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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

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

For the transition period from __________ to __________

COMMISSION FILE NUMBER 0-7475

WAUSAU-MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)

1244 KRONENWETTER DRIVE WISCONSIN
MOSINEE, WISCONSIN 54455 (State of incorporation)
(Address of principal executive office) 39-0690900
(I.R.S. Employer Identification
Number)

Registrant's telephone number, including area code: 715-693-4470

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
COMMON STOCK, NO PAR VALUE NEW YORK STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No ___

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

As of February 21, 2002, the aggregate market value of the common stock
shares held by non-affiliates was approximately $516,191,854.

The number of common shares outstanding at February 21, 2002 was
51,511,091.

DOCUMENTS INCORPORATED BY REFERENCE
PROXY STATEMENT FOR USE IN CONNECTION WITH 2002 ANNUAL MEETING OF SHAREHOLDERS
(TO THE EXTENT NOTED HEREIN): PART III

TABLE OF CONTENTS

PAGE

PART I

Item 1. Business 1
Item 2. Properties 11
Item 3. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security Holders 13

PART II

Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 14
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16

Item 7A. Quantitative and Qualitative Disclosure About Market
Risk 22
Item 8. Financial Statements and Supplementary Data 23
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 51

PART III

Item 10. Directors and Executive Officers of the Registrant 52

Item 11. Executive Compensation 52
Item 12. Security Ownership of Certain Beneficial Owners and
Management 52
Item 13. Certain Relationships and Related Transactions 52

PART IV

Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 53
i

PART I

ITEM 1. BUSINESS.

GENERAL

The Company was incorporated in Wisconsin on June 1, 1899, under the name of
Wausau Paper Mills Company ("Wausau"). On December 17, 1997, Wausau completed
a merger with Mosinee Paper Corporation ("Mosinee") in which Mosinee became a
wholly-owned subsidiary of Wausau. Simultaneous with the consummation of the
merger, Wausau changed its name to Wausau-Mosinee Paper Corporation
(hereinafter referred to as the "Company").

The Company manufactures, converts, and sells paper and paper products within
three principal operating groups: the Printing & Writing Group, the Specialty
Paper Group and the Towel & Tissue Group. Its principal office is located in

Mosinee, Wisconsin. At December 31, 2001, the Company had approximately 3,200
employees at ten operating facilities located in six states.

This report contains certain of management's expectations and other forward-
looking information regarding the Company. See the subheading "Cautionary
Statement Regarding Forward-Looking Statements" in this Item 1.

FINANCIAL INFORMATION ABOUT SEGMENTS

Information relating to the Company's sales, a measure of operating profit or
loss, and total assets by segment is set forth in Note 13 of "Notes to
Consolidated Financial Statements."

NARRATIVE DESCRIPTION OF BUSINESS

The Company competes in different markets within the paper industry. Each of
its operating groups serves distinct market niches. The various markets for
the products of the Company are highly competitive, with competition based on
service, quality and price.

The Company's ten operating facilities are organized into the three operating
groups as described below.

PRINTING & WRITING GROUP

The Printing & Writing Group produces and converts two lines of paper products
in five facilities.

At facilities in Appleton and Brokaw, Wisconsin and Groveton, New Hampshire,
the Group manufactures and converts a broad line of premium printing, writing
and imaging papers in various weights, colors, sizes and finishes. Over 60
percent of the fine printing and writing papers produced are colored papers.
Distribution warehouses are maintained in Appleton and Brokaw, Wisconsin;
Groveton, New Hampshire; Dallas, Texas and Los Angeles, California.

Under the Wausau Papers (reg-trade-mark) label, products are marketed under a
variety of brands, including Astrobrights (reg-trade-mark), Royal and
Professional Series (reg-trade-mark) products. These papers are used for
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printed documents such as annual reports, resumes, invitations, and greeting
cards. Over 70 percent of Wausau Papers' products are sold in sheet form to
paper distributors, who sell to commercial printers, in-plant print shops,
quick printers, and copy centers. Products are also sold to office supply
stores to reach small- and home-office customers and to converters that serve
the greeting card and announcement industry. The Group's fine printing and
writing sales are estimated to be less than 3% of the total uncoated free-
sheet market.

Competition in printing and writing grades comes from specialty divisions of
major integrated paper companies as well as smaller, privately held non-
integrated companies. The Company estimates that the number of principal
competitors in the printing and writing grade papers portion of uncoated free-
sheet market is approximately 14. Competitors include International Paper
Corporation, Domtar, Inc., and Fraser Paper, Inc.

On January 3, 2000, the Company sold the Printing & Writing Group's school

papers business for approximately $6.5 million, although it retained the
Appleton, Wisconsin, converting facility. The sale primarily consisted of
inventory and trademark rights with the net proceeds approximating the net
book value of assets sold. The total net sales in the school papers business
for the year ended December 31, 1999, was approximately $21.2 million. The
Appleton converting facility supports the finishing and distribution needs of
the Printing & Writing Group to minimize the outsourcing of converting
requirements for the Brokaw and Groveton mills. This facility utilizes
contract converting volume to fill any remaining capacity.

The Mosinee Converted Products facilities operating in Columbus, Wisconsin,
and Jackson, Mississippi, produce moisture-barrier laminated roll wrap used to
protect rolls of paper during storage and shipment, and related specialty
finishing and packaging products such as custom coating, laminating and
converting. These products are sold to manufacturers and converters who serve
multiple industries including paper, industrial packaging and corrugated
containers. Mosinee Converted Products' moisture-barrier laminated roll wrap
sales are estimated to be approximately 35 percent of the North American roll
wrap market.

Primary competition in roll wrap comes from approximately 7 other wax and poly
laminators and includes Laminated Papers, Inc., Cascades, Inc., Fortifiber,
Inc., Ludlow Corporation, and Deluxe Paper Products, Inc.

SPECIALTY PAPER GROUP

The Specialty Paper Group's three facilities produce a wide variety of
technical specialty papers. The technical specialty papers markets are diverse
and highly fragmented. The Group's market position varies by product, but it
is a leading producer of liner papers used for "peel-and-stick" pressure
sensitive labels and the largest producer of unsaturated paper masking tape
base.

