##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K/A
 Amendment No. 1
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2005ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to   Commission file number 1-10033
    WELLMAN, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

04-1671740(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1041 521 Corporate Center
    Drive
    Fort Mill, South Carolina(Address of principal
    executive offices)

29715(Zip Code)   Registrants telephone
    number, including area code:
 (803) 835-2000
    Securities registered pursuant
    to Section 12(b) of the Act:
  Name ofEach Exchangeon WhichTitle of Each Class

RegisteredCommon Stock, $0.001 par value

New York Stock ExchangeCommon Stock Purchase Rights

New York Stock Exchange   Securities registered pursuant
    to Section 12(g) of the Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



TABLE OF CONTENTS  PART IItem 1. BusinessItem 2. PropertiesItem 3. Legal ProceedingsPART IIItem 5. Market for Registrants Common Equity and Related Stockholder MattersItem 6. Selected Consolidated Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosure about Market RiskItem 8. Financial Statements and Supplementary DataCONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNotes to Consolidated Financial StatementsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSCHEDULE IIItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMPART IIIItem 10. Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits, Financial Statement Schedules and Reports on Form 8-KSIGNATURESEx-23.1 Consent of Ernst & Young LLPEx-23.2 Consent of KPMG Charter Accountants, Dublin, IrelandEX-31.1 Section 302 Certification of C.E.O.EX-31.2 Section 302 Certification of C.F.O.EX-32.1 Section 906 Certification of C.E.O.EX-32.2 Section 906 Certification of C.F.O.    Table of Contents  EXPLANATORY
    NOTE
     2




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##### Table of Contents



PART I
 
  Item 1.
    Business  ® ®
      2005


2004


2003(In millions, except per share data)Net Sales

$
1,376.9


$
1,305.0


$
1,109.3Gross Profit

$
117.8


$
83.8


$
80.6Operating Loss

$
(2.6
)

$
(16.4
)

$
(141.0
)Loss From Continuing Operations

$
(30.0
)

$
(38.8
)

$
(96.7
)Per Share Net Loss Attributable to
    Common Stockholders

$
(1.40
)

$
(1.61
)

$
(3.38
)Total Assets

$
1,098.7


$
1,166.9


$
1,117.1Capital Expenditures

$
51.4


$
15.1


$
15.5     2005


2004


2003(In millions)Operating Loss

$
(2.6
)

$
(16.4
)

$
(141.0
)Depreciation


51.3



55.4



47.1Amortization


17.4



15.2



5.6Other Expense, Net


56.2



37.0



6.0Restructuring Charges


0.6



2.6



10.2Provision for Uncollectible
    Accounts


0.5



0.8



3.5Impairment Charge










135.3Financing Adjustments(a)






3.4



32.0Adjusted EBITDA

$
123.4


$
98.0


$
98.7     (a)
    
    The Financing Adjustments represent certain cash operating
    expenses associated with obligations that were refinanced with
    our February 2004 Financing. The adjustments assume that the
    February 2004 Financing was completed before the beginning of
    the period. The following represents details of the Financing
    Adjustments that represent cash charges related to certain
    contractual obligations that previously affected operating loss:  2005


2004


2003(In millions)Raw Material Contract

$



$
1.5


$
19.5Sale and Leaseback Transaction






1.8



9.7Asset Securitization






0.1



2.8Financing Adjustments

$



$
3.4


$
32.0  3




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##### Table of Contents



Packaging
    Products Group
    
    PermaClear®
    and PermaClear
    HP®
    solid-stated and amorphous PET resin from chemical-based raw
    materials for use in the manufacture of plastic soft drink
    bottles and other food and beverage packaging and
    EcoClear®
    PET resin, utilizing recycled PET materials to meet
    customers recycled content PET resin requirements.      2005


2004


2003(In millions)Net Sales

$
781.4


$
747.9


$
632.0Segment Profit(a)

$
48.1


$
29.5


$
17.3Segment Depreciation and
    Amortization


41.4



44.2



28.9Segment Financing Adjustments(b)






3.0



25.5Segment EBITDA

$
89.5


$
76.7


$
71.7Assets

$
704.0


$
775.4


$
455.2Capital Expenditures

$
40.3


$
9.4


$
7.6     (a)
    
    For a reconciliation of the Segment Profit to the Loss from
    continuing operations before income taxes and an explanation of
    the calculation of Segment Profit (Loss) in the accompanying
    consolidated financial statements, see Note 15 to the
    Consolidated Financial Statements.(b)
    
    The Financing Adjustments represent certain cash operating
    expenses associated with obligations that were refinanced with
    our February 2004 Financing. The adjustments assume that the
    February 2004 Financing was completed before the beginning of
    the period. The following represents details of the Financing
    Adjustments that represent cash charges related to certain
    contractual obligations that previously affected operating
    results:  2005


2004


2003(In millions)Raw Material Contract

$



$
1.1


$
14.5Sale and Leaseback Transaction






1.8



9.7Asset Securitization






0.1



1.3Financing Adjustments

$



$
3.0


$
25.5    4




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##### Table of Contents



NAFTA PET
    Resin
    Consumption(1)
  
  Source: SBA-CCI, Inc. (March 2006)
  (1)
    All industry information presented in Item 1.
    Business include industry data which are taken from
    sources we believe to be reliable and may have been modified by
    us based on our knowledge of the industry.   5




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##### Table of Contents



NAFTA PET
    Resin Industry Supply/Demand Balance
  
  Source: SBA-CCI, Inc. (March 2006), Wellman
 6




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##### Table of Contents



NAFTA PET
    Resin Net Trade Balance
  
  All quarters are annualized  Source: U.S. Department of Commerce, Expide Logistics SA de
    CV (Feb. 2006), Wellman
   7




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##### Table of Contents



2005
    NAFTA PET Resin Capacity by Producer
  
  Total
    Capacity: 8.26 billion pounds
  Source: SBA-CCI, Inc. (March 2006), Wellman
      Fibers
    and Recycled Products Group
    
    Fortrel®
    chemical-based polyester staple fibers for use in apparel,
    non-woven, home furnishing, and industrial products,
    recycled-based polyester and nylon staple fibers for use in home
    furnishing, non-woven, and industrial products, and
    EcoLon®
    and
    Wellamid®
    recycled-based nylon and polyester engineering resins for use in
    the injection molding industry.  ®
       8




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##### Table of Contents



® ®
    2005


2004


2003(In millions)Net Sales

$
595.5


$
557.1


$
477.3Segment Profit (Loss)(a)

$
6.6


$
(5.5
)

$
(3.3
)Segment Depreciation and
    Amortization


27.3



26.4



23.8Segment Financing Adjustments(b)






0.4



6.5Segment EBITDA

$
33.9


$
21.3


$
27.0Assets

$
300.5


$
315.3


$
382.7Capital Expenditures

$
11.1


$
5.7


$
7.9     (a)
    
    For a reconciliation of the Segment Profit (Loss) to the Loss
    from continuing operations before income taxes and an
    explanation of the calculation of Segment Profit (Loss) in the
    accompanying consolidated financial statements, see Note 15
    to the Consolidated Financial Statements.(b)
    
    The Financing Adjustments represent certain cash operating
    expenses associated with obligations that were refinanced with
    our February 2004 Financing. The adjustments assume that the
    February 2004 Financing was completed before the beginning of
    the period. The following represents details of the Financing
    Adjustments that represent cash charges related to certain
    contractual obligations that previously affected operating
    results:  2005


2004


2003(In millions)Raw Material Contract

$



$
0.4


$
5.0Asset Securitization










1.5Financing Adjustments

$



$
0.4


$
6.5     ®
   9




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##### Table of Contents



Polyester
    Staple Imports Into the U.S.*
  
  Source: U.S. Commerce Department (Feb. 2006)
  Textile
    and Apparel Imports Into the U.S.
  
  Source: U.S. Commerce Department (Feb. 2006)
   10




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##### Table of Contents



U.S. Polyester
    Staple Fiber Industry Supply/Demand Balance
  
  Source: Fiber Economics Bureau (FEB) (Jan. 2006),
    Wellman
     2005
    U.S. Polyester Staple Fiber Capacity
  
  Total
    Capacity: 2.25 billion pounds
  Source: FEB (2005 Average), Wellman
 11




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##### Table of Contents



2005
    European Union Polyester Staple Fiber Capacity
  
  Total
    Capacity: 1.1 billion pounds
  Source: PCI (2005 Red Book)
   12




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##### Table of Contents



Raw
    Materials
  ® ®
  Polyester
    Chain
  
     13




---



##### Table of Contents



Global
    Polyester Chemical Raw Material Costs 2005
  
  * China prices excludes VAT  Source: Chem-Data, PCI (Feb. 2006), Wellman
    
    Mixed Xylenes (MX)  3.2 million tons or 35% of
    U.S. capacity offline due to damage.
    Paraxylene (PX)  3.0 million tons or 63% of
    U.S. capacity offline due to damage.
    Ethylene  19.5 million tons or 56% of North
    America capacity offline either from damage or lack of natural
    gas.
    Ethylene glycol (MEG)  2.3 million tons or 68%
    of the U.S. capacity offline either from damage or lack of
    ethylene.       14




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##### Table of Contents



Capital
    Investment Program
    Capital
    Expenditures
  2005


2004


2003(In millions)Expansion/major cost reductions

$
38.0


$
6.1


$
1.7Maintenance of business capital(a)


