##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (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, 2007ORo

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)

29707(Zip Code)   Registrants telephone
    number, including area code:
 (803)
    835-2000
      Securities registered pursuant
    to Section 12(b) of the Act:
 None
  Securities registered pursuant
    to Section 12(g) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value

Over-the-Counter Bulletin BoardCommon Stock Purchase Rights

Over-the-Counter Bulletin Board   o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K þ
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




---





TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersItem 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 DataREPORT 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 InformationItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accounting Fees and ServicesItem 15. Exhibits, Financial Statement Schedules and Reports on Form 8-KSIGNATURESEX-10.2 Security Agreement, dated February 26, 2008EX-10.3 Grant of Security Interest in U.S. Trademarks and PatentsEX-10.4 Grant of Security Interest in U.S. CopyrightsEX-10.13 Sixth Amended and Restate Management Incentive PlanEX-21 SubsidiariesEX-23.1 Consent of Independent Registered Accounting FirmEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO    Table of Contents  
  PART I
  Forward-Looking
    Statements
  Form 10-K
 
  Item 1.
    Business  Proceedings
    Under Chapter 11 of the Bankruptcy Code
                 No. 08-10595 debtors-in-possession
   2




---



##### Table of Contents



debtor-in-possession
      Strategic
    Alternatives and Sales Process
    Material
    Impairment of Assets
    General
    ® ®
 3




---



##### Table of Contents



® ®
    2007


2006(a)


2005(a)(In millions, except per share data)Net sales

$
1,134.1


$
1,208.3


$
1,179.8Gross profit

$
14.0


$
34.4


$
105.4Operating loss

$
(304.6
)

$
(77.3
)

$
(18.4
)Loss from continuing operations

$
(362.7
)

$
(96.3
)

$
(41.8
)Per share net loss attributable to common stockholders from
    continuing operations

$
(11.71
)

$
(3.47
)

$
(1.77
)Total assets

$
503.2


$
993.3


$
1,076.5Capital expenditures from continuing operations

$
10.9


$
26.8


$
43.7     (a)
    
    Certain amounts have been revised to reflect discontinued
    operations.  and/or
    2007


2006(a)


2005(a)(In millions)Loss from continuing operations

$
(362.7
)

$
(96.3
)

$
(41.8
)Income tax benefit


(3.4
)


(38.2
)


(21.7
)Interest expense, net


61.5



57.2



45.1Depreciation and amortization


58.2



63.4



61.8Permitted Adjustments(b)


275.5



68.5



80.7EBITDA, as defined

$
29.1


$
54.6


$
124.1     (a)
    
    Certain amounts have been revised to reflect discontinued
    operations.(b)
    
    Permitted Adjustments are adjustments specified in our Debt
    Agreements at December 31, 2007, which are used in the
    calculation of EBITDA, as defined. The following table details
    Permitted Adjustments for the periods indicated.  4




---



##### Table of Contents



2007


2006(a)


2005(a)(In millions)Impairment of assets

$
292.6


$



$
Goodwill impairment






33.4



Johnsonville fibers disposal costs, net


(3.1
)


31.6



Actuarial (gains) losses for defined benefit plans


(0.1
)


(2.6
)


16.2Hurricane Katrina (proceeds) costs, net


(15.9
)


1.4



24.0Legal and settlement costs


(1.9
)






35.9Other


3.9



4.7



4.6Total Permitted Adjustments

$
275.5


$
68.5


$
80.7   (a)
    
    Certain amounts have been revised to reflect discontinued
    operations.    2007


2006


2005(In millions)Chemical-based segment profit

$
31.8


$
46.9


$
115.2Recycled-based segment profit (loss)


(2.7
)


7.7



8.9Total segment profit

$
29.1


$
54.6


$
124.1       Chemical-Based
    Segment
    
    PermaClear®,
    PermaClear
    HP®,
    and Thermaclear
    Ti®
    solid-stated PET resin from chemical-based raw materials for use
    in the manufacturing of plastic beverage bottles and other food
    packaging and
    Fortrel®
    chemical-based polyester staple fiber for use in home
    furnishing, non-woven, apparel, and industrial products.   5




---



##### Table of Contents



2007


2006


2005(In millions)Net Sales

$
1,069.4


$
1,050.6


$
1,009.4Segment Profit(a)

$
31.8


$
46.9


$
115.2Segment Depreciation and Amortization

$
56.0


$
57.2


$
54.0Assets

$
446.4


$
791.4


$
781.2Capital Expenditures

$
8.8


$
24.0


$
40.4   (a)
    
    The measurement for segment profit (loss) is EBITDA, as defined.
    For more information, including a reconciliation of segment
    profit (loss) to loss from continuing operations, see
    Item 1. Business.      Raw
    Materials
  70-75%
  
    6




---



##### Table of Contents



7




---



##### Table of Contents



Global
    Polyester Chemical Raw Material Costs
 January 2005 
    February 2008
  
   * China prices
    excludes VAT
  ** Feb. 2008 Far East
    prices are preliminary.
  Source: Chem-Data, PCI (Feb.
    2008), Wellman
      PET
    Resin
    2008
    NAFTA PET Resin Capacity by Producer
  
  Total
    Capacity: 10.0 billion pounds
 Source: SBA-CCI
    (Feb. 2008), Wellman, Inc.
   8




---



##### Table of Contents



NAFTA PET
    Resin Consumption
  
  Source: SBA-CCI, Inc. (March
    2008)
     9




---



##### Table of Contents



NAFTA PET
    Resin Industry Supply/Demand Balance
  
  Source: SBA-CCI, Inc (March
    2008), Wellman, Inc.
  start-up
 10




---



##### Table of Contents



NAFTA PET
    Resin Net Trade Balance
  
  All quarters are
    annualized Source: U.S. Department of
    Commerce, Expide Logistics SA de CV, Statistics Canada, 
    Wellman, Inc. (Feb. 2008)
  Polyester
    Staple Fiber
    2008
    NAFTA Polyester Staple Fiber Capacity
  
  Total Capacity:
    2.2 billion pounds
  Source: FEB (2007
    Average), Wellman, Inc.
   11




---



##### Table of Contents



Polyester
    Staple Imports Into the U.S.*
    (Annualized)
  
  * Imports do not include
    Canada and Mexico
 Source: U.S. Commerce Department
    (Feb. 2008)
  Textile
    and Apparel Imports Into the U.S.
  
  % = Chinas % of U.S.
    Textile and Apparel Imports
 Source: U.S. Commerce Department
    (Feb. 2008)
 12




---



##### Table of Contents



U.S.
    Polyester Staple Fiber Industry Supply/Demand Balance
  
  Source: Fiber Economics
    Bureau (FEB) (Jan. 2008), Wellman, Inc.
  Recycled-Based
    Segment
  ® ®
     13




---



##### Table of Contents



2007


2006(a)


2005(a)(In millions)Net Sales

$
64.7


$
157.7


$
170.4Segment Profit (Loss)(b)

$
(2.7
)

$
7.7


$
8.9Segment Depreciation and Amortization

$
2.2


$
6.2


$
7.8Assets

$
31.7


$
64.2


$
98.0Capital Expenditures

$
2.1


$
2.8


$
3.3   (a)
    Revised to reflect discontinued operations.  (b)
    The measurement for segment profit (loss) is EBITDA, as defined.
    For more information, including a reconciliation of segment
    profit (loss) to loss from continuing operations, see
    Item 1. Business.  Discontinued
    Operations
      Capital
    Investment Program
    Capital
    Expenditures
  2007


2006


2005(In millions)Expansion/major cost reductions

$



$
14.5


$
34.4Maintenance of business capital(a)


10.9



12.3



9.3Total

$
10.9


$
26.8


$
43.7   (a)
    
    Includes environmental, health and safety capital expenditures.   14




---



##### Table of Contents



Research
    and Development
    Employees
    2007


2006


2005


2004


2003Employees


1,000



1,500



1,900



1,700



1,900Long-term, Independent Contractors


25



40



80



360



270Total Personnel


1,025



1,540



1,980



2,060



2,170       Environmental
    Matters
      Executive
    Officers of the Registrant
    Name and Age

PositionThomas M. Duff, 60

Chairman, Chief Executive Officer, and DirectorKeith R. Phillips, 53

Vice President, Chief Financial Officer, and TreasurerMark J. Ruday, 42

Vice President, Chief Operating OfficerSteven L. Ates, 43

Vice President, Sales and MarketingIan K. Shaw, 63

Vice President, Manufacturing and Research & DevelopmentDavid R. Styka, 45

Vice President, Controller and Chief Accounting OfficerJoseph C. Tucker, 60

Vice President, Raw Material Procurement and Strategic
    Development     Thomas M. Duff.
 15




---



##### Table of Contents



Keith R. Phillips.
  Mark J. Ruday.
  Steven L. Ates.
  Ian K. Shaw.
  David R. Styka.
  Joseph C. Tucker.
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K, and/or (202) 551-8090. (http://www.sec.gov).
 