The Company closed The Sorg Paper Company ("Sorg") mill in Middletown, Ohio on
May 15, 2000. Net sales of Sorg in 2000 and 1999 were $27.8 million and $48.9
million respectively with operating losses of $23.0 million, including
restructuring charge of $22.3 million (2000) and $2.9 million (1999). The
Company has been unsuccessful in finding a buyer for the Sorg business.
The Sorg fixed assets including the buildings, equipment and spare
parts not usable by the Company's other mills continue to be actively marketed
to interested parties. With the closing, the Company no longer operates in
the decorative laminate and deep color tissue markets of the industry.

The Rhinelander mill located in Rhinelander, Wisconsin, and the Otis mill
located in Jay, Maine, together are one of the nation's largest manufacturers
of supercalendered backing papers that are used as a base from which "peel-
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and-stick" pressure sensitive labels are dispensed. These highly engineered
backing papers are designed for high-speed labeling machines, which apply
labels on consumer products such as shampoo and deodorant. These facilities
also manufacture specialty papers for a broad range of food, medical, and
industrial applications, including grease-resistant protective barrier paper
for pet food and microwave popcorn, and lightweight paper for sterilized
medical packaging. These products are sold directly to manufacturers and
converters, mainly in the U.S., that serve a host of industries including
consumer products, food service, pet food and medical packaging.

Primary competition comes from approximately 7 paper producing companies
including International Paper Corporation, Fraser Paper, Inc., UPM Kymmene
Corp., EB Eddy Corp., Forest Products, Ltd., and SAPPI, Ltd.
The Mosinee mill in Mosinee, Wisconsin, is North America's largest producer of
unsaturated paper masking tape base used in the production of masking tape and
manufactures a wide range of highly engineered paper products. These products
include interleaver paper used in steel processing and to protect polished
steel after production, coating and laminating base papers used in composite
can labeling and liner applications and high-performance industrial papers
chemically treated for wet strength, flame retardancy, anti-static, corrosion,
or grease resistance for various industries such as automotive, housing, and
food processing. These products are sold directly to manufacturers and
converters, mainly in the U.S.

Competition in several grades of paper made from the Mosinee mill's natural
kraft pulp comes from approximately 9 other fully-integrated, large paper
companies including International Paper Corporation, Longview Fibre
Corporation, and Port Townsend Paper Corporation. Competition in grades of
paper made from market pulp comes from approximately 6 specialty paper mills
including Mead Paper Company and Ivex Corporation.

TOWEL & TISSUE GROUP

The Towel & Tissue Group produces a broad line of towel and tissue products
which are marketed along with soap and dispensing system products for the
industrial and commercial "away-from-home" market. Although the Group's net
sales grew approximately 18% from 1999, it is one of the smaller competitors
in this market with market share estimated at less than 7% of the total
"away-from-home" market.

Under the Bay West name, towel and tissue products made primarily from
recycled material are marketed under a number of brands including
DublSoft(reg-trade-mark), EcoSoft(trademark) and Dubl-Tough(reg-trade-mark).
These products include washroom roll and folded towels, tissue products, a
variety of towel, tissue, and soap dispensers, windshield folded towels,
industrial wipers, dairy towels, household roll towels, and other premium
towel and tissue products that are sold to paper and sanitary supply
distributors in North America that serve restaurants, theme parks, hospitals,
hotels, office buildings, factories, and other commercial and industrial
locations. The Group's towel and tissue mill is located in Middletown, Ohio
and its converting facility and main distribution warehouse is located in
Harrodsburg, Kentucky. In addition, the Company maintains a distribution
warehouse in Los Angeles, California.

Competition comes from major integrated paper companies which service consumer
and food service markets as well as the industrial and institutional markets
concentrated on by Bay West. Major competitors include Georgia-Pacific
Corporation, Kimberly Clark Corporation, and SCA Hygiene Products.
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EXPORT SALES

In addition to the three operating groups, Wausau-Mosinee International, Inc.,
a wholly-owned subsidiary of the Company, is the commissioned sales agent for
the export sales of the Company. Wausau-Mosinee International, Inc. has
elected to be treated as a foreign sales corporation for federal income tax
purposes. Through 2001, the Company obtained certain U.S. income tax benefits
from the operation of the foreign sales corporation. The status of foreign

sales corporation after 2001 is unclear. In response to a World Trade
Organization ("WTO") Appellate Body decision that the tax treatment accorded
such corporations constituted a prohibited export subsidy, the United States
enacted legislation to repeal the foreign sales corporation tax provisions,
subject to transition rules which expired on December 31, 2001, and enacted
replacement legislation in the form of the Extraterritorial Income Exclusion
Act of 2000. The European Union objected to this new legislation, and in
November, 2001, asked the WTO to authorize trade sanctions on a list of goods
produced in the United States. In January, 2002, the Appellate Body of the
WTO held that the United States had failed to withdraw the prohibited export
subsidy. The United States is currently reviewing this issue. The Company
cannot predict what impact, if any, this issue will have on the Company's
future earnings pending final resolution, although foreign sales represent
less than 7% of the Company's net sales.

RAW MATERIALS

Pulp is the basic raw material for paper production and represents
approximately one-half of the cost of making paper. The Mosinee and Brokaw
mills produce approximately 85% and 50%, respectively, of their own pulp
needs. Timber required for operation of the Company's pulp mills is readily
available and is purchased from approximately 200 independent loggers at
market prices under contracts that typically provide for the delivery of a
specified amount of wood and are entered into on a quarterly basis. The
balance of the Company's pulp needs (nearly 400,000 metric tons annually) is
purchased on the open market, principally from pulp mills throughout the
United States and Canada. The Company has purchased, and may, from time to
time in the future, purchase pulp futures contracts as a hedge against
significant future increases in the market price of pulp.

Recycled, de-inked fiber with a high content of post-consumer waste is
purchased from domestic suppliers as part of the fiber requirements for the
Printing & Writing Group's recycled products. Recycled fiber is in adequate
supply and readily obtainable.