13.4



9.0



13.8Total

$
51.4


$
15.1


$
15.5   (a)
    
    Includes environmental, health and safety capital expenditures.      Research
    and Development
    Foreign
    Activities
  non-U.S. sales
    Employees
    2005


2004


2003


2002


2001Employees


1,900



1,700



1,900



2,200



2,500Long-term, Independent Contractors


80



360



270



270



280Total


1,980



2,060



2,170



2,470



2,780    15




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##### Table of Contents



Environmental
    Matters
      Executive
    Officers of the Registrant
    Name and Age

PositionThomas M. Duff, 58

Chairman, Chief Executive Officer,
    and DirectorKeith R. Phillips, 51

Vice President, Chief Financial
    OfficerMichael E. Dewsbury, 56

Vice President, PET Resins
    Division  U.S.Audrey L. Goodman, 52

Vice President, TreasurerMark J. Ruday, 40

Vice President, Chief Accounting
    Officer and ControllerJoseph C. Tucker, 58

Vice President, Fibers and
    Recycled Products Group     Thomas M. Duff.
  Keith R. Phillips.
  Michael E. Dewsbury.
  Audrey L. Goodman.
  Mark J. Ruday.
  Joseph C. Tucker.
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
 16




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##### Table of Contents



Item 2.
    Properties    Stated AnnualProduction Capacity(In millionsLocation

Principal Products

of pounds)Darlington, S.C. (Palmetto)

PET resins


760
(1)Hancock County, MS (Pearl River)

PET resins


560
(2)Emmen, the Netherlands

PET resins


120Darlington, S.C. (Palmetto)

Polyester staple fiber


500Johnsonville, S.C.

Polyester staple fiber


160Mullagh, Ireland

Polyester staple fiber


185Johnsonville, S.C.

Engineering resins


70     (1)
    Includes 260 million pounds of amorphous PET resin capacity
    in excess of solid-stating capacity. The 260 million pounds
    consist of (i) 90 million pounds, which are
    solid-stated externally pursuant to a long-term contract;
    (ii) 90 million pounds, which are sold as amorphous
    PET resin pursuant to a long-term contract; and
    (iii) 80 million pounds, which are available for
    external sales as amorphous PET resin.(2)
    Excludes polymerization production equipment with an annual
    capacity of approximately 300 million pounds, which is in
    the process of being converted in order to manufacture PET
    resin. This conversion is expected to be fully operational in
    the second quarter of 2006. 
  Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   17




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##### Table of Contents



PART II
 
  Item 5.
    Market
    for Registrants Common Equity and Related Stockholder
    Matters  Market
    Information    Year

High


Low


Dividend2005Fourth Quarter

$
8.23


$
5.36


$
0.05Third Quarter

$
10.99


$
5.62


$
0.05Second Quarter

$
14.82


$
9.35


$
0.05First Quarter

$
15.42


$
9.50


$
0.052004Fourth Quarter

$
10.88


$
6.89


$
0.05Third Quarter

$
8.48


$
6.38


$
0.05Second Quarter

$
8.64


$
7.15


$
0.05First Quarter

$
10.81


$
7.33


$
0.05           Securities
    Authorized for Issuance Under Equity Compensation
    Plans
   18




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##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data  Years Ended December 31,2005


2004


2003


2002


2001(In millions, except per share data)Net sales

$
1,376.9


$
1,305.0


$
1,109.3


$
1,014.0


$
1,009.6Gross profit

$
117.8


$
83.8


$
80.6


$
115.2


$
107.3Operating income (loss)

$
(2.6
)

$
(16.4
)

$
(141.0
)

$
45.7


$
35.2Interest expense

$
45.4


$
38.1


$
10.1


$
10.3


$
17.9Earnings (loss) from continuing
    operations

$
(30.0
)

$
(38.8
)

$
(96.7
)

$
26.4


$
13.4Accretion and beneficial
    conversion charge

$
(14.2
)

$
(12.3
)

$
(10.1
)

$



$
Cumulative effect of accounting
    change, net of tax













$
(197.0
)


Net earning (loss) attributable to
    common stockholders

$
(44.2
)

$
(51.1
)

$
(106.7
)

$
(194.3
)

$
8.4Basic net earnings (loss)
    attributable to common stockholders per common share

$
(1.40
)

$
(1.61
)

$
(3.38
)

$
(6.15
)

$
0.27Diluted net earnings (loss)
    attributable to common stockholders per common share

$
(1.40
)

$
(1.61
)

$
(3.38
)

$
(6.07
)

$
0.26Dividends declared per common share

$
0.20


$
0.20


$
0.36


$
0.36


$
0.36   Years Ended December 31,2005


2004


2003


2002


2001(In millions)Operating income (loss)

$
(2.6
)

$
(16.4
)

$
(141.0
)

$
45.7


$
35.2Depreciation and amortization


68.7



70.6



52.7



56.1



62.5Other expense, net


56.2



37.0



6.0



0.7



3.1Restructuring charges


0.6



2.6



10.2







Provision for uncollectible
    accounts


0.5



0.8



3.5



4.2



0.1Impairment charge










135.3







Financing Adjustments(a)






3.4



32.0



28.9



30.0Adjusted EBITDA

$
123.4


$
98.0


$
98.7


$
135.6


$
130.9     (a)
    
    The Financing Adjustments represent certain cash operating
    expenses associated with obligations that were refinanced with
    our February 2004 Financing. The adjustments assume that the
    February 2004 Financing was completed before the beginning of
    the period. The following represents details of the Financing
    Adjustments that represent cash charges related to certain
    contractual obligations that previously affected operating
    income (loss):  2005


2004


2003


2002


2001(In millions)Raw Material Contract

$



$
1.5


$
19.5


$
18.9


$
18.8Sale and Leaseback Transaction






1.8



9.7



8.7



8.3Asset Securitization






0.1



2.8



1.3



2.9Financing Adjustments

$



$
3.4


$
32.0


$
28.9


$
30.0   19




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##### Table of Contents



December 31,2005


2004


2003


2002


2001(In millions)Balance Sheet Data:Total assets

$
1,098.7


$
1,166.9


$
1,117.1


$
965.2


$
1,234.4Total debt(b)

$
498.6


$
471.5


$
371.0


$
236.9


$
333.1Stockholders equity

$
349.4


$
426.5


$
465.6


$
426.7


$
612.7   (b)
    
    The following summarizes our total debt and certain contractual
    obligations for each of the years presented.  December 31,2005


2004


2003


2002


2001(In millions)Total debt

$
498.6


$
471.5


$
371.0


$
236.9


$
333.1Certain contractual obligations:Receivables securitization










27.8



64.2



76.0Sale and leaseback transaction










155.1



165.4



170.8Raw material contract










96.4



115.7



135.0Total certain contractual
    obligations










279.3



345.3



381.8Total debt and certain contractual
    obligations

$
498.6


$
471.5


$
650.3


$
582.2


$
714.9    20




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  GENERAL
  ® ® ®
  ® ® ®
      CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
      Revenue
    Recognition
   21




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##### Table of Contents



Allowance
    for Doubtful Accounts
    Inventory
    Valuation
  first-in,
  Property,
    Plant and Equipment
      Goodwill
    and Other Intangible Assets
      Other
    Assets
   22




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##### Table of Contents



Deferred
    Tax Assets
    Environmental
    Liability
    Pension
    Benefits
            IMPACT OF
    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
   23




---



##### Table of Contents



RECENT
    DEVELOPMENTS
   24




---



##### Table of Contents



Direct Damage to Plant
    Site 

Costs incurred to repair and/or
    restore all machinery, equipment, foundations, and buildings to
    their normal operating condition.Fixed Costs 

Salaries, wages, property
    insurance, electricity, and waste water treatment costs incurred
    during the shutdown period.Incremental freight
    costs 

Additional freight costs incurred
    above our normal freight expense primarily due to the disruption
    in rail service.Infrastructure support 

Costs to maintain an adequate
    living environment for both our employees and contract workers
    starting with the initial repair period and continuing in order
    to maintain proper staffing levels to operate the plant.Inventory spoilage 

Costs representing the difference
    between the inventory cost at the time of the hurricane less the
    net realizable value of inventory that was damaged or spoiled as
    a result of the hurricane.Rail car damage 

Costs of repairing all of our
    leased rail cars that were damaged during the hurricane.Rail car leases 

Monthly lease cost related to the
    rail cars that were damaged and thus inoperable.       RESULTS
    OF OPERATIONS
  2005
    to 2004
    PPG


FRPG


Total(In millions)Net selling prices

$
127.0


$
101.8


$
228.8Sales volumes


(93.6
)


(63.6
)


(157.2
)Foreign currency translation


0.1



0.2



0.3Increase in net sales


33.5



38.4



71.9Volume effect


(75.3
)


(52.4
)


(127.7
)Raw material unit costs


89.0



69.1



158.1Plant added unit costs


(0.1
)


7.1



7.0Foreign currency translation


0.1



0.4



0.5Increase in cost of
    sales


13.7



24.2



37.9Increase in gross
    profit

$
19.8


$
14.2


$
34.0    25




---



##### Table of Contents



2005


2004(In millions)Legal costs

$
35.9


$
5.4Hurricane Katrina costs


24.0



Non-capitalizable financing costs






40.2Rebates from anti-dumping duties


(3.7
)