  Item 1A.
    Risk
    Factors    We
    have substantial liquidity needs and could face liquidity
    pressure.
   16




---



##### Table of Contents



The
    outcome of our Chapter 11 proceedings could result in a
    substantial dilution or cancellation of our current outstanding
    common and preferred stock.
    We may
    be unable to obtain additional financing in the
    future.
    Substantially
    all of our indebtedness contains floating rate interest
    provisions, which could adversely affect our financial health if
    interest rates were to rise significantly.
    We may
    be subject to claims that will not be discharged in the
    Chapter 11 cases, which could have a material adverse
    effect on our results of operations and
    profitability.
  and/or
  Transfers
    of our equity, or any issuances of equity in connection with our
    reorganization, may impair our ability to utilize our federal
    income tax net operating loss carry-forwards in the
    future.
    We
    depend on our management and employees.
   17




---



##### Table of Contents



Competition
    could adversely affect our performance.
    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.
    Prices
    and volumes of polyester staple fiber and PET resin imports
    could adversely impact our margins.
   18




---



##### Table of Contents



The
    financial condition of our customers impacts our operating
    results.
  and/or
  Additional
    liabilities may be proposed by tax authorities.
    Actual
    costs for environmental matters may vary from the
    estimates.
    Natural
    disasters could disrupt our business and affect our operating
    results.
   19




---



##### Table of Contents



Item 2.
    Properties    Stated AnnualProduction CapacityLocation

Principal Products

(In millions of pounds)Chemical-Based:Darlington, S.C. (Palmetto)

Solid-stated PET resin


500Darlington, S.C. (Palmetto)

Amorphous polyester resin


260
(1)Darlington, S.C. (Palmetto)

Polyester staple fiber


500Hancock County, MS (Pearl River)

Solid-stated PET resin


860Recycled-Based:Johnsonville, S.C.

Nylon engineering resin


70     (1)
    
    This capacity is currently idle, but can be converted into
    solid-stated PET resin capacity at a minimal per unit capital
    cost. 
  Item 3.
    Legal
    Proceedings  No. 07-585 and/or
     
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   20




---



##### Table of Contents



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

High


Low


Dividend2007Fourth Quarter

$
2.40


$
0.11


$
0.00Third Quarter

$
3.65


$
1.48


$
0.02Second Quarter

$
3.84


$
2.93


$
0.02First Quarter

$
4.10


$
2.58


$
0.022006Fourth Quarter

$
4.31


$
2.82


$
0.02Third Quarter

$
4.50


$
2.40


$
0.02Second Quarter

$
7.14


$
3.66


$
0.05First Quarter

$
7.46


$
5.57


$
0.05        21




---



##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data  Years Ended December 31,2007


2006(a)


2005(a)


2004(a)


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

$
1,134.1


$
1,208.3


$
1,179.8


$
1,104.6


$
927.7Gross profit

$
14.0


$
34.4


$
105.4


$
63.1


$
63.3Selling, general and administrative expenses

$
43.0


$
48.0


$
50.2


$
46.9


$
54.4Operating loss

$
(304.6
)

$
(77.3
)

$
(18.4
)

$
(24.7
)

$
(141.9
)Interest expense, net

$
61.5


$
57.2


$
45.1


$
38.1


$
10.1Loss from continuing operations

$
(362.7
)

$
(96.3
)

$
(41.8
)

$
(46.5
)

$
(97.9
)Earnings (loss) from discontinued operations, net of income
    taxes (benefit)

$
1.4


$
(16.1
)

$
(18.1
)

$
(3.0
)

$
(1.0
)Accretion and beneficial conversion charge

$
(15.6
)

$
(14.4
)

$
(14.2
)

$
(12.3
)

$
(10.1
)Net loss attributable to common stockholders

$
(376.9
)

$
(126.8
)

$
(74.1
)

$
(61.8
)

$
(109.0
)Basic and diluted net earnings (loss) per common share:Net loss attributable to common stockholders from continuing
    operations

$
(11.71
)

$
(3.47
)

$
(1.77
)

$
(1.86
)

$
(3.42
)Net earnings (loss) attributable to common stockholders from
    discontinued operations


0.04



(0.50
)


(0.57
)


(0.09
)


(0.03
)Net loss attributable to common stockholders

$
(11.67
)

$
(3.97
)

$
(2.34
)

$
(1.95
)

$
(3.45
)Dividends declared per common share

$
0.06


$
0.14


$
0.20


$
0.20


$
0.36   December 31,2007


2006(a)


2005(a)


2004(a)


2003(a)(In millions)Balance Sheet Data:Total assets

$
503.2


$
993.3


$
1,076.5


$
1,137.4


$
1,098.6Total debt and contractual obligations

$
554.3


$
577.3


$
498.6


$
471.5


$
371.0Stockholders (deficit) equity

$
(185.6
)

$
207.1


$
316.8


$
396.3


$
446.3     (a)
    
    Certain amounts have been revised to reflect discontinued
    operations. 22




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  RECENT
    DEVELOPMENTS
  Proceedings
    Under Chapter 11 of the Bankruptcy Code
    
  No. 08-10595 debtors-in-possession
    debtor-in-possession
     23




---



##### Table of Contents



Strategic
    Alternatives and Sales Process
    Material
    Impairment of Assets
    Sale of
    European Operations
        GENERAL
  ® ® ® ®
   24




---



##### Table of Contents



® ®
  ® ®
      CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
      Revenue
    Recognition
     25




---



##### Table of Contents



Allowance
    for Doubtful Accounts
    Inventory
    Valuation
  first-in,
  Property,
    Plant and Equipment
     26




---



##### Table of Contents



Deferred
    Tax Assets
    Environmental
    Liability
    Pension
    Benefits
       27




---



##### Table of Contents



ACCOUNTING
    CHANGES AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
  Accounting
    Changes
        As


Effect of


AsReported(a)


Change(a)


Adjusted(a)(In millions, except  per share data)Operating loss

$
(3.5
)

$
(14.9
)

$
(18.4
)Income tax benefit

$
(16.2
)

$
(5.5
)

$
(21.7
)Loss from continuing operations

$
(32.4
)

$
(9.4
)

$
(41.8
)Earnings (loss) from discontinued operations, net of tax

$
2.4


$
(20.5
)

$
(18.1
)Net loss

$
(30.0
)

$
(29.9
)

$
(59.9
)Net loss attributable to common stockholders from continuing
    operations

$
(1.48
)

$
(0.29
)

$
(1.77
)Net earnings (loss) attributable to common stockholders from
    discontinued operations

$
0.08


$
(0.65
)

$
(0.57
)Net loss attributable to common Stockholders

$
(1.40
)

$
(0.94
)

$
(2.34
)     (a)
    
    Amounts have been revised to reflect effects of discontinued
    operations. 28




---



##### Table of Contents



As


Effect of


AsAs of December 31, 2005

Reported


Change


Adjusted(In millions)Accumulated other comprehensive Income

$
1.9


$
20.3


$
22.2Accumulated deficit

$
(41.2
)

$
(20.3
)

$
(61.5
)Total stockholders equity (deficit)

$
316.8


$



$
316.8            29




---



##### Table of Contents



New
    Pronouncements
      RESULTS
    OF OPERATIONS
  2007
    to 2006
    Chemical-Based


Recycled-Based


Total(In millions)Net SalesSales volumes

$
19.4


$
(93.1
)

$
(73.7
)Net selling prices


(0.6
)


0.1



(0.5
)Increase (decrease) in net sales


18.8



(93.0
)


(74.2
)Cost of SalesVolume effect


19.7



(84.1
)


(64.4
)Raw material unit costs


10.2



4.2



14.4Plant added unit costs


(2.9
)


(0.9
)


(3.8
)Increase (decrease) in cost of sales


27.0



(80.8
)


(53.8
)Decrease in gross profit

$
(8.2
)

$
(12.2
)

$
(20.4
)      30




---



##### Table of Contents



2007


2006(In millions)Johnsonville fibers closure costs, net (See Note 4)

$
(3.1
)

$
33.3Goodwill impairment






33.4Hurricane Katrina (proceeds) costs, net


(15.9
)


1.4Legal and settlement costs


(1.9
)


Gain on sale of assets


(1.4
)


Proceeds relating to anti-dumping activities, net


(1.0
)


(2.0
)Actuarial gains for defined benefit plans (See Notes 2 and
    12)


(0.1
)


(2.6
)Other


(0.6
)


$
(24.0
)

$
63.5          31




---



##### Table of Contents



2006
    to 2005
    Chemical-Based(a)


Recycled-Based(a)


Total(In millions)Net SalesSales volumes

$
28.8


$
(24.8
)

$
4.0Net selling prices


13.1



11.4



24.5Increase (decrease) in net sales


41.9



(13.4
)


