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700 LOUISIANA STREET
    
    FAX: 713 225-6475SUITE 4300
    
    TELEPHONE: 713 570-3200HOUSTON, TEXAS 77002
 
 PRESS RELEASE
 Pioneer Announces 2007 Second Quarter Results




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www.piona.com
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PIONEER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    130,278
    
    
    $
    132,533
    
    
    $
    252,719
    
    
    $
    267,405Cost of sales
    
    
    (107,414
    )
    
    
    (102,025
    )
    
    
    (206,465
    )
    
    
    (201,663
    )Gross profit
    
    
    22,864
    
    
    
    30,508
    
    
    
    46,254
    
    
    
    65,742Selling, general and administrative
expenses
    
    
    (9,658
    )
    
    
    (8,916
    )
    
    
    (18,941
    )
    
    
    (16,995
    )Gain (loss) on asset dispositions
and other, net
    
    
    (638
    )
    
    
    95
    
    
    
    (589
    )
    
    
    407Operating income
    
    
    12,568
    
    
    
    21,687
    
    
    
    26,724
    
    
    
    49,154Interest expense
    
    
    (1,373
    )
    
    
    (2,555
    )
    
    
    (3,455
    )
    
    
    (5,284
    )Interest income
    
    
    2,239
    
    
    
    482
    
    
    
    3,564
    
    
    
    745Other expense, net
    
    
    (5,706
    )
    
    
    (2,075
    )
    
    
    (6,830
    )
    
    
    (4,365
    )Income before income taxes
    
    
    7,728
    
    
    
    17,539
    
    
    
    20,003
    
    
    
    40,250Income tax expense
    
    
    (2,703
    )
    
    
    (2,125
    )
    
    
    (7,733
    )
    
    
    (8,786
    )Net income
    
    $
    5,025
    
    
    $
    15,414
    
    
    $
    12,270
    
    
    $
    31,464Net income per share:Basic
    
    $
    0.42
    
    
    $
    1.31
    
    
    $
    1.04
    
    
    $
    2.67Diluted
    
    $
    0.42
    
    
    $
    1.30
    
    
    $
    1.03
    
    
    $
    2.65Weighted average number of shares
outstanding:Basic
    
    
    11,842
    
    
    
    11,770
    
    
    
    11,805
    
    
    
    11,765Diluted
    
    
    11,925
    
    
    
    11,856
    
    
    
    11,904
    
    
    
    11,853
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PIONEER COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 June 30,
    
    
    December 31,2007
    
    
    2006AssetsCurrent assets
    
    $
    228,363
    
    
    $
    204,125Property, plant and equipment, net
    
    
    152,056
    
    
    
    152,784Other assets, net
    
    
    5,013
    
    
    
    1,850Excess reorganization value over the fair
value of identifiable assets
    
    
    84,064
    
    
    
    84,064Total assets
    
    $
    469,496
    
    
    $
    442,823Liabilities and stockholders equityCurrent liabilities
    
    $
    51,958
    
    
    $
    60,572Long-term debt, less current portion
    
    
    121,760
    
    
    
    101,761Employee benefits and other long-term liabilities
    
    
    98,498
    
    
    
    95,670Total stockholders equity
    
    
    197,280
    
    
    
    184,820Total liabilities and stockholders equity
    
    $
    469,496
    
    
    $
    442,823
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PIONEER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 Six Months EndedJune 30,2007
    
    
    2006Operating activities:Net income
    
    $
    12,270
    
    
    $
    31,464Adjustments to reconcile net income to net
cash flows from operating activities:Depreciation and amortization
    
    
    12,505
    
    
    
    11,998Reduction of allowance for
doubtful accounts
    
    
    (55
    )
    
    
    (858
    )Deferred tax expense
    
    
    644
    
    
    
    3,144Gain on disposal of assets
    
    
    (111
    )
    
    
    (477
    )Currency exchange loss
    
    
    4,329
    
    
    
    2,110Loss on early debt extinguishment
    
    
    2,500
    
    
    
    2,500Stock-based compensation expense
    
    
    266
    
    
    
    674Accretion of asset retirement obligations
    
    
    467
    
    
    
    152Net effect of changes in operating assets and
liabilities
    
    
    (22,780
    )
    
    
    (5,253
    )Other
    
    
    (99
    )
    
    
    Net cash flows from operating activities
    
    
    9,936
    
    
    
    45,454Investing activities:Capital expenditures
    
    
    (11,722
    )
    
    
    (4,734
    )Proceeds from disposal of assets
    
    
    444
    
    
    
    331Net cash flows used in investing activities
    
    
    (11,278
    )
    
    
    (4,403
    )Financing activities:Excess tax benefits on stock options exercised
    
    
    
    
    
    
    53Payment of premium on early debt extinguishment
    
    
    (2,500
    )
    
    
    (2,500
    )Proceeds from issuance of convertible notes
    
    
    120,000
    
    
    
    Debt issuance costs
    
    
    (3,993
    )
    
    
    Repayments of long-term debt
    
    
    (100,978
    )
    
    
    (51,452
    )Proceeds from issuance of stock, net
    
    
    
    
    
    
    219Net cash flows from (used) in financing
activities
    
    
    12,529
    
    
    
    (53,680
    )Effect of exchange rate changes on cash
    
    
    92
    
    
    
    (22
    )Net change in cash and cash equivalents
    
    
    11,279
    
    
    
    (12,651
    )Cash and cash equivalents at beginning of period
    
    
    115,216
    
    
    
    62,790Cash and cash equivalents at end of period
    
    $
    126,495
    
    
    $
    50,139
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