(8.6
)$
56.2


$
37.0            26




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##### Table of Contents



2004
    to 2003
    PPG


FRPG


Total(In millions)Net selling prices

$
94.4


$
22.4


$
116.8Sales volumes


14.4



46.7



61.1Foreign currency translation


7.1



10.7



17.8Increase in net sales


115.9



79.8



195.7Volume effect


10.4



42.2



52.6Raw material unit costs


89.1



49.1



138.2Plant added unit costs


(1.9
)


(11.4
)


(13.3
)Foreign currency translation


6.4



8.6



15.0Increase in cost of
    sales


104.0



88.5



192.5Increase (decrease) in gross
    profit

$
11.9


$
(8.7
)

$
3.2          27




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##### Table of Contents



2004


2003(In millions)Legal costs

$
5.4


$
6.0Non-capitalizable financing costs


40.2



2.2Rebates from anti-dumping duties


(8.6
)


(3.4
)Accelerated stock option vesting






1.2$
37.0


$
6.0                  28




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##### Table of Contents



OUTLOOK
                CAPITAL
    RESOURCES AND LIQUIDITY
     29




---



##### Table of Contents



TABLE
    I
  AmountsAvailableunderTotal





Amount


CommittedMaturity

Facility


Commitment


Outstanding


Facilities(In millions)Revolving Credit Facility(1)

February 2009

$
175.0


$
175.0


$
50.1


$
124.9First Lien Term Loan(2)

February 2009

$
185.0


$
185.0


$
185.0


$
Second Lien Term Loan(3)

February 2010

$
265.0


$
265.0


$
261.4


$
European Facility(4)

July 2010

$
23.7


$
20.5


$



$
20.5Other

N/A

$
2.1


$
2.1


$
2.1


$
Total



$
650.8


$
647.6


$
498.6


$
145.4Adjustments(5)















$
(4.2
)$
141.2     (1)
    We have a $175.0 million revolving credit facility secured
    by our domestic accounts receivable, domestic inventory and
    other related intangibles that matures on February 10,
    2009. Our borrowing capacity is based on our domestic accounts
    receivable and inventory, less outstanding letters of credit and
    the termination value of financial instruments, but cannot
    exceed $175.0 million. Pricing on the Revolving Credit
    Facility is based on our leverage ratio as defined in the
    Revolving Credit Facility. The credit spread over LIBOR and the
    prime rate borrowings ranges from 200 to 275 basis points
    and 100 to 125 basis points, respectively.(2)
    We have a $185.0 million First Lien Term Loan which matures
    on February 10, 2009, which is primarily secured by our
    domestic real property, plant and equipment. Our annual interest
    rate is three-month LIBOR plus 400 basis points and is paid
    quarterly. There is a LIBOR floor of 200 basis points.(3)
    We have a $265.0 million Second Lien Term Loan, which
    matures on February 10, 2010 which is secured by a second
    priority interest in substantially all of our domestic assets.
    Our annual interest rate is three-month LIBOR plus
    675 basis points and is paid quarterly. There is a LIBOR
    floor of 200 basis points. The amount outstanding is net of
    the unamortized portion of an original issue discount.(4)
    Effective July 2005, certain of our foreign subsidiaries entered
    into a five-year 20 million multi-currency facility,
    secured by their trade accounts receivable. While interest rates
    vary by currency borrowed, we primarily borrow in Euros, and the
    Euro borrowing rate is the Banks Prime Rate plus 2% (4.94%
    at December 31, 2005). 30




---



##### Table of Contents



(5)
    The adjustments are a reduction in the amounts available under
    the Revolving Credit Facility due to outstanding letters of
    credit and the
    mark-to-market
    value of outstanding swaps. For additional information on swaps,
    see Note 7 to the Consolidated Financial Statements.    TABLE II
  Payments Due by PeriodGreaterThanLess


Years


Years


5Than


1-3


3-5


Years1


(Years


(Years


YearsYear


2007


2009


2011Contractual




(Year


&


&


&Obligations

Total


2006)


2008)


2010)


Beyond(In millions)Debt Agreements (see Table I)

$
498.6


$
0.3


$
1.6


$
496.7


$
Interest Payments on Debt
    Agreements(6)


194.3



51.7



103.5



39.1



Operating Leases(7)


47.5



7.9



13.5



10.6



15.5Total

$
740.4


$
59.9


$
118.6


$
546.4


$
15.5     (6)
    Interest payments on Debt Agreements include the unamortized
    portion of an original issue discount. Future interest rates are
    based on a forward rate curve.(7)
    These amounts relate primarily to operating leases for our
    railcars, computer hardware, and executive offices.       31




---



##### Table of Contents



ENVIRONMENTAL
    MATTERS
          FORWARD-LOOKING
    STATEMENTS; RISKS AND UNCERTAINTIES
  Form 10-K
 32




---



##### Table of Contents



Risk
    Related to Our Business
  Reduced
    raw material margins could adversely affect our operating
    results.  see
  Our
    operations are dependent on the availability and cost of our raw
    materials.      Reduced
    sales volume could adversely affect our operating
    results.    Increases
    in costs could adversely affect our operating
    results.   33




---



##### Table of Contents



Polyester
    staple fiber, textile and PET resin imports could adversely
    impact our margins.        The
    actions of our competitors may adversely affect our operating
    results.    The
    financial condition of our customers impacts our operating
    results.    The
    availability and costs of our financing could adversely affect
    our operating results.     34




---



##### Table of Contents



Additional
    liabilities may be proposed by tax authorities.    Actual
    costs for environmental matters may vary from the
    estimates.    Changes
    in foreign currency exchange rates could adversely affect our
    operating results.   
  Item 7A.
    Quantitative
    and Qualitative Disclosure about Market Risk  DERIVATIVES
    INTEREST
    RATE RISK
    FOREIGN
    CURRENCY RISK
   35




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  WELLMAN,
    INC.
  Index to Consolidated Financial Statements and Consolidated
    Financial Statement
 Schedule
  Consolidated Statements of
    Operations for the years ended December 31, 2005, 2004 and
    2003


37Consolidated Balance Sheets as of
    December 31, 2005 and 2004


38Consolidated Statements of
    Stockholders Equity for the years ended December 31,
    2005, 2004 and 2003


39Consolidated Statements of Cash
    Flows for the years ended December 31, 2005, 2004 and 2003


40Notes to Consolidated Financial
    Statements


41Report of Independent Registered
    Public Accounting Firm on the Consolidated Financial Statements


69Consolidated financial statement
    schedule for the years ended December 31, 2005, 2004 and
    2003:II  Valuation and
    qualifying accounts


70Item 9.

Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure


71Item 9A.

Controls and Procedures


71Item 9B.

Other Information


71Report of Independent Registered
    Public Accounting Firm on Managements Assessment and the
    Effectiveness of Internal Control over Financial Reporting


72    36




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2005


2004


2003(In millions, except per share data)Net sales

$
1,376.9


$
1,305.0


$
1,109.3Cost of sales


1,259.1



1,221.2



1,028.7Gross profit


117.8



83.8



80.6Selling, general and
    administrative expenses


63.1



59.8



66.6Impairment charge










135.3Restructuring charges


0.6



2.6



10.2Provision for uncollectible
    accounts


0.5



0.8



3.5Other expense, net


56.2



37.0



6.0Operating loss


(2.6
)


(16.4
)


(141.0
)Interest expense, net


45.4



38.1



10.1Loss from continuing operations
    before income taxes


(48.0
)


(54.5
)


(151.1
)Income tax benefit


(18.0
)


(15.7
)


(54.4
)Loss from continuing operations


(30.0
)


(38.8
)


(96.7
)Earnings from discontinued
    operations, net of income tax










0.1Net loss

$
(30.0
)

$
(38.8
)

$
(96.6
)Net loss attributable to common
    stockholders:Net loss

$
(30.0
)

$
(38.8
)

$
(96.6
)Accretion and beneficial
    conversion charge


(14.2
)


(12.3
)


(10.1
)Net loss attributable to common
    stockholders

$
(44.2
)

$
(51.1
)

$
(106.7
)Basic and diluted net earnings
    (loss) per common share:Net loss attributable to common
    stockholders from continuing operations

$
(1.40
)

$
(1.61
)

$
(3.38
)Net earnings attributable to
    common stockholders from discontinued operations










Net loss attributable to common
    stockholders

$
(1.40
)

$
(1.61
)

$
(3.38
)Basic and diluted weighted-average
    common shares outstanding


31.7



31.6



31.6    37




---



##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS
  December 31,2005


2004(In millions, exceptshare data)ASSETS:Current assets:Cash and cash equivalents

$



$
5.6Accounts receivable, less
    allowance of $2.1 in 2005 and $2.6 in 2004


160.3



200.2Inventories


162.3



145.0Prepaid expenses and other current
    assets


21.7



27.1Total current assets


344.3



377.9Property, plant and equipment, at
    cost:Land, buildings and improvements


138.0



140.4Machinery and equipment


1,085.5



1,095.9Construction in progress


45.8



11.01,269.3



1,247.3Less accumulated depreciation


622.0



591.8Property, plant and equipment, net


647.3



655.5Goodwill, net


33.4



38.2Other assets, net


73.7



95.3$
1,098.7


$
1,166.9LIABILITIES AND
    STOCKHOLDERS EQUITY:Current liabilities:Accounts payable