The Towel & Tissue Group fulfills substantially all of its de-inked fiber
needs from 100% post-consumer waste which is readily available from domestic
suppliers. Approximately 135,000 standard tons of wastepaper is consumed
annually. In addition, approximately 30% of the Towel & Tissue Group's parent
roll supply needs are purchased from outside sources at current market prices.

Various chemicals are used in the pulping and papermaking processes. These
industrial chemicals are available from a number of suppliers and are
purchased at current market prices.

ENERGY

The Company's paper mills require large amounts of electrical and steam energy
which are adequately supplied by public utilities or generated at Company
operated facilities. The Company generates approximately 30% of its
electrical power needs from spent pulping liquor, fuel oil, coal, wood chips,
fibercake, natural gas and hydropower. Natural gas delivery contracts
typically cover deliveries for one to two years and prices are based on
published indices. Coal is generally purchased under short-term contracts at
fixed prices. Fuel oil is not a significant energy source and is purchased
-4-

under spot contracts at spot prices as needed. Spent pulping liquor, wood
chips and fibercake are byproducts of mill operations. The Company continues
to explore alternative power sources as an ongoing business process and has
entered into an operating lease for a co-generation electrical power facility
for its Groveton mill. The leased facility was completed and operational in
November, 2001.

Under the terms of a natural gas transportation agreement with the Portland
Natural Gas Transmission System, the Company is committed to the
transportation of a fixed volume of natural gas until November, 2019. The
contract is only for the transportation of natural gas from the Company's
natural gas suppliers to the Company's mill in New Hampshire. The Company is
not required to buy or sell minimum gas volumes under the agreement. The
Company is required to pay a minimum transportation fee of approximately $1.0
million annually per the agreement; however, the Company's natural gas
requirements exceed the level required to be transported.

PATENTS AND TRADEMARKS

The Company develops and files trademarks and patents, as appropriate.
Trademarks include Wausau Papers(reg-trade-mark),
AstroBrights(reg-trade-mark), Exact(reg-trade-mark), Bay West(reg-trade-mark),
Ecosoft(trademark), DublSoft(reg-trade-mark), and Wave 'n Dry(reg-trade-mark),
among others. The Company considers its trademarks and patents, in the
aggregate, to be material to its business, although the Company believes the
loss of any one such mark or patent right would not have a material adverse
effect on its business. The Company does not own or hold material licenses,
franchises or concessions.

SEASONAL NATURE OF BUSINESS

The markets for some of the grades of paper produced by the Company tend to be
somewhat seasonal. However, the marketing seasons for these grades are not
necessarily the same. Overall, the Company generally experiences lower sales
in the fourth quarter, in comparison to the rest of the year, primarily due to
downtime typically taken by its converting customers during the holiday season
and a general slowing of business activity for many industrial users of
Company products at that time of year.

WORKING CAPITAL

As is customary in the paper industry, the Company carries adequate amounts of
raw materials and finished goods inventory to facilitate the manufacture and
rapid delivery of paper products to its customers. The Company will
occasionally carry higher than normal quantities of pulp in anticipation of
rising pulp prices.

MAJOR CUSTOMERS

A substantial portion of the Company's accounts receivable is with customers
in various paper converting, paper merchant or distribution businesses. One
customer accounted for approximately 10.6% of consolidated net sales during
2001. The loss of this customer would have an adverse effect on the Company's
business, but the Company believes such effect would be of relatively short
duration.

BACKLOG

Company-wide order backlogs increased to 27,500 tons representing $30.5
million in sales as of December 31, 2001. This compares to 22,000 tons, or
$27.5 million in sales as of December 31, 2000 and 34,000 tons, or
-5-
$39.7 million in sales at December 31, 1999. The 2001 order backlog
improvement over 2000 does not necessarily indicate strengthening business
conditions as a significant portion of orders are shipped out of inventory
promptly upon order receipt. This portion of the business is not reflected in
the Company's backlog totals. The entire backlog at December 31, 2001 is
expected to be shipped during fiscal 2002.

RESEARCH AND DEVELOPMENT

Expenditures for product development in the last three fiscal years were:


(DOLLARS IN THOUSANDS)

Specialty Paper Printing & Writing
YEAR TOTAL GROUP GROUP

2001 $ 4,058 $ 3,538 $ 520
2000 3,968 3,446 522
1999 2,293 1,803 490

ENVIRONMENT

The Company is subject to extensive regulation by various federal, state,
provincial, and local agencies concerning compliance with environmental
control statutes and regulations. These regulations impose limitations,
including effluent and emission limitations, on the discharge of materials
into the environment, as well as require the Company to obtain and operate in
compliance with conditions of permits and other governmental authorizations.
Future regulations could materially increase the Company's capital
requirements and certain operating expenses in future years.

The Company has a strong commitment to protecting the environment. Like its
competitors in the paper industry, the Company faces increasing capital
investments and operating costs to comply with expanding and more stringent
environmental regulations. The Company estimates that its capital
expenditures for environmental purposes will approximate $1.2 million in 2002.

The United States Environmental Protection Agency ("EPA") has promulgated
rules under the Clean Water Act and the Clean Air Act which impose new air and
water quality standards for pulp and paper mills (the "Cluster Rules"). As
required, the Company made the necessary changes to the Brokaw and Mosinee
mills and was in compliance with the Cluster Rules by the required April 15,
2001 deadline. The Company's response included the adoption of total chlorine
free technology ("TCF") pulp bleaching operations at the Brokaw, Wisconsin
mill. The TCF process became effective in November 2000. Company-wide
expenditures to comply with the Cluster Rule guidelines and, at the same time,
provide other production efficiencies was $19.1 million. These expenditures
were incurred in 2001, 2000 and 1999. No additional capital spending is
expected to be spent related to these regulations.

Compliance with the EPA's permitting process involves the consolidation of all
Company air discharge permits and is expected to involve an additional $1
million in capital expenditures. This cost is expected to be incurred in 2003
or 2004.