28.5Cost of SalesRaw material unit costs


79.4



8.1



87.5Volume effect


25.1



(21.4
)


3.7Plant added unit costs


9.9



(1.6
)


8.3Increase (decrease) in cost of sales


114.4



(14.9
)


99.5Increase (decrease) in gross profit

$
(72.5
)

$
1.5


$
(71.0
)  32




---



##### Table of Contents



(a)
    
    Certain amounts have been adjusted to reflect our voluntary
    change in accounting principle for recognizing actuarial gains
    and losses related to our defined benefit plans and revised to
    reflect discontinued operations.          start-up
          2006


2005(In millions)Johnsonville fibers closure costs

$
33.3


$
Goodwill impairment


33.4



Actuarial (gains) losses


(2.6
)


16.2Legal and settlement costs






35.9Hurricane Katrina costs, net


1.4



24.0Proceeds relating to anti-dumping activities, net


(2.0
)


(3.6
)$
63.5


$
72.5      33




---



##### Table of Contents



34




---



##### Table of Contents



CAPITAL
    RESOURCES AND LIQUIDITY
    Historical
    Flow of Funds
  start-up
        Our Debt
    at December 31, 2007
    TABLE
    I
  Amounts AvailableTotal





Amount


under CommittedDebt Agreement

Maturity

Facility


Commitment


Outstanding


Facilities(In millions)Revolving Credit Facility(1)

May 2011

$
225.0


$
179.9


$
105.2


$
74.7First Lien Term Loan(2)

February 2009


185.0



185.0



185.0



Second Lien Term Loan(3)

February 2010


265.0



265.0



263.1



Other

N/A


1.0



1.0



1.0



Total



$
676.0


$
630.9


$
554.3



74.7Adjustments(4)
















(3.8
)Total Committed AmountsAvailable















$
70.9     (1)
    
    We had a $225.0 million Revolving Credit Facility, as
    amended on October 20, 2006 secured by our domestic
    accounts receivable, domestic inventory and other related
    intangibles that matured on May 4, 2011. Our borrowing
    capacity was principally based on our domestic accounts
    receivable and inventory, less outstanding letters of credit and
    any liability related to the termination of certain financial
    instruments, but could not exceed $225.0 million. Pricing
    on the Revolving Credit Facility was based on our Average Excess
    Availability as defined in the Revolving Credit Facility and has
    interest rates of either LIBOR plus 1.25%  2.00% per
    annum (currently 1.75%) or the prime lending rate plus
    0.25%  1.00% per annum (currently 0.75%), at our
    option on outstanding borrowings. Interest payments were
    generally due at the end of each borrowing period.(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 4.00% and is paid quarterly.
    There is a LIBOR floor of 2.00%.(3)
    
    We have a $265.0 million Second Lien Term Loan, which
    matures on February 10, 2010 which is secured by a second
    lien on substantially all of our assets. Our annual interest
    rate is three-month LIBOR plus 6.75% and is 35




---



##### Table of Contents



paid quarterly. There is a LIBOR floor of 2.00%. The amount
    outstanding is net of the unamortized portion of the original
    issue discount.(4)
    
    The adjustments were reductions in the amounts available under
    the Revolving Credit Facility due to outstanding letters of
    credit.    Our
    Liquidity after Bankruptcy
    debtor-in-possession
     36




---



##### Table of Contents



360-day
    Minimum CumulativeApplicable Month

EBITDAMarch 2008

$
2.1 millionApril 2008

$
5.61 millionMay 2008

$
10.37 millionJune 2008

$
15.81 millionJuly 2008

$
19.635 millionAugust 2008

$
22.865 millionSeptember 2008

$
23.8 millionOctober 2008

$
27.455 millionNovember 2008

$
28.56 millionDecember 2008

$
30.855 millionJanuary 2009

$
31.5 million      37




---



##### Table of Contents



TABLE
    II
  Payments Due by PeriodGreaterThanLess Than


Years 1-3


Years 3-5


5 YearsContractual




1 Year


(Years 2009


(Years 2011


Years 2013Obligations

Total


(Year 2008)


& 2010)


& 2012)


& Beyond(In millions)Revolving Credit (see Table I)(5)

$
105.2


$
105.2


$



$



$
Interest Payments on Revolving Credit Agreement(6)


5.0



5.0











First and Second Lien Term Loans(7)


450.0



450.0











Interest on First and Second Lien Term Loans(8)


12.1



12.1











Operating Leases(9)


48.2



9.3



15.3



12.7



10.9Total

$
620.5


$
581.6


$
15.3


$
12.7


$
10.9  38




---



##### Table of Contents



(5)
    
    This is the amount payable under our Revolving Credit Facility.
    As part of our voluntary bankruptcy filing we repaid this with
    Debtor in Possession financing which is discussed above.(6)
    
    Interest payments include amounts paid under the Revolving
    Credit Facility and amounts expected to be paid on the DIP
    Credit Agreement subsequent to February 22, 2008 through
    August 15, 2008. As noted in the covenants above, based on
    the DIP Credit Agreement, we are obligated to close on the sale
    of our assets by August 15, 2008.(7)
    
    We have listed the first and second lien loans at their face
    value and have indicated they are due within one year as a
    result of the acceleration of the maturity as due to the
    bankruptcy filing. The amounts they ultimately receive will be a
    result of the amount and allocation of the proceeds of the sale
    of the assets in accordance with the Inter-creditor Agreement.(8)
    
    We believe that the First and Second Lien Term loans are
    undersecured, and as such we have only included the interest
    that was paid in February 2008.(9)
    
    These amounts are as of December 31, 2007 and relate
    primarily to operating leases for our railcars and computer
    hardware.        ENVIRONMENTAL
    MATTERS
     39




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosure about Market Risk  DERIVATIVES
    INTEREST
    RATE RISK
  debtor-in-possession
 40




---



##### 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, 2007, 2006 and 2005


42Consolidated Balance Sheets as of December 31, 2007 and 2006


43Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2007, 2006 and 2005


44Consolidated Statements of Cash Flows for the years ended
    December 31, 2007, 2006 and 2005


45Notes to Consolidated Financial Statements


46Report of Independent Registered Public Accounting Firm on the
    Consolidated Financial Statements


83Consolidated financial statement schedule for the years ended
    December 31, 2007, 2006 and 2005:II  Valuation and qualifying accounts


84Item 9.    Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosure


85Item 9A.  Controls and Procedures


85Item 9B.  Other Information


85Report of Independent Registered Public Accounting Firm on the
    Effectiveness of Internal Control over Financial Reporting


86    41




---



##### Table of Contents



CONSOLIDATED
    STATEMENTS OF OPERATIONS  Years Ended December 31,2007


2006


2005(In millions, except per share data)Net sales

$
1,134.1


$
1,208.3


$
1,179.8Cost of sales


1,120.1



1,173.9



1,074.4Gross profit


14.0



34.4



105.4Selling, general and administrative expenses


43.0



48.0



50.2Impairment loss


292.6







Restructuring charges


5.6







0.6Provision for uncollectible accounts


1.4



0.2



0.5Other (income) expense, net


(24.0
)


63.5



72.5Operating loss


(304.6
)


(77.3
)


(18.4
)Interest expense, net


61.5



57.2



45.1Loss from continuing operations before income taxes


(366.1
)


(134.5
)


(63.5
)Income tax benefit


(3.4
)


(38.2
)


(21.7
)Loss from continuing operations


(362.7
)


(96.3
)


(41.8
)Earnings (loss) from discontinued operations, net of income
    taxes (benefit)


1.4



(16.1
)


(18.1
)Net loss

$
(361.3
)

$
(112.4
)

$
(59.9
)Net loss attributable to common stockholders:Net loss

$
(361.3
)

$
(112.4
)

$
(59.9
)Accretion


(15.6
)


(14.4
)


(14.2
)Net loss attributable to common stockholders

$
(376.9
)

$
(126.8
)

$
(74.1
)Basic and diluted net loss per common share:Net loss attributable to common stockholders from continuing
    operations

$
(11.71
)

$
(3.47
)

$
(1.77
)Net loss attributable to common stockholders from discontinued
    operations


0.04



(0.50
)


(0.57
)Net loss attributable to common stockholders

$
(11.67
)

$
(3.97
)

$
(2.34
)Basic and diluted weighted-average common shares outstanding


32.3



31.9



31.7    42




---



##### Table of Contents



CONSOLIDATED
    BALANCE SHEETS  December 31,2007


2006(Adjusted)(In millions, except share data)ASSETS:Current assets:Cash and cash equivalents

$



$
Accounts receivable, less allowance of $3.1 in 2007 and $1.9 in
    2006


129.0



161.4Inventories


97.0



114.3Prepaid expenses and other current assets


25.0



34.6Current assets held for sale






59.6Total current assets


251.0



369.9Property, plant and equipment, at cost:Land, buildings and improvements


90.4



83.8Machinery and equipment


336.7



949.8Construction in progress


5.4



8.7432.5



1,042.3Less accumulated depreciation


190.7



485.1Property, plant and equipment, net


241.8



557.2Other assets, net


10.4



33.8Non-current assets held for sale






32.4$
503.2


$
993.3LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY:Current liabilities:Accounts payable