$
102.4


$
113.3Accrued liabilities


45.8



49.2Current portion of long-term debt


0.2



Total current liabilities


148.4



162.5Long-term debt


498.4



471.5Deferred income taxes and other
    liabilities


102.5



106.4Total liabilities


749.3



740.4Stockholders equity:Series A preferred stock,
    $0.001 par value, 5,000,000 shares authorized,
    4,502,143 shares issued and outstanding


61.7



56.0Series B preferred stock,
    $0.001 par value, 6,700,000 shares authorized, issued
    and outstanding


91.8



83.3Class A common stock,
    $0.001 par value; 100,000,000 shares authorized,
    34,946,722 shares issued in 2005 and 34,531,747 in 2004






Class B common stock,
    $0.001 par value; 5,500,000 shares authorized; no
    shares issued






Paid-in capital


247.2



245.5Common stock warrants


4.9



4.9Accumulated other comprehensive
    income (loss)


(11.3
)


31.0Retained earnings


4.6



55.3Less common stock in treasury at
    cost: 2,500,000 shares


(49.5
)


(49.5
)Total stockholders equity


349.4



426.5$
1,098.7


$
1,166.9    38




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
 (In millions, except per share data)
  AccumulatedCommon


OtherSeries A Preferred Stock Issued


Series B Preferred Stock Issued


Class A Common Stock Issued


Paid-In


Stock


Comprehensive


Retained


TreasuryShares


Amount


Shares


Amount


Shares


Amount


Capital


Warrants


Income/(Loss)


Earnings


Stock


TotalBalance at December 31,
    2002


















34.4


$



$
248.5






$
(3.2
)

$
230.9


$
(49.5
)

$
426.7Net loss






































(96.6
)






(96.6
)Currency translation adjustments


































27.3











27.3Minimum pension liability
    adjustments


































(0.8
)










(0.8
)Fair value of derivatives


































1.9











1.9Total comprehensive loss














































(68.2
)Cash dividends ($0.36 per
    share)






































(11.5
)






(11.5
)Issuance of Series A preferred
    stock


4.5


$
48.7







































48.7Issuance of Series B preferred
    stock










6.7


$
72.4































72.4Equity transaction costs


























(9.0
)


















(9.0
)Accretion






2.3







3.6























(5.9
)






Beneficial conversion charge


























4.2











(4.2
)






Issuance of restricted stock, net


























0.2



















0.2Amortization of deferred
    compensation, net


























1.4



















1.4Issuance of common stock warrants





























$
4.9















4.9Balance at December 31,
    2003


4.5



51.0



6.7



76.0



34.4







245.3



4.9



25.2



112.7



(49.5
)


465.6Net loss






































(38.8
)






(38.8
)Currency translation adjustments


































10.3











10.3Minimum pension liability
    adjustments


































(2.1
)










(2.1
)Fair value of derivatives


































(2.4
)










(2.4
)Total comprehensive loss














































(33.0
)Cash dividends ($0.20 per
    share)






































(6.3
)






(6.3
)Equity transaction costs


























(0.1
)


















(0.1
)Accretion






5.0







7.3























(12.3
)






Exercise of stock options, net


























0.2



















0.2Issuance of restricted stock, net


















0.1







0.1



















0.1Balance at December 31,
    2004


4.5



56.0



6.7



83.3



34.5







245.5



4.9



31.0



55.3



(49.5
)


426.5Net loss






































(30.0
)






(30.0
)Currency translation adjustments


































(20.6
)










(20.6
)Minimum pension liability
    adjustments


































(22.6
)










(22.6
)Fair value of derivatives


































0.9











0.9Total comprehensive loss














































(72.3
)Cash dividends ($0.20 per
    share)






































(6.5
)






(6.5
)Accretion






5.7







8.5























(14.2
)






Issuance of restricted stock, net


















0.4







1.7



















1.7Balance at December 31,
    2005


4.5


$
61.7



6.7


$
91.8



34.9


$



$
247.2


$
4.9


$
(11.3
)

$
4.6


$
(49.5
)

$
349.4    39




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##### Table of Contents



CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2005


2004


2003(In millions)Cash flows from operating
    activities:Net loss

$
(30.0
)

$
(38.8
)

$
(96.6
)Adjustments to reconcile net loss
    to net cash provided by (used in) operating activities:Depreciation


51.3



55.4



47.1Amortization


1.7



0.8



5.6Amortization of the acquisition
    cost of a long-term raw material contract


15.7



14.4



Amortization in interest expense,
    net


4.2



4.0



2.0Deferred income taxes and other


(19.9
)


(24.0
)


(69.9
)Loss on sale of discontinued
    business and impairment losses










134.8Acquisition cost of long-term raw
    material contract






(77.1
)


Non-capitalizable financing costs






21.0



Loss on disposal of assets


1.3



1.2



0.8Changes in assets and liabilities:Accounts receivable


35.4



(60.2
)


(68.6
)Inventories


(22.3
)


(21.2
)


(1.0
)Prepaid expenses and other current
    assets


5.2



(0.3
)


(2.1
)Accounts payable, accrued
    liabilities, and other current liabilities


(9.5
)


25.3



23.5Other


(7.1
)


0.7



7.6Net cash provided by (used in)
    operating activities


26.0



(98.8
)


(16.8
)Cash flows from investing
    activities:Additions to property, plant and
    equipment


(51.4
)


(15.1
)


(15.5
)Purchase of assets subject to sale
    and leaseback transaction






(150.0
)


Proceeds from sale of business










1.1Net cash used in investing
    activities


(51.4
)


(165.1
)


(14.4
)Cash flows from financing
    activities:Proceeds from debt


26.3



469.7



239.4Repayments of debt






(370.0
)


(100.0
)Termination of swaps






(11.9
)


Debt issuance costs






(18.0
)


Issuance of preferred stock
    (Series A & B) and warrants










126.0Financing costs






(0.1
)


(17.3
)Exercise of employee stock options






0.2



Issuance of restricted stock, net










0.2Dividends paid on common stock


(6.5
)


(6.3
)


(11.5
)Net cash provided by financing
    activities


19.8



63.6



236.8Effect of exchange rate changes on
    cash and cash equivalents






0.4



(0.1
)Increase (decrease) in cash and
    cash equivalents


(5.6
)


(199.9
)


205.5Cash and cash equivalents at
    beginning of year


5.6



205.5



Cash and cash equivalents at end
    of year

$
0.0


$
5.6


$
205.5Supplemental cash flow data:Cash paid during the year for:Interest (net of amounts
    capitalized)

$
41.1


$
33.1


$
10.0Income taxes

$
1.0


$
6.3


$
1.0     40




---



##### Table of Contents



Notes to
    Consolidated Financial Statements
 (In millions, except share and per share data)
  1.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Organization
    and Principles of Consolidation
  ® ® ® ®
  Use of
    Estimates
    Revenue
    Recognition
    Cash
    and Cash Equivalents
    Derivatives
    and Hedging Activities
    Allowances
    for Doubtful Accounts
   41




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  Inventories
  first-in,
  Property,
    Plant and Equipment
      Net BookValue at


Pretax ImpactEnd of


of ReducingYear


Depreciation(In millions)As of and for the year ending
    December 31, 2003

$
3.6


$
1.6As of and for the year ending
    December 31, 2004

$
0.2


$
0.7As of and for the year ending
    December 31, 2005

$
5.2


$
0.4          42




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
      Goodwill
    and Other Intangible Assets
      Other
    Assets
      Income
    Taxes
    Environmental
    Expenditures
   43




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  Foreign
    Currency Translation and Other Comprehensive Income
    (Loss)
        Foreign








AccumulatedCurrency


Minimum


Fair Value


OtherTranslation


Pension


of


ComprehensiveAdjustments


Liability


Derivatives


Income/(Loss)(In millions)Balance at December 31, 2002

$
5.9


$
(10.1
)

$
1.0


$
(3.2
)Changes during year (net of taxes
    of $1.7 million)


27.3



(0.8
)


1.9



28.4Balance at December 31, 2003


33.2



(10.9
)


2.9



25.2Changes during year (net of taxes
    of $1.4 million)


10.3



(2.1
)


(2.4
)


5.8Balance at December 31, 2004


43.5



(13.0
)


0.5



31.0Changes during year (net of taxes
    of $6.3 million)


(20.6
)


(22.6
)


0.9



(42.3
)Balance at December 31, 2005

$
22.9


$
(35.6
)

$
1.4


$
(11.3
)   Advertising
    Costs
    Research
    and Development Costs
    Deferred
    Debt Costs
    Stock
    Based Compensation
     44




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
      Reclassification
    2.
    ACCOUNTING
    CHANGES  Accounting
    for Discontinued Operations
      3.
    INVENTORIES    December 31,2005


2004(In millions)Raw materials

$
61.5


$
47.5Finished and semi-finished goods


92.2



90.2Supplies


8.6



7.3$
162.3


$
145.0  45




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  4.
    ACCRUED
    LIABILITIES    December 31,2005