In 1986, the Wisconsin Department of Natural Resources ("DNR") notified a
subsidiary of the Company that it may be a potentially responsible party
("PRP") for the Gorski landfill in Mosinee, Wisconsin, and nominated the
landfill to the Environmental Protection Agency's ("EPA") National Priorities
List. No action was taken by either the DNR or the EPA until June 2000, when
the DNR requested certain parties who had disposed of waste at the site to
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form a PRP group to cooperatively investigate the environmental contamination
at the site. In October 2001, the Company entered into an agreement with
certain other PRPs to fund a study of the landfill to determine possible
remediation strategies. The Company contributed approximately $31,000 to this
study. The DNR is evaluating the proposed study and is expected to approve or
recommend modifications to the proposed study in 2002. As of year-end, the
Company estimated that the cost of remediation of the entire site will be
approximately $3 million, based on the remediation method the Company's
consultants believe to be the most likely to be used. This estimate is
preliminary and is based on information now known to the Company. Actual
costs of remediation of the site could be materially different and no
timetable for the actual remediation work has yet been developed. The
Company's share of the cost of such remediation cannot be determined with
certainty at this time, but based on the estimated costs at year-end and the
number and nature of other potential responsible parties, the Company is of
the opinion that such costs will not have a material adverse effect on the
operations, financial condition, or liquidity of the Company.

The Company believes that capital expenditures associated with compliance with
environmental regulations will not have a material adverse effect on its
competitive position, consolidated financial condition, liquidity, or
earnings.

EMPLOYEES

The Company had approximately 3,200 employees at the end of 2001. Most hourly
mill employees are covered under collective bargaining agreements. New labor
agreements with the Paper, Allied-Industrial, Chemical & Energy Workers
International Union were negotiated in 2001. Union employees at the Brokaw
mill signed a five-year agreement. The Sorg mill contract, still covering
employees with Mosinee Holdings, Inc., was extended until April 30, 2003, when
the Bay West Ohio mill contract expires. These employees will then be part of
the Bay West Ohio agreement. Labor agreements will expire in other facilities
in 2002, 2003, 2004, and 2005. The Company expects that new multi-year
contracts will be negotiated at competitive rates. The Company maintains good
labor relations in all facilities.

EXECUTIVE OFFICERS OF THE COMPANY

The following information relates to executive officers of the Company as of
March 19, 2002. Unless otherwise specified, current positions listed for an
executive officer have been held for a minimum of five years.

SAN W. ORR, JR., 60
Chairman of the Board of the Company and Advisor, Estate of A. P. Woodson and
family; Chief Executive Officer of the Company (2000; 1994-1995); formerly
Chairman of the Board (1987-1997) and a director (1972-1997) of Mosinee Paper
Corporation; also a director of Marshall & Ilsley Corporation.

RICHARD L. RADT, 70
Vice Chairman of the Board of the Company. Previously, Chairman (1987-1988),
and President and Chief Executive Officer and a director (1977-1987) of the
Company. Also Vice Chairman (1993-1997), and President and Chief Executive
Officer (1988-1993) of Mosinee Paper Corporation.
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THOMAS J. HOWATT, 52
President and Chief Executive Officer of the Company since August, 2000.
Previously, Senior Vice President, Printing & Writing Group (1997-2000), Vice
President and General Manager, Printing & Writing Division (1994-1997), Vice
President and General Manager, Wausau Papers of New Hampshire (1993-1994),
Vice President Operations, Brokaw Division (1990-1993), and prior thereto,
Vice President, Administration, Brokaw Division.

STUART R. CARLSON, 55
Executive Vice President, Administration since August, 2000. Previously,
Senior Vice President, Specialty Paper Group (1997-2000), and Senior Vice
President -Administration (1993-1996), and Vice President Human Resources
(1991-1993) of Mosinee Paper Corporation. Also Director of Human Resources,
Georgia Pacific, Inc (1990-1991) and Corporate Director of Industrial
Relations, Great Northern Nekoosa Corporation (1989-1990).

SCOTT P. DOESCHER, 42
Senior Vice President, Finance, Secretary and Treasurer since May 2001.
Previously, Vice President, Finance, Printing & Writing Group (1998-2001),
Director of Finance, Printing & Writing Division (1992-1998) and Corporate
Director Financial Analysis and Internal Audit and Assistant
Secretary/Treasurer (1988-1992).

JOHN J. SCHIEVELBEIN, 59
Senior Vice President, Printing & Writing Group since October, 2000.
Previously, Vice
President and General Manager of Mosinee Converted Products (1990-2000) and
Manager of Market Development, Mosinee Pulp and Paper Division (1986-1990).

ALBERT K. DAVIS, 54
Senior Vice President, Specialty Paper Group since October, 2000. Previously,
Vice President of Operations & Site Manager (1998 - 2000), Vice President of
Operations (1996-1998), Vice President of Engineering (1990 - 1996),
Rhinelander Paper Company, Inc.

DAVID L. CANAVERA, 52
Senior Vice President, Towel & Tissue Group since December, 1997. Previously,
Senior Vice President, Towel & Tissue (1996-1997) of Mosinee Paper
Corporation, and Vice President and General Manager (1994-1996) and Vice
President Resident Manager (1991-1994), Bay West Paper, Harrodsburg.

DENNIS M. URBANEK, 57
Senior Vice President, Engineering and Environmental Services since December,
1997. Previously, Vice President, Engineering and Environmental Services
(1996-1997) of Mosinee Paper Corporation, Vice President and General Manager
of Mosinee's Pulp & Paper Division (1992-1996), and Vice President and General
Manager, Sorg Paper Company (1990-1992).

This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). In
addition, certain statements in future filings by the Company with the
Securities and Exchange Commission, reports to shareholders, press releases,
and other oral and written statements made by or with the approval of the
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Company which are not statements of historical fact will constitute forward-
looking statements within the meaning of the Reform Act.

Forward-looking statements of the Company may be identified by, among other
things, expressions of the Company's or Company officers' beliefs or
expectations that certain events may occur or are anticipated, and projections
or statements of expectations with respect to (i) various aspects of the
Company's business (including, but not limited to, net income, the
availability or price of raw materials, and customer demand for Company
products), (ii) the Company's plans or intentions, (iii) the Company's stock
performance, (iv) the industry within which the Company operates, (v) the
economy, and (vi) any other expressions of similar import or covering other
matters relating to the Company, its business, and its operations. In making
forward-looking statements within the meaning of the Reform Act, the Company
undertakes no obligation to publicly update or revise any such statement.