$
69.7


$
80.9Accrued liabilities


23.3



33.5Current portion of long-term debt


554.3



0.3Current liabilities associated with assets held for sale






30.3Total current liabilities


647.3



145.0Long-term debt






577.0Deferred income taxes and other liabilities


41.5



51.2Non-current liabilities associated with assets held for sale






13.0Total liabilities


688.8



786.2Stockholders equity (deficit):Series A preferred stock, $0.001 par value,
    5,000,000 shares authorized, 4,502,143 shares issued
    and outstanding


73.8



67.5Series B preferred stock, $0.001 par value,
    6,700,000 shares authorized, issued and outstanding


109.7



100.4Class A common stock, $0.001 par value;
    100,000,000 shares authorized, 35,372,382 shares
    issued in 2007 and 35,202,944 in 2006






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






Paid-in capital


248.6



248.3Common stock warrants


4.9



4.9Accumulated other comprehensive (loss) income


(1.4
)


28.4Accumulated deficit


(571.7
)


(192.9
)Less common stock in treasury at cost: 2,500,000 shares


(49.5
)


(49.5
)Total stockholders (deficit) equity


(185.6
)


207.1$
503.2


$
993.3    43




---



##### Table of Contents






CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
    (In millions)  Series A


Series B














Accumulated


RetainedPreferred


Preferred


Class A Common





Common


Other


Earnings/Stock Issued


Stock Issued


Stock Issued


Paid-In


Stock


Comprehensive


Accumulated


TreasuryShares


Amount


Shares


Amount


Shares


Amount


Capital


Warrants


Income/(Loss)


(Deficit)


Stock


TotalBalance at December 31, 2004


4.5


$
56.0



6.7


$
83.3



34.5


$



$
245.5


$
4.9


$
37.0


$
19.1


$
(49.5
)

$
396.3Net loss






































(59.9
)






(59.9
)Currency translation adjustments


































(15.7
)










(15.7
)Fair value of derivatives


































0.9











0.9Total comprehensive loss














































(74.7
)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



22.2



(61.5
)


(49.5
)


316.8Net loss






































(112.4
)






(112.4
)Currency translation adjustments


































6.5











6.5Fair value of derivatives


































(0.3
)










(0.3
)Total comprehensive loss














































(106.2
)Cash dividends ($0.14 per share)






































(4.6
)






(4.6
)Accretion






5.8







8.6























(14.4
)






Issuance of restricted stock, net


















0.3







1.1



















1.1Balance at December 31, 2006


4.5



67.5



6.7



100.4



35.2







248.3



4.9



28.4



(192.9
)


(49.5
)


207.1Net loss






































(361.3
)






(361.3
)Currency translation adjustments


































(27.3
)










(27.3
)Fair value of derivatives


































(2.5
)










(2.5
)Total comprehensive loss














































(391.1
)Cash dividends ($0.06 per share)






































(1.9
)






(1.9
)Accretion






6.3







9.3























(15.6
)






Issuance of restricted stock, net


















0.2







0.3



















0.3Balance at December 31, 2007


4.5


$
73.8



6.7


$
109.7



35.4


$



$
248.6


$
4.9


$
(1.4
)

$
(571.7
)

$
(49.5
)

$
(185.6
)    44




---



##### Table of Contents





CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Years Ended December 31,2007


2006


2005(In millions)Cash flows from operating activities:Net loss

$
(361.3
)

$
(112.4
)

$
(59.9
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Loss (earnings) from discontinued operations, net of tax


(1.4
)


16.1



18.1Depreciation


41.0



45.9



44.4Amortization


1.5



1.8



1.7Amortization of acquisition costs of long-term raw material
    contract


15.7



15.7



15.7Amortization in interest expense, net


4.3



4.3



4.2Deferred income taxes and other


2.4



(39.8
)


(23.8
)Actuarial (gains) and losses for defined benefit plans


(0.1
)


(2.6
)


16.2Impairment loss on ling-lived assets


292.6







Goodwill impairment






33.4



Loss on disposal of assets


(2.0
)


31.6



1.3Changes in assets and liabilities:Accounts receivable


34.0



(30.9
)


33.5Inventories


18.9



4.8



(19.2
)Prepaid expenses and other current assets


(6.9
)


(0.6
)


1.6Accounts payable, accrued liabilities, and other current
    liabilities


(19.0
)


(13.3
)


(1.5
)Other


(8.7
)


(0.5
)


(12.5
)Net cash provided by (used in) operating activities


11.0



(46.5
)


19.8Cash flows from investing activities:Additions to property, plant and equipment


(10.9
)


(26.8
)


(43.7
)Net cash used in investing activities


(10.9
)


(26.8
)


(43.7
)Cash flows from financing activities:Proceeds from debt






77.8



25.2Repayments of debt


(22.3
)






Debt issuance costs






(2.5
)


Dividends paid on common stock


(1.9
)


(4.6
)


(6.5
)Net cash provided by (used in) financing activities


(24.2
)


70.7



18.7Discontinued Operations:Operating activities


(8.1
)


4.6



6.2Investing activities


36.1



(4.1
)


(7.8
)Financing activities


(4.0
)


2.1



1.2Effect of exchange rate changes on cash


0.1







Net cash provided by (used in) discontinued operations


24.1



2.6



(0.4
)Increase (decrease) in cash and cash equivalents










(5.6
)Cash and cash equivalents at beginning of year










5.6Cash and cash equivalents at end of year

$



$



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

$
58.4


$
54.2


$
41.1Income taxes

$
(2.4
)

$
0.1


$
1.0    45




---



##### 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
     46




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    Foreign





AccumulatedCurrency


Fair Value


OtherTranslation


of


ComprehensiveAdjustments


Derivatives


Income/(Loss)Balance at December 31, 2004

$
36.5


$
0.5


$
37.0Changes during year (net of taxes of $0.6 million)


(15.7
)


0.9



(14.8
)Balance at December 31, 2005


20.8



1.4



22.2Changes during year (net of taxes of $0.8 million)


6.5



(0.3
)


6.2Balance at December 31, 2006


27.3



1.1



28.4Changes during year (net of taxes of $0.0 million)


(27.3
)


(2.5
)


(29.8
)Balance at December 31, 2007

$



$
(1.4
)

$
(1.4
)   Allowances
    for Doubtful Accounts
    Inventories
  first-in,
  Acquisition
    Costs of Long-Term Raw Material Contract
    Property,
    Plant and Equipment
     47




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
        Income
    Taxes
    Environmental
    Expenditures
  and/or
  Advertising
    Costs
    Research
    and Development Costs
    Deferred
    Debt Costs
    Stock
    Based Compensation
     48




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  Reclassification
    2.
    NEW
    ACCOUNTING PRONOUNCEMENTS  Accounting
    Changes
         49




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
        As


Effect of


AsReported(a)


Change(a)


Adjusted(a)(In millions, except per share data)Operating loss

$
(3.5
)

$
(14.9
)

$
(18.4
)Income tax benefit

$
(16.2
)

$
(5.5
)

$
(21.7
)Loss from continuing operations

$
(32.4
)

$
(9.4
)

$
(41.8
)Earnings (loss) from discontinued operations, net of tax

$
2.4


$
(20.5
)

$
(18.1
)Net loss

$
(30.0
)

$
(29.9
)

$
(59.9
)Net loss attributable to common stockholders from continuing
    operations

$
(1.48
)

$
(0.29
)

$
(1.77
)Net earnings (loss) attributable to common stockholders from
    discontinued operations

$
0.08


$
(0.65
)

$
(0.57
)Net loss attributable to common Stockholders

$
(1.40
)

$
(0.94
)

$
(2.34
)     (a)
    
    Amounts have been revised to reflect effects of discontinued
    operations.    As


Effect of


AsAs of December 31, 2005

Reported


Change


Adjusted(In millions)Accumulated other comprehensive Income

$
1.9


$
20.3


$
22.2Accumulated deficit

$
(41.2
)

$
(20.3
)

$
(61.5
)Total stockholders equity

$
316.8


$



$
316.8    50




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
          New
    Pronouncements
     51




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  3.
    INVENTORIES    December 31,2007


2006(In millions)Raw materials

$
29.7


$
40.7Finished and semi-finished goods


63.0



70.7Supplies


4.3



2.9$
97.0


$
114.3   4.
    JOHNSONVILLE
    FIBERS CLOSURE      (In millions)Impairment on asset disposals

$
13.6Impairment on assets
    held-for-sale


8.2Inventory write-downs


6.7Employee restructuring charges


3.9Miscellaneous


0.9$
33.3    52




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    EmployeeRestructuringCharges(In millions)Accrual during third quarterof 2006