2004(In millions)Payroll, compensation, and benefits

$
12.0


$
14.2Interest


7.9



6.7Property and other taxes


6.4



7.3Restructuring reserves


0.1



1.6Other


19.4



19.4$
45.8


$
49.2   5.
    OTHER
    EXPENSE, NET    For the Years Ended December 31,2005


2004


2003(In millions)Legal costs

$
35.9


$
5.4


$
6.0Hurricane Katrina costs


24.0







Non-capitalizable financing costs






40.2



2.2Rebates from anti-dumping duties


(3.7
)


(8.6
)


(3.4
)Accelerated stock option vesting










1.2$
56.2


$
37.0


$
6.0      46




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    Direct Damage to Plant
    Site 

Costs incurred to repair and/or
    restore all machinery, equipment, foundations, and buildings to
    their normal operating condition.Fixed Costs 

Salaries, wages, property
    insurance, electricity, and waste water treatment costs incurred
    during the shutdown period.Incremental freight
    costs 

Additional freight costs incurred
    above our normal freight expense, primarily due to the
    disruption in rail service.Infrastructure support 

Costs to maintain an adequate
    living environment for both our employees and contract workers
    starting with the initial repair period and continuing in order
    to maintain proper staffing levels to operate the plant.Inventory spoilage 

Costs representing the difference
    between the inventory cost at the time of the hurricane less the
    net realizable value of inventory that was damaged or spoiled as
    a result of the hurricane.Rail car damage 

Costs of repairing all of our
    leased rail cars that were damaged during the hurricane.Rail car leases 

Monthly lease cost related to the
    rail cars that were damaged and thus inoperable.         6.
    RESTRUCTURING
    CHARGES     47




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    Severance Costs(In millions)Accrual balances at
    December 31, 2003

$
6.1Accruals during 2004


2.9Cash payments


(7.5
)Currency translation adjustments


0.1Accrual balances at
    December 31, 2004


1.6Cash payments


(1.5
)Currency translation adjustments


(0.1
)Accrual balances at
    December 31, 2005

$
0.0   7.
    BORROWING
    ARRANGEMENTS    December 31,2005


2004(In millions)$175.0 Revolving Credit Facility

$
50.1


$
25.0$185.0 First Lien Term Loan


185.0



185.0$265.0 Second Lien Term Loan


261.4



260.520.0 European Facility






Other


2.1



1.0498.6



471.5Less current portion


0.2



$
498.4


$
471.5     
    a $175.0 million Revolving Credit Facility that matures on
    February 10, 2009 and has an annual interest rate of either
    LIBOR plus 200 to 275 basis points or the prime rate plus
    100 to 125 basis points, at our option on outstanding
    borrowings,
    a $185.0 million First Lien Term Loan that matures on
    February 10, 2009 and has an annual interest rate of
    three-month LIBOR plus 400 basis points paid
    quarterly, and
    a $265.0 million Second Lien Term Loan that matures on
    February 10, 2010 and has an annual interest rate of
    three-month LIBOR plus 675 basis points paid quarterly.     48




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
             49




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    (In millions)Termination of Swap Agreements

$
14.4Pre-payment Penalties


13.9Write-Off of Debt Issuance Costs


6.6Other Expenses


5.3Non-Capitalizable Financing Costs

$
40.2   8.
    INCOME
    TAXES    Years Ended December 31,2005


2004


2003(In millions)United States

$
(53.0
)

$
(61.8
)

$
(152.9
)Foreign


5.0



7.3



1.8$
(48.0
)

$
(54.5
)

$
(151.1
)     Years Ended December 31,2005


2004


2003(In millions)Current:Federal

$



$
6.1


$
State


0.1







0.1Foreign


0.4



0.2



(0.2
)0.5



6.3



(0.1
)Deferred:Federal


(18.5
)


(21.9
)


(53.6
)State










(0.8
)Foreign






(0.1
)


0.1(18.5
)


(22.0
)


(54.3
)$
(18.0
)

$
(15.7
)

$
(54.4
)  50




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    Years Ended December 31,2005


2004


2003Computed at statutory rate


35.0
%


35.0
%


35.0
%State taxes, net of federal benefit


(0.1
)






0.3Differences in income tax rates
    between the United States and foreign countries


2.7



4.5



0.5Repatriation of foreign earnings,
    American Jobs Creation Act of 2004






(11.2
)


Credits


0.6



1.1



0.4Other, net


(0.7
)


(0.6
)


(0.2
)Effective tax rate


37.5
%


28.8
%


36.0
%     December 31,2005


2004(In millions)Depreciation

$
196.1


$
212.7Foreign


6.6



5.8Other


2.6



2.4Total deferred tax liabilities


205.3



220.9Domestic carry forward


186.1



186.5Foreign carry forward


4.6



5.8Other


16.3



7.4Total deferred tax assets


207.0



199.7Valuation allowance


(37.0
)


(38.9
)Net deferred tax assets


170.0



160.8Net deferred tax liabilities

$
35.3


$
60.1      51




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  9.
    ENVIRONMENTAL
    MATTERS        2005


2004


2003(In millions)Balance at beginning of year

$
7.0


$
6.5


$
9.2Changes in remediation cost
    estimates






0.8



(2.3
)Expenditures


(0.4
)


(0.3
)


(0.4
)Balance at end of year

$
6.6


$
7.0


$
6.5       10.
    RETIREMENT
    PLANS     52




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
      2005


2004(In millions)Consolidated Balance
    Sheets:Prepaid benefit cost

$
22.4


$
25.6Accrued benefit liability


(45.0
)


(16.7
)Intangible asset






.1Accumulated other comprehensive
    loss


49.1



19.8Accrued benefit cost recognized
    on Consolidated Balance Sheets

$
26.5


$
28.8   2005


2004


2003(In millions)Consolidated Statements of
    Operations:Net periodic pension cost

$
5.3


$
2.4


$
2.9     Net Periodic Pension Costs,
  Projected Benefit Obligations (PBOs)
  Plan Assets
  Accumulated Benefit Obligations,
  Funded Status,
  Cash Flows,
  Recognition of Actuarial Gains and Losses
  I.
    Net
    Periodic Pension Costs   53




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
      2005


2004


2003Domestic


Foreign


Domestic


Foreign


Domestic


ForeignPlans


Plans


Plans


Plans


Plans


PlansDiscount rate


5.75
%


4.95
%


6.25
%


5.46
%


6.75
%


5.71
%Expected return on plan assets


8.25
%


6.77
%


8.50
%


8.10
%


9.00
%


8.25
%Rate of compensation increase






3.00
%






3.00
%






3.21
%     2005


2004


2003Domestic


Foreign


Domestic


Foreign


Domestic


ForeignPlans


Plans


Plans


Plans


Plans


Plans(In millions)Service cost

$
0.5


$
2.7


$
0.4


$
2.3


$
0.4


$
2.0Interest cost


3.2



3.9



3.2



3.6



3.3



3.0Expected return on plan assets


(3.5
)


(5.1
)


(3.3
)


(5.6
)


(3.0
)


(4.7
)Net amortization and deferral


1.4



1.9



1.0



0.6



1.1



0.6Curtailment loss






0.3







0.2







0.2Net periodic pension
    cost

$
1.6


$
3.7


$
1.3


$
1.1


$
1.8


$
1.1   II.
    Projected
    Benefit Obligations    2005


2004Domestic Plans


Foreign Plans


Domestic Plans


Foreign PlansAssumptionsAverage weighted-average
    assumptions used to determine benefit obligations at
    December 31Discount rate


5.00
%


3.96
%


5.75
%


4.95
%Rate of compensation increases






3.63
%






3.00
%  54




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    2005


2004Domestic Plans


Foreign Plans


Domestic Plans


Foreign Plans(In millions)Change in benefit
    obligation:Projected benefit obligation at
    beginning of year

$
57.0


$
86.8


$
54.1


$
66.2Service cost


0.5



2.7



0.4



2.3Interest cost


3.2



3.9



3.2



3.6Actuarial loss


14.2



36.8



2.7



11.1Benefits paid


(3.6
)


(1.7
)


(3.4
)


(2.9
)Exchange gain






(13.0
)






6.3Curtailment loss






0.3







0.2Projected benefit obligation at
    end of year

$
71.3


$
115.8


$
57.0


$
86.8   III.
    Plan
    Assets    2005


2004Domestic Plans


Foreign Plans


Domestic Plans


Foreign Plans%





%





%





%(In




of





of





of





ofmillions)

Value


Total


Value


Total


Value


Total


Value


TotalAssets by Category:Equity securities

$
27.1



61.7
%

$
58.2



67.8
%

$
28.3



66.0
%

$
52.9



64.1
%Debt securities


16.8



38.3



20.9



24.3



14.6



34.0



21.8



26.4Real estate










4.5



5.2











4.3



5.2Other










2.3



2.7











3.5



4.3Total

$
43.9



100.0
%

$
85.9



100.0
%

$
42.9



100.0
%

$
82.5



100.0
%   Investment
    Policies
   55




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    2005


2004Domestic Plans


Foreign Plans


Domestic Plans


Foreign Plans(In millions)Change in plan
    assets:Fair value of plan assets at
    beginning of year

$
42.9


$
82.5


$
39.5


$
69.9Actual return on plan assets


1.5



13.3



2.9



7.3Contributions


3.1



3.0



3.9



2.3Benefits paid


(3.6
)


(1.7
)


(3.4
)


(2.9
)Exchange gain






(11.2
)