Forward-looking statements are not guarantees of performance. Forward-looking
statements of the Company are based on information available to the Company as
of the date of such statements and reflect the Company's expectations as of
such date, but are subject to risks and uncertainties that may cause actual
results to vary materially. Many of the factors that will determine these
results are beyond the Company's ability to control or predict. Shareholders
and others are cautioned not to put undue reliance on any forward-looking
statements.

In addition to specific factors which may be described in connection with any
of the Company's forward-looking statements, factors which could cause actual
results to differ materially include, but are not limited to, the following:

Increased competition from either domestic or foreign
paper producers or providers of alternatives to the Company's
products, including increases in competitive production capacity
resulting in sales declines from reduced shipment volume and /or
lower net selling prices in order to maintain shipment volume.

Changes in customer demand for the Company's products
due to overall economic activity affecting the rate of
consumption of the Company's products, growth rates of the end
markets for the Company's products, technological or consumer
preference changes, or acceptance of the Company's products by
the markets served by the Company.

Changes in the price of raw materials, in particular,
pulp, wastepaper and linerboard. A substantial portion of the
Company's raw materials, including approximately two-thirds of
the Company's pulp needs, are purchased on the open market and
price changes could have a significant impact on the Company's
costs. Fiber represents a substantial portion of the cost of
making paper and significant price increases for fiber could
materially affect the Company's financial condition. Raw
material prices will change based on supply and demand on a
worldwide spectrum. Pulp price changes can occur due to worldwide
consumption levels of pulp, pulp capacity additions, expansions
or curtailments of the supply of pulp, inventory building or
depletion at pulp consumer levels which affect short-term demand,
and pulp producer cost changes related to wood availability,
environmental issues, or other variables.

Changes in energy prices or availability.
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Unforeseen or recurring operational problems at any of
the Company's facilities causing significant lost production
and/or cost increases.

Significant changes to the Company's strategic plans
such as a major acquisition or expansion, the disposition of
assets or product lines, the failure to successfully execute
major capital projects or other strategic plans, or the inability
to successfully integrate an acquisition.

Changes in laws or regulations which affect the
Company. The paper industry is subject to stringent
environmental laws and regulations and any changes required to
comply with such laws or regulations may increase the Company's
capital expenditures and operating costs.
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ITEM 2. PROPERTIES

The Company's headquarters are located in Mosinee, Wisconsin. Executive
officers and corporate staff who perform corporate accounting, financial and
human resource services are located in the corporate headquarters, as are
certain operating group personnel. The Company's operating facilities consist
of the following:



Number of
Paper Practical 2001
FACILITY PRODUCT MACHINES CAPACITY*(TONS) ACTUAL(TONS)

Printing & Writing
GROUP
Brokaw, WI Paper 4 177,000 170,000
(Wausau Papers) Pulp 100,000 100,000

Groveton, NH Paper 2 115,000 115,000
(Wausau Papers)

Appleton, WI
(Wausau Papers) Converting N/A 35,000 16,000

Columbus, WI and Laminated/
Jackson, MS Coated Papers N/A 145,000 56,000
(Mosinee Converted
Products)

Specialty Paper
GROUP
Rhinelander, WI Paper 4 148,000 138,000

Otis, ME Paper 2 73,000 72,000

Mosinee, WI Paper 4 114,000 108,000
Pulp 96,000 93,000
Towel&Tissue
GROUP
Middletown, OH Towel 1(towel) 70,000 65,000
Tissue 1(tissue) 35,000 35,000
Deink Pulp 110,000 94,000

Harrodsburg, KY Converted Towel
& Tissue N/A 190,000 146,000

* "Practical capacity" is the amount of product a mill can produce with
existing equipment and workforce and usually approximates maximum, or
theoretical, capacity. At the Company's converting operations it reflects the
approximate maximum amount of product that can be made on existing equipment,
but would require additional days and/or shifts of operation to achieve.

-11-

The Company also maintains warehouse distribution facilities in order to
provide prompt delivery of its products. The facilities are:


Owned or
GROUP LOCATION SQUARE FEET LEASE (EXPIRATION DATE)

Printing & Writing Appleton, WI 36,000 Owned
Groups
Brokaw, WI 174,000 Owned
Dallas, TX 85,000* Leased (April, 2003)

Groveton, NH 80,000 Owned

Los Angeles, CA 65,000* Leased (November, 2003)

Towel & Los Angles, CA 40,000* Leased (November, 2003)
Tissue Group
Harrodsburg, KY 440,620 Owned

* guaranteed space

The Specialty Paper and Towel & Tissue Groups also lease limited space in
various warehouses to facilitate deliveries to customers.

The Company owns approximately 120,000 acres of timberland in the state of
Wisconsin. These timber lands contain an estimated 9.3 million board feet of
saw timber and an estimated 633,995 cords of pulpwood.

ITEM 3. LEGAL PROCEEDINGS

The Company has been named as a potentially responsible party with respect to
a Mosinee, Wisconsin landfill. See the discussion of this matter under the
subheading "-- Environment" in Item 1 of this report.

The Company strives to maintain compliance with applicable environmental
discharge regulations at all times. However, from time to time, the Company's
operating facilities may exceed permitted levels of materials into the
environment or inadvertently discharge other materials. Such discharges may
be caused by equipment malfunction, prevailing environmental conditions, or
other factors. The Company strives to maintain compliance with applicable
environmental discharge regulations at all times. It is the policy of the
Company to report any violation of environmental regulations to the
appropriate environmental authority as soon as it becomes aware of such an
occurrence and to work with such authorities to take appropriate remediatory
or corrective actions.
-12-

In February, 2002, the Company received a waiver from the Internal Revenue
Service for excise tax liabilities which would have otherwise been imposed in
the amount of approximately $1.5 million in connection with certain liquidity
shortfalls resulting from supplemental retirement pavements under two
qualified plans maintained by subsidiaries of the Company. The Pension
Benefit Guaranty Corporation has imposed a penalty of approximately $237,000
in connection with the Company's failure to file notice of such events on a
timely basis. The Company believes its failure was due to reasonable cause
and is seeking a waiver of such penalty.