$
4.1Payments during 2006


(1.6
)Adjustments to initial accrual


(0.2
)Remaining accrual at December 31, 2006


2.3Payments during 2007


(2.2
)Adjustments to initial accrual


(0.1
)Remaining accrual at December 31, 2007

$
   5.
    ACCRUED
    LIABILITIES    December 31,2007


2006(In millions)Payroll, compensation, and benefits

$
6.4


$
6.9Interest


8.2



8.7Accrued legal & professional accruals


1.8



6.1Property and other taxes


1.6



3.2Restructuring reserves


0.3



2.3Other


5.0



6.3$
23.3


$
33.5    53




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  6.
    OTHER
    (INCOME) EXPENSE, NET    Year Ended December 31,2007


2006


2005(Adjusted)


(Adjusted)Johnsonville fibers closure costs, net

$
(3.1
)

$
33.3


$
Goodwill impairment






33.4



Legal and settlement costs


(1.9
)






35.9Hurricane Katrina costs, net


(15.9
)


1.4



24.0Actuarial (gains) losses for defined benefit plans


(0.1
)


(2.6
)


16.2Gain on sale of assets, net


(1.4
)






Proceeds relating to anti-dumping activities, net


(1.0
)


(2.0
)


(3.6
)Other


(0.6
)






$
(24.0
)

$
63.5


$
72.5          54




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  1 2
          7.
    DISCONTINUED
    OPERATIONS          WIL

$
92.0European PET resins business


$
92.0  55




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    Accounts receivable, net

$
29.3Inventories


29.3Prepaid expenses and other current assets


1.0Total current assets held for sale


59.6Property, plant and equipment, net


32.2Other assets and deferred income taxes, net


0.2Total non-current assets held for sale


32.4Total assets held for sale

$
92.0     WIL

$
32.6European PET resins business


10.7$
43.3     Accounts payable

$
14.3Accrued liabilities


16.0Total current liabilities associated with assets held for
    sale


30.3Long-term debt


2.4Deferred income taxes and other liabilities


10.6Total non-current liabilities associated with assets held for
    sale


13.0Total liabilities associated with assets held for sale

$
43.3     WIL


European PET Resins2007


2006


2007


2006(In millions)Net sales

$
76.4


$
123.7


$
33.0


$
82.6Earnings (loss) from discontinued operations before income tax
    benefit

$
1.0


$
14.1



(0.9
)

$
(3.2
)Income tax expense (benefit)


0.3



1.5







(0.1
)Gain (loss) from discontinued operations, net


0.7



12.6



(0.9
)


(3.1
)Gain (loss) on disposal of business and impairment charge to
    record assets at fair value less costs of disposal


3.0







(1.0
)


(26.5
)Income tax expense (benefit)


0.4











(0.9
)Net gain (loss) on disposal of business and impairment loss to
    record assets at fair value less costs of disposal


2.6







(1.0
)


(25.6
)Net earnings (loss) from discontinued operations, net

$
3.3


$
12.6


$
(1.9
)

$
(28.7
)  56




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  8.
    RESTRUCTURING
    CHARGES  Research &
    Development Realignment
    SeveranceAccrual(In millions)Accruals recorded in fourth quarter of 2007

$
0.4Payments in 2007


(0.1
)Accrual balance at December 31, 2007

$
0.3   2007
    Organizational Restructuring
    SeveranceAccrual(In millions)Accruals recorded in 2007

$
2.9Payments in 2007


(2.8
)Adjustments to accruals during 2007


(0.1
)Accrual balance at December 31, 2007

$
   Reduction
    of Polyester Staple Fiber Capacity
   57




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  9.
    BORROWING
    ARRANGEMENTS    December 31,2007


2006(In millions)$225.0 Revolving Credit Facility

$
105.2


$
128.0$185.0 First Lien Term Loan


185.0



185.0$265.0 Second Lien Term Loan


263.1



262.2Other


1.0



2.1Total debt


554.3



577.3Less current portion


554.3



0.3Total long-term debt

$



$
577.0     
    a $225.0 million Revolving Credit Facility, as amended on
    October 20, 2006 secured by our domestic accounts
    receivable, domestic inventory and other related intangibles
    that matures on May 4, 2011. Our borrowing capacity was
    principally based on our domestic accounts receivable and
    inventory, less outstanding letters of credit and any liability
    related to the termination of certain financial instruments, but
    cannot exceed $225.0 million. Pricing on the Revolving
    Credit Facility was based on our Average Excess Availability as
    defined in the Revolving Credit Facility and has interest rates
    of either LIBOR plus 1.25%-2.00% per annum (currently 1.75%) or
    the prime lending rate plus 0.25%-1.00% per annum (currently
    0.75%), at our option on outstanding borrowings. Interest
    payments were due at the end of each borrowing period.
    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 4.00% 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 6.75% paid quarterly.         58




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    No. 08-10595
  debtor-in-possession
        
    In June 2007, we purchased a three year $50.0 million
    interest rate cap which provides that for quarterly periods when
    three-month LIBOR exceeds 6.50% on its reset date, we will
    receive the difference between the three-month LIBOR and 6.50%
    for such periods;
    In July 2007, we entered into a two year $50.0 million
    interest rate swap where we receive three-month LIBOR and pay
    5.255% quarterly;
    In July 2007, we entered into a two year $50.0 million
    interest rate collar which provides that for quarterly periods
    when three-month LIBOR exceeds 6.00% on its reset date, we will
    receive the difference between the three-month LIBOR and 6.00%,
    and for quarterly periods when three-month LIBOR is less than
    3.61% on its reset date, we will pay the difference between the
    three-month LIBOR and 3.61%.     59




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  10.
    INCOME
    TAXES    Years Ended December 31,2007


2006


2005(Adjusted)


(Adjusted)(In millions)United States

$
(367.1
)

$
(134.9
)

$
(64.0
)Foreign


1.0



0.4



0.5$
(366.1
)

$
(134.5
)

$
(63.5
)     Years Ended December 31,2007


2006


2005(Adjusted)


(Adjusted)(In millions)Current:Federal

$
(3.1
)

$



$
State


0.1



0.1



0.1Foreign










$
(3.0
)

$
0.1


$
0.1Deferred:Federal

$
0.2


$
(36.7
)

$
(21.8
)State


(0.6
)


(1.6
)


Foreign










(0.4
)


(38.3
)


(21.8
)$
(3.4
)

$
(38.2
)

$
(21.7
)    60




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    Years Ended December 31,2007


2006


2005(Adjusted)


(Adjusted)Computed at statutory rate


35.0
%


35.0
%


35.0
%State taxes, net of federal benefit


0.0



0.9



(0.1
)Differences in income tax rates between the United States and
    foreign countries


0.1



0.1



0.2IRS Refund from settlement of uncertain tax position


0.8







Valuation Allowance


(32.9
)






Goodwill






(8.7
)


Credits


0.2



0.8



0.4Other, net


(2.3
)


0.3



(1.3
)Effective tax rate


0.9
%


28.4
%


34.2
%       December 31,2007


2006(In millions)Depreciation

$
64.7


$
182.4Foreign






3.8Other


6.8



3.0Total deferred tax liabilities


71.5



189.2Foreign repatriation






20.3Other


6.3



9.3Total deferred liabilities


77.8



218.8Domestic carry-forward


225.1



214.9Foreign carry-forward






3.5Other


13.1



21.6Total deferred tax assets


238.2



240.0Valuation allowance


(168.6
)


(29.4
)Net deferred tax assets


69.6



210.6Net deferred liabilities

$
8.2


$
8.2    61




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
            (In millions)Balance at January 1, 2007

$
25.6Settlements


(19.6
)Reductions related to expirations of statute of limitations


(0.5
)Additions for current year tax positions


0.6Reductions for prior year tax positions


(0.1
)Balance as of December 31, 2007

$
6.0   11.
    ENVIRONMENTAL
    MATTERS     62




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    2007


2006


2005(In millions)Balance at beginning of year

$
5.1


$
6.6


$
7.0Changes in remediation cost estimates


0.9



(1.3
)


Expenditures


(0.6
)


(0.2
)


(0.4
)Balance at end of year

$
5.4


$
5.1


$
6.6       12.
    RETIREMENT
    PLANS           63




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    2007

2006(In millions)Consolidated Balance Sheets:Non-current accrued benefit cost recognized on Consolidated
    Balance Sheets

$
16.3


$
23.0   2007


2006


2005Consolidated Statements of Operations:Net periodic pension cost (income)

$
0.0


$
(1.8
)

$
16.4     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      2007


2006


2005Discount rate


5.30
%


5.00
%


5.75
%Expected return on plan assets


7.50
%


7.50
%


8.25
%Rate of compensation increase










  64




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    2007


2006


2005(In millions)Service Cost

$
0.2


$
0.6


$
0.5Interest Cost


3.5



3.4



3.2Expected return on plan assets


(3.6
)