5.9Fair value of plan assets at
    end of year

$
43.9


$
85.9


$
42.9


$
82.5Increase in minimum liability
    included in other comprehensive loss

$
14.9


$
14.7


$
2.1


$
0.7   IV.
    Funded
    Status    2005


2004Domestic Plans


Foreign Plans


Domestic Plans


Foreign Plans(In millions)Projected Benefit obligation at
    end of year

$
71.3


$
115.8


$
57.0


$
86.8Fair value of plan assets at end
    of the year


43.9



85.9



42.9



82.5Funded status at the end of the
    year


(27.4
)


(29.9
)


(14.1
)


(4.3
)Unrecognized net actuarial loss


32.2



51.7



17.3



30.0Unrecognized prior service cost










0.1



Unrecognized transition obligation






(0.1
)






(0.2
)Accrued benefit cost

$
4.8


$
21.7


$
3.3


$
25.5  56




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  V.
    Accumulated
    Benefit Obligations    2005


2004Domestic Plans


Foreign Plans


Domestic Plans


Foreign Plans(In millions)Information for pension plans
    with an accumulated benefit obligation in excess of plan
    assets:Projected benefit obligation

$
71.3


$
69.4


$
57.0


$
15.9Accumulated benefit obligation

$
71.3


$
54.5


$
57.0


$
13.4Fair value of plan assets

$
43.9


$
46.0


$
42.9


$
10.8Increase in minimum pension
    liability in other comprehensive loss

$
14.9


$
14.7


$
2.1


$
0.7   VI.
    Cash
    Flows  Contributions    Estimated
    Future Benefit Payments    Domestic


Foreign BenefitBenefit Payments


Payments(In millions)2006

$
3.8


$
1.62007

$
3.8


$
1.72008

$
3.7


$
1.82009

$
3.7


$
1.92010

$
3.7


$
2.0Years 2011-2015

$
19.5


$
12.9   VII.
    Recognition
    of Actuarial Gains and Losses     57




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  11.
    STOCKHOLDERS
    EQUITY                 58




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
           59




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
        2005


2004


2003(In millions, except per share data)Net loss attributable to common
    stockholders, as reported

$
(44.2
)

$
(51.1
)

$
(106.7
)Add: Stock-based employee
    compensation expense included in reported net earnings (loss),
    net of related tax effects










0.9Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(0.7
)


(0.2
)


(5.5
)Pro forma net loss attributable to
    common stockholders

$
(44.9
)

$
(51.3
)

$
(111.3
)Net loss attributable to common
    stockholders per share:Basic net loss per common share,
    as reported

$
(1.40
)

$
(1.61
)

$
(3.38
)Basic net loss per common share,
    pro forma

$
(1.42
)

$
(1.62
)

$
(3.53
)Diluted net loss per common share,
    as reported

$
(1.40
)

$
(1.61
)

$
(3.38
)Diluted net loss per common share,
    pro forma

$
(1.42
)

$
(1.62
)

$
(3.53
)    60




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    Weighted AveragePrice perShares


ShareOutstanding December 31, 2002


3,665,768


$
17.59Granted


498,000



10.46Exercised


(4,800
)


9.64Cancelled


(310,040
)


17.85Outstanding December 31, 2003


3,848,928



16.66Granted (Directors Only)


8,000



8.02Exercised


(17,600
)


9.64Cancelled


(1,010,310
)


17.65Outstanding December 31, 2004


2,829,018



16.33Exercised


(22,880
)


9.66Cancelled


(214,880
)


26.38Outstanding December 31, 2005


2,591,258


$
15.55     Range of exercise prices

$
8.02-$15.24


$
16.61-$22.75Number outstanding at
    December 31, 2005


961,260



1,629,998Weighted-average remaining
    contractual life


6.7



3.9Weighted-average exercise price of
    options outstanding

$
11.33


$
18.04Number exercisable at
    December 31, 2005


961,260



1,629,998Weighted-average exercise price of
    options exercisable

$
11.33


$
18.04   10-year
   61




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  12.
    NET LOSS
    ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE    2005


2004


2003(In millions)Numerator for basic and diluted
    net earnings (loss) attributable to common stockholders per
    common share:Net earnings (loss)

$
(30.0
)

$
(38.8
)

$
(96.7
)Accretion and beneficial
    conversion charge(a)


(14.2
)


(12.3
)


(10.1
)Net earnings (loss) attributable
    to common stockholders from continuing operations


(44.2
)


(51.1
)


(106.8
)Net earnings (loss) attributable
    to common stockholders from discontinued operations










0.1Net loss attributable to common
    stockholders

$
(44.2
)

$
(51.1
)

$
(106.7
)Denominator:Denominator for basic net earnings
    (loss) attributable to common stockholders per common
    share  weighted-average shares


31.7



31.6



31.6Effect of dilutive securities:Employee stock options and
    restricted stock










Preferred stock  if
    converted(b)










Denominator for diluted net
    earnings (loss) attributable to common stockholders per common
    share  adjusted weighted-average shares


31.7



31.6



31.6     (a)
    Accretion is recorded based on the fair market value of the
    increase in the liquidation preference of the preferred stock.
    The 2005 amount included $1.0 million, of which
    $0.8 million was recorded in the first quarter and
    $0.2 million was recorded in the second quarter, which was
    the amount that the fair market value of the accretion exceeded
    the book value of the accretion based on the value of the
    underlying stock. In 2003, we incurred a non-cash beneficial
    conversion charge of $4.2 million as a result of the
    preferred stock becoming convertible into common stock.  (b)
    
    These shares were not included in the EPS calculation, since
    their effect would have been anti-dilutive, but may be included
    under the if-converted method in future calculations. For
    additional information, including the liquidation preference of
    the preferred stock, see Note 11.  13.
    COMMITMENTS
    AND CONTINGENCIES       62




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
          14.
    DERIVATIVES
    AND FINANCIAL INSTRUMENTS          Concentration
    of Credit Risk
   63




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    Fair
    Value of Financial Instruments
              2005


2004(In millions)

Carrying Amount


Fair Value


Carrying Amount


Fair ValueNonderivativesCash and cash equivalents

$



$



$
5.6


$
5.6Accounts receivable

$
160.3


$
160.3


$
200.2


$
200.2Accounts payable

$
102.4


$
102.4


$
113.3


$
113.3Borrowing arrangements

$
498.6


$
510.1


$
471.5


$
480.1Derivatives  receive
    (pay):Cash flow hedges

$
(0.2
)

$
(0.2
)

$
(3.4
)

$
(3.4
)Forward foreign currency contracts

$



$



$
0.1


$
0.1   15.
    OPERATING
    SEGMENT AND GEOGRAPHIC AREAS      
    PermaClear®
    and PermaClear
    HP®
    solid-stated and amorphous PET resin from chemical-based raw
    materials for use in the manufacturing of plastic soft drink
    bottles and other food and beverage packaging and
    EcoClear®
    PET resin, utilizing recycled PET materials to meet
    customers recycled content PET resin requirements.    
    Fortrel®
    chemical-based polyester staple fibers for use in apparel,
    non-woven, home furnishing, and industrial products, 64




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  
    recycled-based polyester and nylon staple fibers for use in home
    furnishing, non-woven and industrial products, and
    Ecolon®
    and
    Wellamid®
    recycled-based nylon and polyester engineering resins for use in
    the injection molding industry.        Fibers andPackaging Products


Recycled ProductsGroup


Group


Total(In millions)2005Revenues

$
781.4


$
595.5


$
1,376.9Segment profit

$
48.1


$
6.6


$
54.7Assets

$
704.0


$
300.5


$
1,004.5Amortization and depreciation

$
41.4


$
27.3


$
68.7Capital expenditures

$
40.3


$
11.1


$
51.42004Revenues

$
747.9


$
557.1


$
1,305.0Segment profit (loss)

$
29.5


$
(5.5
)

$
24.0Assets

$
775.4


$
315.3


$
1,090.7Amortization and depreciation

$
44.2


$
26.4


$
70.6Capital expenditures

$
9.4


$
5.7


$
15.12003Revenues

$
632.0


$
477.3


$
1,109.3Segment profit (loss)

$
17.3


$
(3.3
)

$
14.0Assets

$
455.2


$
382.7


$
837.9Amortization and depreciation

$
28.9


$
23.8


$
52.7Capital expenditures

$
7.6


$
7.9


$
15.5  65




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
    2005


2004


2003(In millions)Segment ProfitTotal for reportable segments

$
54.7


$
24.0


$
14.0Impairment charge










(135.3
)Restructuring charges


(0.6
)


(2.6
)


(10.2
)Provision for uncollectible
    accounts


(0.5
)


(0.8
)


(3.5
)Other expense, net


(56.2
)


(37.0
)


(6.0
)Interest expense, net


(45.4
)


(38.1
)


(10.1
)Loss from continuing operations
    before income taxes

$
(48.0
)

$
(54.5
)

$
(151.1
)AssetsTotal for reportable segments

$
1,004.5


$
1,090.7


$
837.9Corporate assets(1)


94.2



76.2



279.2Total Assets

$
1,098.7


$
1,166.9


$
1,117.1     (1)
    Corporate assets include cash, prepaid expenses, construction in
    progress and other assets not allocated to the segments.    2005


2004


2003(In millions)Net salesU.S.