The Company may be involved from time to time in various other legal and
administrative proceedings or subject to various claims in the normal course
of its business. Although the ultimate disposition of legal proceedings
cannot be predicted with certainty, in the opinion of management, the ultimate
disposition of any threatened or pending matters described in this Item 3,
either individually or on a combined basis, will not have a material adverse
effect on the consolidated financial condition, liquidity, or results of
operations of the Company.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of shareholders during the fourth quarter
of 2001.
-13-
PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

The Company's common stock is traded on the New York Stock Exchange under the
symbol "WMO".

As of the record date of the annual meeting, February 21, 2002, (the "Record
Date") there were approximately 3,400 holders of record of the Company's
common stock. The Company estimates that as of the Record Date there were
approximately 6,900 additional beneficial owners whose shares were held in
street name or in other fiduciary capacities. As of the Record Date, there
were 51,511,091 shares of common stock outstanding.

The following table sets forth the range of high and low closing price
information of the Company's common stock and the dividends declared on the
common stock, for the calendar quarters indicated.



Closing
Market Price Cash Dividend
CALENDAR QUARTER HIGH LOW DECLARED
2001

First Quarter $13.00 $10.44 *
Second Quarter $14.00 $11.59 $.17
Third Quarter $13.58 $8.82 $.085
Fourth Quarter $12.10 $9.70 $.085

2000
First Quarter $14.63 $9.50 *
Second Quarter $13.25 $8.94 $.17
Third Quarter $10.13 $7.75 $.085
Fourth Quarter $12.13 $7.63 $.085

1999
First Quarter $17.94 $14.00 *
Second Quarter $18.25 $12.75 $.16
Third Quarter $17.69 $12.13 $.08
Fourth Quarter $14.13 $10.94 $.08

*Two dividends of .085 per share were declared in the second quarter in 2001
and 2000, and two dividends of $.08 per share were declared in the second
quarter of 1999.

-14- ITEM 6. SELECTED FINANCIAL DATA.


WAUSAU-MOSINEE PAPER CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA

For the year ended December 31,
(ALL DOLLAR AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA) 2001 2000 1999 1998 1997{(1)}
FINANCIAL RESULTS

Net sales{(2)} $ 943,729 $ 990,924 $ 982,735 $ 982,467 $ 968,289
Depreciation, depletion and
amortization 60,948 58,860 55,012 52,207 47,259
Operating profit 30,607 19,224 79,646 72,145 120,828
Interest expense 14,416 15,713 11,823 7,683 8,103
Earnings before provision for
income taxes 15,330 1,138 68,017 65,801 113,589
Net earnings 9,660 718 42,417 40,801 65,398
Cash dividends paid 17,498 17,207 16,233 15,494 13,134
Cash flows from operating activities 103,866 80,254 89,334 117,859 99,724

PER SHARE
Net earnings-basic and diluted $ 0.19 $ 0.01 $ 0.81 $ 0.73 $ 1.13
Cash dividends declared 0.34 0.34 0.32 0.28 0.25
Stockholders' equity 7.09 7.33 7.53 7.12 7.61
Average number of shares outstanding 51,466,000 51,354,000 52,265,000 55,708,000 57,811,000
Price range (low and high closing) $8.82-14.00 $7.63-14.63 $10.94-18.44 $12.25-24.06 $17.55-25.38

FINANCIAL CONDITION
Working capital $ 101,724 $ 138,605 $ 140,822 $ 81,406 $ 126,653
Total assets 892,008 954,494 941,872 904,367 875,637
Long-term debt 192,264 250,465 220,476 127,000 140,500
Stockholders' equity 364,855 376,548 393,760 396,586 440,160
Capital expenditures 29,791 86,896 80,619 77,023 66,062

RATIOS
Percent net earnings to sales 1.0% 0.1% 4.3% 4.2% 6.8%
Percent net earnings to average
stockholders' equity 2.6% 0.2% 10.7% 9.8% 15.8%
Ratio of current assets to
current liabilities 1.8 to 1 2.1 to 1 2.2 to 1 1.8 to 1 2.4 to 1
Percent of long-term debt to
total capital 34.5% 39.9% 35.9% 24.3% 24.2%

(1) As a result of a change in fiscal year from August 31 to December 31
and merger of Wausau Paper Mills Company and Mosinee Paper Corporation
("Mosinee") in December 1997 which was accounted for as pooling of interests,
the financial information has been restated to retroactively combine Mosinee's
financial statements as if the merger had occurred at the beginning of the
earliest period presented.

(2) The Company has adopted EITF 00-10, "Accounting for Shipping and
Handling Fees and Costs." Under its provisions, all shipping and handling
costs were reclassified from Net Sales to Cost of Sales. All comparative
prior year periods presented have been restated to reflect the change.

-15-

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

OPERATIONS REVIEW


NET SALES

(ALL DOLLAR AMOUNTS IN THOUSANDS)
2001 2000 1999

Net sales $943,729 $990,924 $982,735
Percent increase/(decrease) (5%) 1% -

Net sales for the twelve months ended December 31, 2001 were $943.7 million,
4.8% below 2000 net sales of $990.9 million. Net sales in 1999 were $982.7
million. Total shipments in 2001 were 807,000 tons, 1.1% higher than the
798,000 tons shipped the previous year. Shipments in 1999 were 844,000 tons.
Results in 2000 and 1999 include sales and shipments from the Sorg Paper
Company, which was closed in May 2000. Sales and shipments from Sorg totaled
$27.8 million and 20,000 tons in 2000 and $48.3 million and 41,000 tons in
1999. Results in 1999 include sales of $21.2 million and shipments of 22,000
tons from the operation of the school papers business which was sold in early
2000. Shipments in 2001 exceeded prior year for the Printing & Writing Group
and Towel & Tissue Group but fell below 2000 in the Specialty Paper Group due
to the closure of the Sorg Paper Company. Although combined shipments were
higher on a year-over-year basis, an economic recession in 2001 reduced market
demand and, combined with increased competitive pressures, resulted in product
price and sales mix deterioration during the year. For the Company's paper
products, average selling price declined more than 5%, impacting net sales
approximately $54 million in 2001 as compared to 2000. Of the average selling
price decline, actual product price changes account for approximately 40% or
$22 million with mix changes accounting for the remainder of the difference.
Average selling prices declined during 2001 across all three business segments
with the most significant deterioration occurring in the Specialty Paper
Group.