(3.2
)


(3.5
)Actuarial (gain) loss


(0.1
)


(2.6
)


16.2Net periodic pension cost (income)

$



$
(1.8
)

$
16.4   Projected
    Benefit Obligations
    2007


2006AssumptionsWeighted-average assumptions used to determine benefit
    obligations at December 31Discount rate


5.40
%


5.30
%Rate of compensation increases






     2007


2006(In millions)Change in benefit obligation:Projected Benefit obligation at beginning of year

$
70.0


$
71.3Service cost


0.2



0.5Interest cost


3.5



3.4Actuarial gain


(1.1
)


(1.4
)Benefits paid


(4.1
)


(3.8
)Projected Benefit obligation at end of year

$
68.5


$
70.0   III. Plan
    Assets
    2007


2006% of





% of(In millions)




Total





TotalEquity securities

$
31.8



60.9
%

$
29.6



63.0
%Debt securities


20.0



38.3



17.4



37.0Other


0.4



0.8







Total

$
52.2



100.0
%

$
47.0



100.0
%   Investment
    Policies
   65




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    2007


2006(In millions)Change in plan assets:Fair value of plan assets at beginning of year

$
47.0


$
43.9Actual return on plan assets


2.6



4.4Employer contributions


6.7



2.5Benefits paid


(4.1
)


(3.8
)Fair value of plan assets at end of year

$
52.2


$
47.0   IV.
    Funded
    Status    2007


2006(In millions)Projected benefit obligation at end of year

$
68.5


$
70.0Fair value of plan assets at end of the year


52.2



47.0Funded status accrued at the end of the year

$
(16.3
)

$
(23.0
)   V.
    Accumulated
    Benefit Obligations    2007


2006(In millions)Information for pension plans with an accumulated
    benefit obligation in excess of plan assets:Projected benefit obligation

$
68.5


$
70.0Accumulated benefit obligation

$
68.5


$
70.0Fair value of plan assets

$
52.2


$
47.0   VI.
    Cash
    Flows  Contributions
   66




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  Estimated
    Future Benefit Payments
    (In millions)2008

$
4.62009

$
4.52010

$
4.52011

$
4.52012

$
4.5Years
    2013-2017

$
23.6   VII.
    Recognition
    of Actuarial Gains and Losses    13.
    STOCKHOLDERS
    EQUITY           67




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
           68




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
            2005(In millions, exceptper share amounts)Net loss attributable to common stockholders, as reported

$
(74.1
)Add: Stock-based employee compensation expense included in
    reported net loss, net of related tax effects


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


(0.7
)Pro forma net loss attributable to common stockholders

$
(74.8
)Net loss attributable to common stockholders per share:Basic net loss per common share, as reported

$
(2.34
)Basic net loss per common share, pro forma

$
(2.36
)Diluted net loss per common share, as reported

$
(2.34
)Diluted net loss per common share, pro forma

$
(2.36
)  69




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    WeightedAverage PriceShares


per ShareOutstanding December 31, 2004


2,829,018



16.33Exercised


(22,880
)


9.66Cancelled/Forfeited


(214,880
)


26.38Outstanding December 31, 2005


2,591,258



15.55Cancelled/Forfeited


(246,570
)


21.58Outstanding December 31, 2006


2,344,688



14.92Cancelled/Forfeited


(476,470
)


16.85Outstanding December 31, 2007


1,868,218


$
14.55     Range of exercise prices

$
8.02-$15.24


$
16.61-$18.94Number outstanding at December 31, 2007


884,743



983,475Weighted-average remaining contractual life


4.7



3.1Weighted-average exercise price of options outstanding

$
11.31


$
17.48Number exercisable at December 31, 2007


884,743



983,475Weighted-average exercise price of options exercisable

$
11.31


$
17.48   10-year
   70




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  14.
    NET LOSS
    ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE    2007


2006(a)


2005(a)(In millions)Numerator for basic and diluted net loss attributable to common
    stockholders per common share:Loss from continuing operations

$
(362.7
)

$
(96.3
)

$
(41.8
)Accretion(b)


(15.6
)


(14.4
)


(14.2
)Net loss attributable to common stockholders from continuing
    operations


(378.3
)


(110.7
)


(56.0
)Net loss attributable to common stockholders from discontinued
    operations


1.4



(16.1
)


(18.1
)Net loss attributable to common stockholders

$
(376.9
)

$
(126.8
)

$
(74.1
)Denominator:Denominator for basic net loss attributable to common
    stockholders per common share  weighted-average shares


32.3



31.9



31.7Effect of dilutive securities:Employee stock options and restricted stock










Preferred stock  if converted(c)










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


32.3



31.9



31.7     (a)
    
    These amounts were revised to reflect discontinued operations.
    For additional information on discontinued operations, see
    Note 7.(b)
    
    Accretion is recorded based on the fair market value of the
    increase in the liquidation preference of the preferred stock.
    The 2005 amount included $0.9 million primarily recorded in
    the first quarter of 2005 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.(c)
    
    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 13.  15.
    COMMITMENTS
    AND CONTINGENCIES       71




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
          For the Year EndedDecember 31,2007


2006(In millions)Balance at beginning of period

$
3.6


$
4.9Adjustments to accruals


(1.9
)


Payments


(1.4
)


(1.3
)Balance at end of period

$
0.3


$
3.6   No. 07-585 and/or
         72




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  16.
    DERIVATIVES
    AND FINANCIAL INSTRUMENTS            Concentration
    of Credit Risk
    Fair
    Value of Financial Instruments
     73




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
          2007


2006(a)Carrying





CarryingAmount


Fair Value


Amount


Fair Value(In millions)NonderivativesCash and cash equivalents

$



$



$



$
Accounts receivable


129.0



129.0



161.4



161.4Accounts payable


69.7



69.7



80.9



80.9Borrowing arrangements


554.3



388.7



577.3



530.5Derivatives  receive (pay):Cash flow hedges


(1.4
)


(1.4
)


0.2



0.2     (a)
    
    Amounts adjusted to reflect discontinued operations.  17.
    OPERATING
    SEGMENT AND GEOGRAPHIC AREAS      
    PermaClear®,
    PermaClear
    HP®,
    and Thermaclear
    Ti®
    solid-stated PET resin from chemical-based raw materials for use
    in the manufacturing of plastic beverage bottles and other food
    packaging and
    Fortrel®
    chemical-based polyester staple fiber for use in home
    furnishing, non-woven, apparel, and industrial products.  ® ®
     74




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
      Chemical-


Recycled-Based


BasedSegment


Segment


Total(In millions)2007Net sales

$
1,069.4


$
64.7


$
1,134.1Segment profit (loss)

$
31.8


$
(2.7
)

$
29.1Assets

$
446.4


$
31.7


$
478.1Amortization and depreciation from continuing operations

$
56.0


$
2.2


$
58.2Capital expenditures for continuing operations

$
8.8


$
2.1


$
10.92006(a)Net Sales

$
1,050.6


$
157.7


$
1,208.3Segment profit

$
46.9


$
7.7


$
54.6Assets

$
791.4


$
64.2


$
855.6Amortization and depreciation from continuing operations

$
57.2


$
6.2


$
63.4Capital expenditures for continuing operations

$
24.0


$
2.8


$
26.82005(a)Net Sales

$
1,009.4


$
170.4


$
1,179.8Segment profit

$
115.2


$
8.9


$
124.1Assets

$
781.2


$
98.0


$
879.2Amortization and depreciation from continuing operations

$
54.0


$
7.8


$
61.8Capital expenditures for continuing operations

$
40.4


$
3.3


$
43.7     (a)
    
    Reflects our change in accounting principle (See
    Note 2) and discontinued operations (See Note 7). 75




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
     2007


2006


2005(In millions)Segment Profit (Loss)Total for reportable segments

$
29.1


$
54.6


$
124.1Interest expense, net


(61.5
)


(57.2
)


(45.1
)Depreciation and amortization


(58.2
)


(63.4
)


(61.8
)Permitted Adjustments(1)


(275.5
)


(68.5
)


(80.7
)Loss from continuing operations before income taxes

$
(366.1
)

$
(134.5
)

$
(63.5
)AssetsTotal for reportable segments

$
478.1


$
855.6


$
879.2Corporate assets(2)


25.1



137.7



197.3Total Assets

$
503.2


$
993.3


$
1,076.5     (1)
    
    Permitted Adjustments are adjustments specified in our Debt
    Agreements, which are used in the calculation of EBITDA, as
    defined that is used to report our segment profit (loss).
    Permitted Adjustments included the following for the years
    indicated:  2007

2006

2005(In millions)Permitted Adjustments:Impairment of assets

$
292.6


$



$
Goodwill impairment






33.4



Johnsonville fibers closure costs, net


(3.1
)


31.6



Actuarial gains (losses) for defined benefit plans


(0.1
)


(2.6
)


16.2Hurricane Katrina (proceeds) costs, net


(15.9
)


1.4



24.0Legal and settlement costs


(1.9
)






35.9Other


3.9



4.7



4.6$
275.5


$
68.5


$
80.7   (2)
    
    Corporate assets include cash, prepaid expenses, construction in
    progress, and certain other assets not allocated to the segments.    2007(a)


2006(a)


2005(a)(In millions)Net sales(a)U.S.