$
1,179.8


$
1,104.6


$
927.7Europe


197.1



200.4



181.6$
1,376.9


$
1,305.0


$
1,109.3Operating income (loss)U.S.

$
(4.1
)

$
(23.7
)

$
(143.2
)Europe


1.5



7.3



2.2$
(2.6
)

$
(16.4
)

$
(141.0
)Long-lived assetsU.S.

$
598.1


$
603.0


$
488.3Europe


49.2



52.5



54.7$
647.3


$
655.5


$
543.0    66




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  16.
    QUARTERLY
    FINANCIAL DATA (UNAUDITED)    March


June


Sept.


Dec.31,


30,


30,


31,


Total2005


2005


2005


2005


2005(In millions, except per share data)Income Statement Data:Net sales

$
386.3


$
345.0


$
344.3


$
301.3


$
1,376.9Cost of sales


340.8



326.4



312.4



279.5



1,259.1Gross profit


45.5



18.6



31.9



21.8



117.8Selling, general and
    administrative expenses


18.1



13.7



14.9



16.4



63.1Restructuring charges(2)






0.6











0.6Provision for uncollectible
    accounts










0.4



0.1



0.5Other expense, net(3)


1.8



26.0



15.3



13.1



56.2Operating income (loss)


25.6



(21.7
)


1.3



(7.8
)


(2.6
)Interest expense, net


10.4



11.2



11.6



12.2



45.4Earnings (loss) before income
    taxes (benefit)


15.2



(32.9
)


(10.3
)


(20.0
)


(48.0
)Income tax expense (benefit)


4.2



(10.2
)


(4.1
)


(7.9
)


(18.0
)Net earnings (loss)

$
11.0


$
(22.7
)

$
(6.2
)

$
(12.1
)

$
(30.0
)Net earnings (loss) attributable
    to common stockholders:Net earnings (loss)

$
11.0


$
(22.7
)

$
(6.2
)

$
(12.1
)

$
(30.0
)Accretion


(4.0
)


(3.4
)


(3.4
)


(3.4
)


(14.2
)Net earnings (loss) attributable
    to common stockholders

$
7.0


$
(26.1
)

$
(9.6
)

$
(15.5
)

$
(44.2
)Basic net earnings (loss) per
    common share:Net earnings (loss) attributable
    to common stockholders(4)

$
0.22


$
(0.82
)

$
(0.30
)

$
(0.49
)

$
(1.40
)Basic weighted-average common
    shares outstanding


31.7



31.7



31.7



31.7



31.7Diluted net earnings (loss) per
    common share:Net earnings (loss) attributable
    to common stockholders(4)

$
0.20


$
(0.82
)

$
(0.30
)

$
(0.49
)

$
(1.40
)Diluted weighted-average common
    shares outstanding


53.8



31.7



31.7



31.7



31.7   67




---



##### Table of Contents



Notes to Consolidated Financial
    Statements  (Continued)
  March


June


Sept.


Dec.31,


30,


30,


31,


Total2004(1)


2004(1)


2004(1)


2004(1)


2004(In millions, except per share data)Income Statement Data:Net sales

$
293.8


$
329.0


$
310.0


$
372.2


$
1,305.0Cost of sales


276.4



305.7



295.5



343.6



1,221.2Gross profit


17.4



23.3



14.5



28.6



83.8Selling, general and
    administrative expenses


14.5



13.8



14.6



16.9



59.8Restructuring charges(2)


0.3



0.8



1.3



0.2



2.6Provision for uncollectible
    accounts


0.3











0.5



0.8Other expense (income), net(3)


41.4



1.1



0.6



(6.1
)


37.0Operating income (loss)


(39.1
)


7.6



(2.0
)


17.1



(16.4
)Interest expense, net


7.5



10.1



10.5



10.0



38.1Earnings (loss) from continuing
    operations before income taxes (benefit)


(46.6
)


(2.5
)


(12.5
)


7.1



(54.5
)Income tax expense (benefit)


(18.4
)


(1.0
)


(4.9
)


8.6



(15.7
)Net loss

$
(28.2
)

$
(1.5
)

$
(7.6
)

$
(1.5
)

$
(38.8
)Net loss attributable to common
    stockholders:Net loss

$
(28.2
)

$
(1.5
)

$
(7.6
)

$
(1.5
)

$
(38.8
)Accretion


(3.0
)


(3.0
)


(3.1
)


(3.2
)


(12.3
)Net loss attributable to common
    stockholders

$
(31.2
)

$
(4.5
)

$
(10.7
)

$
(4.7
)

$
(51.1
)Basic and diluted net loss per
    common share:Net loss attributable to common
    stockholders(4)

$
(0.99
)

$
(0.14
)

$
(0.34
)

$
(0.15
)

$
(1.61
)Basic and diluted weighted-average
    common shares outstanding


31.6



31.6



31.6



31.6



31.6     (1)
    Certain amounts have been reclassified to conform to the
    full-year 2005 presentation.(2)
    Quarterly net earnings (loss) include restructuring charges. For
    additional information on restructuring charges, see Note 6.(3)
    Other expense (income), net consisted of the following amounts
    for the periods indicated:  March


June


Sept.


Dec.31,


30,


30,


31,


Total2005


2005


2005


2005


2005(In millions)Legal costs (See Note 5)

$
1.8


$
26.1


$
8.0


$



$
35.9Hurricane Katrina costs










7.4



16.6



24.0Rebates from anti-dumping duties






(0.1
)


(0.1
)


(3.5
)


(3.7
)$
1.8


$
26.0


$
15.3


$
13.1


$
56.2   March


June


Sept.


Dec.31,


30,


30,


31,


Total2004


2004


2004


2004


2004(In millions)Legal costs (See Note 5)

$
1.2


$
1.1


$
1.3


$
1.8


$
5.4Non-capitalizable financing costs


40.2















40.2Rebates from anti-dumping duties










(0.7
)


(7.9
)


(8.6
)$
41.4


$
1.1


$
0.6


$
(6.1
)

$
37.0   (4)
    Based on the requirements of SFAS No. 128,
    Earnings Per Share, to calculate the quarterly
    earnings (loss) per share independently of the annual earnings
    (loss) per share, the sum of the four quarters earnings
    (loss) per share will not necessarily equal the annual earnings
    (loss) per share. 68




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
               
   69




---



##### Table of Contents



SCHEDULE
    II
  VALUATION AND QUALIFYING ACCOUNTS
 Years Ended December 31, 2005, 2004 and 2003
  Balance


Charged








Balanceat


to








atBeginning


Costs








Endof


and








ofDescription

Year


Expenses


Other


Deductions


Year(In millions)Allowance for doubtful accounts
    Receivable:Year ended December 31, 2005

$
2.6


$
0.5


$



$
1.0
(a)

$
2.1Year ended December 31, 2004

$
3.8


$
0.8


$
(0.3
)

$
1.7
(a)

$
2.6Year ended December 31, 2003

$
7.7


$
3.5


$
0.1


$
7.5
(a)

$
3.8     (a)
    Accounts written off and reduction of allowance. 70




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   
  Item 9A.
    Controls
    and Procedures  Evaluation of Disclosure Controls and Procedures.
  Managements Report on Internal Control over Financial
    Reporting. Rules 13a-15(f) 15d-15(f).
   
  Item 9B.
    Other
    Information   71




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    Form 10-K,
       72




---



##### Table of Contents



73




---



##### Table of Contents



PART III
 
  Item 10.
    Directors
    and Executive Officers of the Registrant   
  Item 11.
    Executive
    Compensation  Regulation S-K.
 
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   
  Item 13.
    Certain
    Relationships and Related Transactions  Regulation S-K.
 
  Item 14.
    Principal
    Accountant Fees and Services   
  PART IV
 
  Item 15.
    Exhibits,
    Financial Statement Schedules and Reports on
    Form 8-K  Financial Statements
    Financial Statement Schedules
    Exhibits
  Regulation S-K,
  Exhibit Number

Description3
.1

Certificate of Amendment to
    Restated Certificate of Incorporation dated June 26, 2003
    (Exhibit 3(a)(5) of the Companys
    Form 10-Q
    for the quarter ended June 30, 2003 incorporated by
    reference herein)*3
.2

Restated By-Laws, as of
    August 14, 2001 74




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##### Table of Contents



Exhibit Number

Description4
.1

Credit agreement dated as of
    February 10, 2004, between Wellman, Inc. and Deutsche Bank
    Trust Company Americas as administrative agent and collateral
    agent, Deutsche Bank Securities Inc., as lead arranger and
    bookrunner, JP Morgan Chase Bank as syndication agent and
    certain other financial institutions (Exhibit 4(a)(1) of
    the Companys
    Form 10-K
    for the year ended December 31, 2003 incorporated by
    reference herein)*4
.2

First Amendment to Credit
    Agreement, dated as of December 22, 2005, between Wellman,
    Inc. and Deutsche Bank Trust Company Americas as administrative
    agent and collateral agent4
.3

First Lien Senior Credit Agreement
    dated as of February 10, 2004, between Wellman, Inc. and
    Deutsche Bank Trust Company Americas as administrative agent and
    collateral agent, JP Morgan Chase Bank as syndication agent,
    Deutsche Bank Securities Inc., as joint lead arranger and joint
    lead bookrunner, JP Morgan Securities Inc. as joint lead
    arranger and joint lead bookrunner and certain other financial
    institutions (Exhibit 4(a)(2) of the Companys
    Form 10-K
    for the year ended December 31, 2003 incorporated by
    reference herein)4
.4