Discussion of market conditions and trends is included in the segment
summaries below. Where published market data is available it is referenced in
the following discussion. Certain markets within which the Company competes
are small and highly fragmented. Where industry data is not available, the
Company's analysis is based on more subjective market indicators such as order
patterns for Company products and discussion with customers regarding overall
industry volumes.

Printing & Writing Group shipments were 345,000 tons in 2001, 2.7% higher than
the 336,000 tons shipped in 2000. Shipments in 1999 were 361,000 tons
including 22,000 tons from the operation of the school papers business, which
was sold in early 2000. Average selling price in 2001 declined approximately
4% year-over-year with product mix deterioration accounting for most of the
decline. Demand for uncoated free sheet papers declined approximately 8% in
2001 as compared to the prior year with market demand for text, cover and
other premium printing papers decreasing an even greater amount. While market
demand decreased in some of the Printing & Writing Group's core markets,
shipments increased in the retail market segment and commodity offset
products. Lower-priced commodity offset shipments replaced higher-priced core

Printing & Writing grades during 2001, resulting in mix deterioration that
accounted for most of the decline in average selling price. Market conditions
for Printing & Writing Group products remained weak as 2002 began.
-16-
Shipments in the Specialty Paper Group totaled 323,000 tons, a decrease of
2.7% compared to prior year shipments of 332,000 tons. Shipments in 2000
included 20,000 tons from the Sorg Paper Company, which was closed in May
2000. Shipments in 1999 were 359,000 tons including 41,000 from the operation
of Sorg. Excluding Sorg Paper Company volume, shipments from ongoing
operations were 323,000 tons in 2001 compared with 312,000 tons in 2000, an
increase of 3.5%. Market demand for the Specialty Paper Group's creped tape
backing paper declined more than 30% in 2001 while demand in other market
categories declined significantly but by lesser amounts. The overall decrease
in demand was driven primarily by weak economic conditions and reduced
activity in the industrial sector. In addition, the Specialty Paper Group lost
position in the pressure sensitive backing paper or release liner market in
2000 and early 2001 due to increased competitive pressures. Some of the market
share lost was recovered late in 2001 through the volume ramp-up of a new High
Performance Liner (HPL). This new highly engineered release liner has superior
performance characteristics as compared to traditional pressure sensitive
backing paper products. Shipments of HPL products, introduced in late 2000,
totaled over 20,000 tons for the year and built to an annualized run-rate in
excess of 30,000 tons by the fourth quarter. Additional market share gains are
expected. Non-core product shipments which include tablet and offset grades,
totaled 50,000 tons in 2001 compared to 8,000 tons in 2000. Non-core products
carry a significantly lower average selling price than traditional core
products. Average selling price declined approximately 9% on a year-over-year
basis with product mix differences accounting for nearly half of the decrease.
Specialty Paper Group markets remained largely unchanged as 2002 began.

The Towel & Tissue Group posted record shipments in 2001 of 139,000 tons, an
increase of 6.9% compared to shipments of 130,000 tons in 2000. Shipments in
1999 were 124,000 tons. Growth of higher margin proprietary products tracked
the growth of overall shipments for the most recent year. The "away-from-home"
segment of the towel and tissue market contracted more than 2% in 2001.
Product mix was comparable in 2001 as compared to 2000 with average selling
price essentially unchanged. Pricing remained very competitive in early 2002
with overall demand in the "away-from-home" towel and tissue market improving
slightly.


GROSS PROFIT ON SALES

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Gross profit on sales $97,314 $104,519 $139,098
Gross profit margin 10% 11% 14%

Gross profit margins decreased in 2001 to $97.3 million or 10.3% of net sales
from $104.5 million or 10.5% in 2000 and $139.1 million or 14.2% in 1999. The
decrease can be traced, in part, to reduced selling prices, product mix
deterioration and increased natural gas costs. Natural gas prices in 2001
increased approximately 13% or more than $3 million as compared to prior year.
Natural gas prices began rising in the second half of 2000, peaking at over
$10 per decatherm in January 2001. Prices declined during the course of the
year, averaging $4 per decatherm over the fourth quarter. Market pulp and

wastepaper prices began to fall in late 2000 and continued their decrease
through 2001. The price of market pulp, the basic raw material used in the
manufacture of paper, decreased approximately $150 per air-dried metric ton or
$53 million in 2001 as compared to 2000. The price of wastepaper, used in the
production of towel and tissue, decreased $47 per standard ton or $6 million
as compared to last year. Other manufacturing cost elements increased in 2001
as compared to 2000 including depreciation, labor and benefit costs. In
comparison to raw material and natural gas costs at the beginning of 2001,
product selling prices were relatively low. This combination led to a
relatively narrow gross profit margin of 6.9% in the first quarter. Driven
-17-
principally by declining market pulp, wastepaper and natural gas prices,
margins improved to 11.8% in the fourth quarter. As 2002 began, market pulp,
wastepaper and energy prices were all slightly lower than those experienced in
the fourth quarter of 2001.

Printing & Writing Group 2001 gross profit margin was 11.9% compared to 10.2%
in 2000 and 15.2% in 1999. Product selling price declines, mix deterioration
and natural gas price increases were more than offset by market pulp price
declines and improved operations to account for most of the margin gain. The
Printing & Writing Group's mills operated near capacity in both 2000 and 2001
with several production records established in the latter year. Margins
improved from 7.0% in the first quarter to 14.5% in the fourth quarter of
2001.