$
1,006.9


$
1,059.0


$
1,010.7Foreign


127.2



149.3



169.1$
1,134.1


$
1,208.3


$
1,179.8     (a)
    
    Revenues are attributed to countries based on the location of
    the customer. 76




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
   18.
    QUARTERLY
    FINANCIAL DATA (UNAUDITED)    March 31,


June 30,


Sept. 30,


Dec. 31,


Total2007


2007


2007


2007


2007(In millions, except per share data)Income Statement Data:Net sales

$
319.2


$
299.9


$
270.8


$
244.2


$
1,134.1Cost of sales


316.2



291.1



271.2



241.6



1,120.1Gross profit


3.0



8.8



(0.4
)


2.6



14.0Selling, general and administrative expenses


11.7



9.9



10.9



10.5



43.0Impairment loss














292.6



292.6Restructuring charges(2)


2.9



0.2







2.5



5.6Provision for uncollectible accounts


0.1



0.2



0.2



0.9



1.4Other income, net(3)


(2.7
)


(8.5
)


(1.6
)


(11.2
)


(24.0
)Operating income (loss)


(9.0
)


7.0



(9.9
)


(292.7
)


(304.6
)Interest expense, net


15.1



15.2



16.0



15.2



61.5Loss from continuing operations before income tax expense
    (benefit)


(24.1
)


(8.2
)


(25.9
)


(307.9
)


(366.1
)Income tax expense (benefit)










(3.6
)


0.2



(3.4
)Loss from continuing operations


(24.1
)


(8.2
)


(22.3
)


(308.1
)


(362.7
)Earnings (loss) from discontinued operations, net of income tax
    (benefit)


(0.2
)


(3.2
)


4.3



0.5



1.4Net loss

$
(24.3
)

$
(11.4
)

$
(18.0
)

$
(307.6
)

$
(361.3
)Net loss attributable to common stockholders:Net loss

$
(24.3
)

$
(11.4
)

$
(18.0
)

$
(307.6
)

$
(361.3
)Accretion


(3.7
)


(3.8
)


(4.0
)


(4.1
)


(15.6
)Net loss attributable to common stockholders

$
(28.0
)

$
(15.2
)

$
(22.0
)

$
(311.7
)

$
(376.9
)Basic and diluted net loss per common share:Net loss attributable to common stockholders from continuing
    operations(4)

$
(0.86
)

$
(0.37
)

$
(0.81
)

$
(9.67
)

$
(11.71
)Net earnings (loss) attributable to common stockholders from
    discontinued operations(4)


(0.01
)


(0.10
)


0.13



0.02



0.04Net loss attributable to common stockholders(4)

$
(0.87
)

$
(0.47
)

$
(0.68
)

$
(9.65
)

$
(11.67
)Basic and diluted weighted-average common shares outstanding


32.2



32.3



32.3



32.3



32.3   77




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
  March 31,


June 30,


Sept. 30,


Dec. 31,


Total2006(1)


2006(1)


2006(1)


2006(1)


2006(In millions, except per share data)Income Statement Data:Net sales

$
294.9


$
316.7


$
307.6


$
289.1


$
1,208.3Cost of sales


287.4



303.7



297.6



285.2



1,173.9Gross profit


7.5



13.0



10.0



3.9



34.4Selling, general and administrative expenses


12.1



11.1



12.3



12.5



48.0Provision for uncollectible accounts


0.1











0.1



0.2Other expense, net(3)


6.1



1.1



35.2



21.1



63.5Operating income (loss)


(10.8
)


0.8



(37.5
)


(29.8
)


(77.3
)Interest expense, net


12.5



13.7



15.7



15.3



57.2Loss from continuing operations before income tax benefit


(23.3
)


(12.9
)


(53.2
)


(45.1
)


(134.5
)Income tax benefit


(7.9
)


(4.5
)


(18.9
)


(6.9
)


(38.2
)Loss from continuing operations


(15.4
)


(8.4
)


(34.3
)


(38.2
)


(96.3
)Loss from discontinued operations, net of income tax (benefit)


(0.6
)


(3.3
)


(1.3
)


(10.9
)


(16.1
)Net loss

$
(16.0
)

$
(11.7
)

$
(35.6
)

$
(49.1
)

$
(112.4
)Net loss attributable to common stockholders:Net loss

$
(16.0
)

$
(11.7
)

$
(35.6
)

$
(49.1
)

$
(112.4
)Accretion


(3.4
)


(3.6
)


(3.6
)


(3.8
)


(14.4
)Net loss attributable to common stockholders

$
(19.4
)

$
(15.3
)

$
(39.2
)

$
(52.9
)

$
(126.8
)Basic and diluted net loss per common share:Net loss attributable to common stockholders from continuing
    operations(4)

$
(0.59
)

$
(0.38
)

$
(1.19
)

$
(1.32
)

$
(3.47
)Net earnings (loss) attributable to common stockholders from
    discontinued operations(4)


(0.02
)


(0.10
)


(0.04
)


(0.34
)


(0.50
)Net loss attributable to common stockholders(4)

$
(0.61
)

$
(0.48
)

$
(1.23
)

$
(1.66
)

$
(3.97
)Basic and diluted weighted-average common shares outstanding


31.9



31.9



31.9



31.9



31.9     (1)
    
    Certain amounts have been revised to reflect discontinued
    operations. For additional information on discontinued
    operations, see Note 7.(2)
    
    Quarterly net earnings (loss) include restructuring charges. For
    additional information on restructuring charges, see Note 8. 78




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
   (3)
    
    Other (income) expense, net consisted of the following pretax
    amounts for the periods indicated:  March 31,


June 30,


Sept. 30,


Dec. 31,


Total2007


2007


2007


2007


2007(In millions)Hurricane Katrina (proceeds) costs, net
    (See Note 6)

$
0.2


$
(6.1
)

$



$
(10.0
)

$
(15.9
)Johnsonville fibers closure costs, net
    (See Note 4)


(1.0
)


(1.1
)


(1.0
)






(3.1
)Actuarial gains for defined benefit plans
    (See Notes 2 and 12)














(0.1
)


(0.1
)Legal and settlement costs


(1.9
)














(1.9
)Gain on sale of assets






(1.4
)










(1.4
)Costs (proceeds) relating to anti-dumping activities, net






0.1



(0.1
)


(1.0
)


(1.0
)Other










(0.5
)


(0.1
)


(0.6
)$
(2.7
)

$
(8.5
)

$
(1.6
)

$
(11.2
)

$
(24.0
)   March 31,


June 30,


Sept. 30,


Dec. 31,


Total2006


2006


2006


2006


2006(In millions)Johnsonville fibers closure costs (See Note 4)

$



$



$
34.1


$
(0.8
)

$
33.3Goodwill impairment














33.4



33.4Hurricane Katrina costs, net (See Note 6)


5.7



1.4



0.9



(6.6
)


1.4Actuarial gains for defined benefit plans (See Notes 2 and
    12)














(2.6
)


(2.6
)Costs (proceeds) relating to anti-dumping activities, net


0.4



(0.3
)


0.2



(2.3
)


(2.0
)$
6.1


$
1.1


$
35.2


$
21.1


$
63.5   (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. 79




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
   19.
    SUBSEQUENT
    EVENT                 No. 08-10595 debtors-in-possession
    debtor-in-possession
     80




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
    360-day
     Minimum CumulativeApplicable Month

EBITDAMarch 2008

$
2.1 millionApril 2008

$
5.61 millionMay 2008

$
10.37 millionJune 2008

$
15.81 millionJuly 2008

$
19.635 millionAugust 2008

$
22.865 millionSeptember 2008

$
23.8 millionOctober 2008

$
27.455 millionNovember 2008

$
28.56 millionDecember 2008

$
30.855 millionJanuary 2009

$
31.5 million    81




---



##### Table of Contents



Notes to
    Consolidated Financial Statements 
    (Continued)
   82




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                    83




---



##### Table of Contents



SCHEDULE II
  VALUATION
    AND QUALIFYING ACCOUNTS
 Years
    Ended December 31, 2007, 2006 and 2005
  Balance at


Charged toBeginning of


Costs and








Balance atDescription

Year


Expenses


Other


Deductions


End of Year(In millions)Allowance for doubtful accounts Receivable:Year ended December 31, 2007

$
1.9


$
1.4


$



$
0.2
(b)

$
3.1Year ended December 31, 2006(a)

$
1.8


$
0.3


$
0.2


$
0.4
(b)