Second Lien Senior Credit
    Agreement dated as of February 10, 2004 between Wellman,
    Inc. and Deutsche Bank Trust Company Americas as administrative
    agent and collateral agent, JP Morgan Chase Bank as syndication
    agent, Deutsche Bank Securities Inc., as joint lead arranger and
    joint lead bookrunner, JP Morgan Securities Inc. as joint lead
    arranger and joint lead bookrunner, and certain other financial
    institutions (Exhibit 4(a)(3) of the Companys
    Form 10-K
    for the year ended December 31, 2003 incorporated by
    reference herein)4
.5

Rights Agreement dated as of
    August 31, 2001 between the Company and First Union
    National Bank, as Rights Agent (Exhibit 4 of the
    Companys Registration Statement on
    Form 8-A,
    incorporated by reference herein)4
.6

Amendment to Rights Agreement
    dated as of February 12, 2003, by and between Wellman, Inc.
    and Wachovia Bank, N.A., f/k/a First Union National Bank, as
    Rights Agent (Exhibit 4.1 to the Companys
    Form 8-K
    dated February 27, 2003 incorporated by reference herein)4
.7

Common Stock Purchase Warrant
    dated as of February 12, 2003 for the purchase of
    1,250,000 shares of common stock (Exhibit 4(f) to the
    Companys
    Form 10-K
    for the year ended December 31, 2002, incorporated by
    reference herein)4
.8

Securities Purchase Agreement by
    and between Wellman, Inc. and Warburg Pincus Private Equity
    VIII, LP, dated as of February 12, 2003 (Exhibit 4(g)
    to the Companys
    Form 10-K
    for the year ended December 31, 2002, incorporated by
    reference herein)4
.9

Common Stock Purchase Warrant
    dated as of June 27, 2003 for the purchase of
    1,250,000 shares of common stock (Exhibit 4(h) of the
    Companys
    Form 10-Q
    for the quarter ended June 30, 2003 incorporated by
    reference herein)Executive Compensation Plans
    and Arrangements10
.1

Wellman, Inc. Directors Stock
    Option Plan (Exhibit 10(g) of the Companys
    Form 10-Q
    for the quarter ended June 30, 2001 incorporated by
    reference herein)10
.2

Wellman, Inc. Third Amended and
    Restated Management Incentive Compensation Plan for the
    Executive Group (Exhibit 10(h) to the Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)*10
.3

Wellman, Inc. Life Insurance Plan
    for Designated Employees10
.4

Wellman, Inc. Amended and Restated
    1997 Stock Option Plan (Exhibit 10(k) of the Companys
    Form 10-Q
    for the quarter ended June 30, 2001 incorporated by
    reference herein)*10
.5

Wellman, Inc. Deferred
    Compensation and Restricted Stock Plan, effective as of
    February 17, 1998 and as amended as of December 1,
    1998 and December 31, 2002 and December 31, 200410
.6

Wellman, Inc. Restricted Stock
    Plan, effective June 1, 2004 (Exhibit 4 of the
    Companys
    Form S-8,
    filed on June 30, 2004, incorporated by reference herein)10
.7

Employment Agreement dated as of
    March 14, 2005 between the Company and Thomas M. Duff
    (Exhibit 10(a) to the Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein) 75




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##### Table of Contents



Exhibit Number

Description10
.8

Employment Agreement dated as of
    March 14, 2005 between the Company and Keith R. Phillips
    (Exhibit 10(b) to the Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.9

Employment Agreement dated as of
    March 14, 2005 between the Company and Joseph C. Tucker
    (Exhibit 10(c) to the Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.10

Employment Agreement dated as of
    March 14, 2005 between the Company and Michael E. Dewsbury
    (Exhibit 10(d) to the Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.11

Employment Agreement dated as of
    March 14, 2005 between the Company and Audrey L. Goodman
    (Exhibit 10(e) to the Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.12

Employment Agreement dated as of
    March 14, 2005 between the Company and Mark J. Ruday
    (Exhibit 10(f) to the Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.13

Wellman, Inc. 2004 Restricted
    Stock Grant Agreement, effective July 1, 2004, between the
    Company and Thomas M. Duff (Exhibit 10(m) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.14

Wellman, Inc. 2004 Restricted
    Stock Grant Agreement, effective July 1, 2004, between the
    Company and Keith R. Phillips (Exhibit 10(n) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.15

Wellman, Inc. 2004 Restricted
    Stock Grant Agreement, effective July 1, 2004, between the
    Company and Joseph C. Tucker (Exhibit 10(o) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.16

Wellman, Inc. 2004 Restricted
    Stock Grant Agreement, effective July 1, 2004, between the
    Company and Michael E. Dewsbury (Exhibit 10(p) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.17

Wellman, Inc. 2004 Restricted
    Stock Grant Agreement, effective July 1, 2004, between the
    Company and Audrey L. Goodman (Exhibit 10(q) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.18

Wellman, Inc. 2004 Restricted
    Stock Grant Agreement, effective July 1, 2004, between the
    Company and Mark J. Ruday (Exhibit 10(r) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.19

Wellman, Inc. 2005 Restricted
    Stock Grant Agreement, effective March 14, 2005, between
    the Company and Thomas M. Duff (Exhibit 10(s) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.20

Wellman, Inc. 2005 Restricted
    Stock Grant Agreement, effective March 14, 2005, between
    the Company and Keith R. Phillips (Exhibit 10(t) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.21

Wellman, Inc. 2005 Restricted
    Stock Grant Agreement, effective March 14, 2005, between
    the Company and Joseph C. Tucker (Exhibit 10(u) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.22

Wellman, Inc. 2005 Restricted
    Stock Grant Agreement, effective March 14, 2005, between
    the Company and Michael E. Dewsbury (Exhibit 10(v) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.23

Wellman, Inc. 2005 Restricted
    Stock Grant Agreement, effective March 14, 2005, between
    the Company and Audrey L. Goodman (Exhibit 10(w) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein)10
.24

Wellman, Inc. 2005 Restricted
    Stock Grant Agreement, effective March 14, 2005, between
    the Company and Mark J. Ruday (Exhibit 10(x) to the
    Companys
    Form 10-K
    for the year ended December 31, 2004, incorporated by
    reference herein) 76




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##### Table of Contents



Exhibit Number

Description*10
.25

Wellman, Inc. 2006 Restricted
    Stock Grant Agreement, effective January 13, 2006, between
    the Company and Thomas M. Duff*10
.26

Wellman, Inc. 2006 Restricted
    Stock Grant Agreement, effective January 13, 2006, between
    the Company and Keith R. Phillips*10
.27

Wellman, Inc. 2006 Restricted
    Stock Grant Agreement, effective January 13, 2006, between
    the Company and Joseph C. Tucker*10
.28

Wellman, Inc. 2006 Restricted
    Stock Grant Agreement, effective January 13, 2006, between
    the Company and Michael E. Dewsbury*10
.29

Wellman, Inc. 2006 Restricted
    Stock Grant Agreement, effective January 13, 2006, between
    the Company and Audrey L. Goodman*10
.30

Wellman, Inc. 2006 Restricted
    Stock Grant Agreement, effective January 13, 2006, between
    the Company and Mark J. RudayOther Material
    Agreements10
.31

Trademark Assignment and License,
    dated January 28, 1988, by and among Fiber Industries,
    Inc., Hoechst-Celanese Corporation and Celanese
    (Exhibit 10.14 of Fiber Industries, Inc.s
    Registration Statement on
    Form S-1,
    File
    No. 33-20626,
    incorporated by reference herein)*21


Subsidiaries23
.1

Consent of Ernst & Young
    LLP23
.2

Consent of KPMG Chartered
    Accountants, Dublin, Ireland31
.1

Certification of the Chief
    Executive Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200231
.2

Certification of the Chief
    Financial Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200232
.1

Certification of the Chief
    Executive Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200232
.2

Certification of the Chief
    Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002*99
.1

Report of KPMG on the Consolidated
    Financial Statements of WIL*99
.2

Report of KPMG on
    Managements Assessment and the Effectiveness of Internal
    Control over Financial Reporting for WIL     Reports on
    Form 8-K.
  Form 8-K
  Form 8-K
  Form 8-K
 77




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##### Table of Contents



SIGNATURES
      
       Signatures

Title/s/  Thomas
    M. DuffThomas
    M. Duff

Chairman, Chief Executive Officer
    and Director (Principal Executive Officer)/s/  Keith
    R. PhillipsKeith
    R. Phillips

Vice President and Chief Financial
    Officer
    (Principal Financial Officer)/s/  Mark
    J. RudayMark
    J. Ruday

Vice President, Chief Accounting
    Officer and Controller (Principal Accounting Officer)/s/  James
    B. BakerJames
    B. Baker

Director/s/  David
    A. BarrDavid
    A. Barr

Director/s/  Richard
    F. HeitmillerRichard
    F. Heitmiller

Director/s/  Kevin
    KruseKevin
    Kruse

Director/s/  David
    J. McKittrickDavid
    J. McKittrick

Director/s/  James
    E. RogersJames
    E. Rogers

Director/s/  Roger
    A. VandenbergRoger
    A. Vandenberg

Director  78