration Statement File No. 33-37838, Registration statement File
No. 33-60263, Registration Statement File No. 33-64393, and Registration
Statement File No. 333-73375.


/s/ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP


Milwaukee, Wisconsin
July 25, 2000

<PAGE>

                                 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this amendment to the report to be
signed on its behalf by the undersigned, thereunto duly authorized.

          CONSOLIDATED PAPERS, INC.
          -------------------------
                  Registrant

/s/Carl H. Wartman                                       July 25, 2000
-------------------------------------------------    -----------------
Carl H. Wartman,                                               Date
Secretary and General Counsel