$
1.9Year ended December 31, 2005(a)

$
2.2


$
0.5


$
0.1


$
1.0
(b)

$
1.8     (a)
    
    Revised to reflect discontinued operations. For additional
    information on discontinued operations, see Note 7 to the
    Consolidated Financial Statements.(b)
    
    Accounts written off and reduction of allowance. 84




---



##### 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. Rules 13a-15(e) 15d-15(e)
  Evaluation of Internal Control over Financial Reporting. Rules 13a-15(f) 15d-15(f)
            Changes
    in Internal Control
     
  Item 9B.
    Other
    Information   85




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                    86




---



##### Table of Contents



PART III
 
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K
 
  Item 11.
    Executive
    Compensation  Form 10-K
 
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Form 10-K
 
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Form 10-K
 
  Item 14.
    Principal
    Accounting Fees and Services  Form 10-K
  PART IV
 
  Item 15.
    Exhibits,
    Financial Statement Schedules and Reports on
    Form 8-K  Financial Statements
    Financial Statement Schedules
    Exhibits
  Regulation S-K,
 87




---



##### Table of Contents



ExhibitNumber

Description (The Company refers to Wellman, Inc.
    and the entities it controls.)3
.1

Restated Certificate of Incorporation, dated June 1, 1987
    (Exhibit 3(a)(1) of the Companys
    Form 10-Q
    for the quarter ended June 30, 2000 incorporated by
    reference herein)3
.2

Certificate of Amendment to Restated Certificate of
    Incorporation, dated May 18, 1989 (Exhibit 3(a)(2) of
    the Companys
    Form 10-Q
    for the quarter ended June 30, 2000 incorporated by
    reference herein)3
.3

Certificate of Amendment to Restated Certificate of
    Incorporation, dated May 30, 1990 (Exhibit 3(a)(3) of
    the Companys
    Form 10-Q
    for the quarter ended June 30, 2000 incorporated by
    reference herein)3
.4

Certificate of Amendment to Restated Certificate of
    Incorporation, dated February 16, 1994
    (Exhibit 3(a)(4) of the Companys
    Form 10-Q
    for the quarter ended June 30, 2000 incorporated by
    reference herein)3
.5

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 (Exhibit 3.2
    of the Companys
    Form 10-K
    for the year ended December 31, 2005, incorporated by
    reference herein)4
.1

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
.2

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
.3

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
.4

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)10
.1

Credit Agreement, dated as of February 26, 2008, among
    Wellman, Inc. and the other Borrowers Named Herein, Debtors and
    Debtors in Possession as Borrowers, with Wellman, Inc. as Funds
    Administrator, the Lenders Signatory Hereto From Time to Time,
    as Lenders, and Deutsche Bank Securities, Inc. as Lead Arranger
    and Bookrunner, JP Morgan Chase Bank, National Association, as
    Syndication Agent, General Electric Capital Corporation, Lasalle
    Business Credit, LLC, Wachovia Capital Finance Corporation
    (Central) as Co-Documentation Agents (Exhibit 10.1 of the
    Companys
    Form 8-K
    filed March 4, 2008, incorporated by reference herein)10
.2

Security Agreement, dated as of February 26, 2008, between
    Wellman, Inc. and certain of its subsidiaries and Deutsche Bank
    Trust Company Americas as collateral agent.10
.3

Grant of Security Interest in U.S. Trademarks and Patents
    between Wellman, Inc. and Fiber Industries, Inc. as debtors and
    debtors in possession and Deutsche Bank Trust Company
    Americas as collateral agent.10
.4

Grant of Security Interest in U.S. Copyrights between Wellman,
    Inc. MRF, Inc., and Fiber Industries, Inc. as debtors and
    debtors in possession and Deutsche Bank Trust Company
    Americas as collateral agent.10
.5

Amended and Restated Credit agreement dated as of May 4,
    2006, between Wellman, Inc. and certain of its subsidiaries 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, N.A. as
    syndication agent; and General Electric Capital Corporation,
    LaSalle Business Credit, LLC, and Wachovia Capital Finance as
    co-documentation agents (Exhibit 4.1 of the Companys
    Form 10-Q
    for the quarter ended March 31, 2006, incorporated by
    reference herein)10
.6

First Amendment to the Amended and Restated Credit Agreement,
    dated October 20, 2006, between Wellman, Inc. and Deutsche
    Bank Trust Company Americas as administrative agent and
    collateral agent (Exhibit 99.1 of the Companys
    Form 8-K
    filed on October 26, 2006 incorporated by reference herein)10
.7

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) 88




---



##### Table of Contents



ExhibitNumber

Description (The Company refers to Wellman,
    Inc. and the entities it controls.)10
.8

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)10
.9

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)10
.10

Sale and Purchase Agreement for the sale and purchase of the
    shares of Wellman International Trading and MJR Recycling BV
    (Exhibit 4.10 of the Companys
    Form 8-K
    filed on July 26, 2007, incorporated by reference herein)Executive Compensation Plans and Arrangements10
.11

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
.12

Wellman, Inc. Equity Incentive Plan (Appendix A of the
    Companys Definitive Proxy Statement on Schedule 14A,
    filed on April 19, 2007, incorporated by reference herein)10
.13

Wellman, Inc. Sixth Amended and Restated Management Incentive
    Compensation Plan for the Executive Group10
.14

Wellman, Inc. Life Insurance Plan for Designated Employees
    (Exhibit 10.3 of the Companys
    Form 10-K
    for the year ended December 31, 2005, incorporated by
    reference herein)10
.15

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
.16

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, 2004 (Exhibit 10.5 of the Companys
    Form 10-K
    for the year ended December 31, 2005, incorporated by
    reference herein)10
.17

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
.18

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)10
.19

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
.20

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
.21

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
.22

Employment Agreement dated as of August 8, 2007 between the
    Company and Steven L. Ates (Exhibit 10.12 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2007, incorporated by
    reference herein)10
.23

Employment Agreement dated as of August 8, 2007 between the
    Company and Ian K. Shaw (Exhibit 10.13 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2007, incorporated by
    reference herein)10
.24

Employment Agreement dated as of August 8, 2007 between the
    Company and David R. Styka (Exhibit 10.14 to the
    Companys
    Form 10-Q
    for the quarter ended September 30, 2007, incorporated by
    reference herein)10
.25

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
.26

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
.27

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) 89




---



##### Table of Contents



ExhibitNumber

Description (The Company refers to Wellman,
    Inc. and the entities it controls.)10
.28

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
.29

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
.30

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
.31

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
.32

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)10
.33

Wellman, Inc. 2006 Restricted Stock Grant Agreement, effective
    January 13, 2006, between the Company and Thomas M. Duff
    (Exhibit 10.25 to the Companys
    Form 10-K
    for the year ended December 31, 2005, incorporated by
    reference herein)10
.34

Wellman, Inc. 2006 Restricted Stock Grant Agreement, effective
    January 13, 2006, between the Company and Keith R. Phillips
    (Exhibit 10.26 to the Companys
    Form 10-K
    for the year ended December 31, 2005, incorporated by
    reference herein)10
.35

Wellman, Inc. 2006 Restricted Stock Grant Agreement, effective
    January 13, 2006, between the Company and Joseph C. Tucker
    (Exhibit 10.27 to the Companys
    Form 10-K
    for the year ended December 31, 2005, incorporated by
    reference herein)10
.36

Wellman, Inc. 2006 Restricted Stock Grant Agreement, effective
    January 13, 2006, between the Company and Mark J. Ruday
    (Exhibit 10.30 to the Companys
    Form 10-K
    for the year ended December 31, 2005, incorporated by
    reference herein)10
.37

Wellman, Inc. 2007 Restricted Stock Grant Agreement, effective
    April 2, 2007, between the Company and Steven L. Ates
    (Exhibit 10.1 to the Companys
    Form 10-Q
    for the quarter ended March 31, 2007, incorporated by
    reference herein)10
.38

Wellman, Inc. 2007 Restricted Stock Grant Agreement, effective
    April 2, 2007, between the Company and Mark J. Ruday
    (Exhibit 10.2 to the Companys
    Form 10-Q
    for the quarter ended March 31, 2007, incorporated by
    reference herein)10
.39

Wellman, Inc. 2007 Restricted Stock Grant Agreement, effective
    April 2, 2007, between the Company and Ian K. Shaw
    (Exhibit 10.3 to the Companys
    Form 10-Q
    for the quarter ended March 31, 2007, incorporated by
    reference herein)10
.40

Wellman, Inc. 2007 Restricted Stock Grant Agreement, effective
    April 2, 2007, between the Company and David R. Styka
    (Exhibit 10.4 to the Companys
    Form 10-Q
    for the quarter ended March 31, 2007, incorporated by
    reference herein)Other Material Agreements10
.41

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 Independent Registered Accounting Firm31
.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  90




---



##### 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/  David
    R. StykaDavid
    R. Styka

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

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  91