Specialty Paper Group gross margins declined to 2.5% in 2001 from 7.6% in 2000
and 11.6% in 1999. Hardest hit of the Company's three business segments by
weak economic conditions and competitive pressures, Specialty Paper Group
selling price declines, mix deterioration and natural gas price increases were
only partially offset by lower market pulp prices. The Group recorded the
equivalent of two weeks of market-related downtime at each of two mills over
the first half of 2001. Gross profit margin in the first quarter was 0.9%.
Reduced market pulp and natural gas costs and full operations allowed the
Specialty Paper Group to improve gross profit margins to 3.7% in the fourth
quarter.

The Towel & Tissue Group recorded 2001 gross profit margins of 21.0% compared
to 18.8% in 2000 and 20.8% in 1999. Relatively stable selling prices and
product mix combined with reduced wastepaper prices to improve 2001 margins as
compared to 2000. Gross profit margins increased from 19.1% in the first
quarter to 21.2% in the fourth quarter. Reduced raw material prices and record
operating rates drove most of the profitability improvement experienced during
2001.

Order backlogs increased to 27,500 tons representing $30.5 million in sales,
for all operating groups as of December 31, 2001. This compares to 22,000 tons
and $27.5 million in sales at the end of 2000 and 34,000 tons and $39.7
million in sales at the end of 1999. The 2001 improvement in order backlog
does not necessarily indicate strengthening business conditions as a large
portion of orders are shipped directly from inventory upon receipt and do not
impact backlog numbers.

LABOR

New labor agreements with the Paper, Allied-Industrial, Chemical & Energy
Workers International Union were successfully negotiated in 2001. Union
employees at the Brokaw mill signed a five-year agreement. The Sorg mill

contract, still covering employees with Mosinee Holdings, Inc., was extended
until April 30, 2003, when the Bay West Ohio mill contract expires. These
employees will then be covered under the Bay West Ohio agreement. The
agreements contain wage increases similar to those negotiated at other paper
companies during the year. Labor agreements will expire at other facilities in
2002, 2003, 2004 and 2005.

The Company maintains good labor relations in all facilities.
-18-


OPERATING EXPENSES

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Selling and administrative $66,707 $63,580 $59,452
Percent increase/(decrease) 5% 7% (1%)
Restructuring - 21,715 -
Total operating expense 66,707 85,295 59,452
As a percent of net sales 7% 9% 6%

In 2001, 2000 and 1999, selling and administrative expenses were impacted by
stock incentive programs charges or credits, which were determined by the
Company's stock price change. During 2001 the charge for these programs was
$3.0 million, compared to charges of $1.2 million in 2000 and credits of $3.9
million in 1999. In addition, selling and administrative costs for 2001 were
impacted by general wage and benefit cost increases, as well as higher bad
debt expense compared to 2000. Employee benefit costs increased $1.0 million
in 2001. Bad debt expense totaled $1.3 million in 2001 compared to $0.4
million in 2000 and $0.1 million in 1999. The year ended December 31, 2000,
was impacted by a charge of $2.6 million due to the resignation of the
Company's President and CEO.

In the first quarter of 2000, the Company announced the closure of the Sorg
Paper Company mill in Middletown, Ohio. In connection with this closure, the
Company recorded a pre-tax restructuring charge of $22.3 million during 2000
in the Specialty Paper Group segment to cover shutdown and asset disposition
costs. For additional information on the closure of the Sorg Paper Company and
related restructuring charge, please refer to Note 2-Restructuring in the
Notes to Consolidated Financial Statements.


OTHER INCOME AND EXPENSE

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Interest expense $14,416 $15,713 $11,823
Other income (expense) (861) (2,373) 194

Interest expense decreased in 2001 compared to 2000 due to lower debt levels
and weighted average interest rates. The reduction in debt in 2001 was due
principally to internal initiatives aimed at limiting capital spending and
reducing inventory levels as a component of working capital. Interest expense
in 2000 and 1999 had increased year-over-year as average debt levels rose due
to increased capital spending and the repurchase of $1.3 million and $32.4
million of Company stock in 2000 and 1999, respectively.

In exchange for cash payments totaling $6.4 million in 2001, the Company
terminated the outstanding interest rate swap agreements that had effectively
converted $88.5 million of fixed rate debt to variable rate debt. Additional
information on the termination of the interest rate swap agreements and the
related debt is discussed within Note 4-Debt and Note 12-Financial Instruments
in the Notes to Consolidated Financial Statements.

Interest expense is expected to be slightly lower in 2002 than in 2001 due to
lower anticipated average debt levels resulting from continued limitations on
capital spending and reductions in components of working capital. Capitalized
interest totaled $0.2, $1.1 and $0.6 million in 2001, 2000 and 1999,
respectively. Fluctuations in capitalized interest are primarily dependent on
varying levels of capital expenditures qualifying under capitalized interest
-19-
criteria as outlined in Note 1-Description of the Business and Summary of
Significant Accounting Policies in the Notes to Consolidated Financial
Statements.

Other income and expense is comprised of $1.1 million in net losses on
disposal of assets in 2001 compared to $0.6 and $0.3 million in net losses on
asset disposals in 2000 and 1999, respectively. Additionally, 2000 includes
anti-trust settlement charges of $2.0 million. Other income and expense also
includes interest income of $0.3, $0.1, and $0.2 million in 2001, 2000 and
1999, respectively.


INCOME TAXES

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Income tax provision $5,670 $420 $25,600
Effective tax rate 37.0% 36.9% 37.6%

The effective tax rates for the years presented are indicative of the
Company's normalized tax rate. The effective tax rate for 2002 is expected to
approximate 37%.

LIQUIDITY AND CAPITAL RESOURCES


CASH FLOW AND CAPITAL EXPENDITURES

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Cash provided by operating activities $103,866 $80,254 $89,334
Percent increase/(decrease) 29% (10%) (24%)
Working capital 101,724 138,605 140,822
Percent increase/(decrease) (27%) (2%) 73%
Current ratio 1.8:1 2.1:1 2.2:1

Cash flow increased in 2001 compared to 2000 principally due to increased cash
flow earnings from operations, proceeds from the termination of the interest
rate swap agreements and proceeds from stock option exercises. In 2001, the
Company limited capital spending due to weak economic conditions and excess
production capacity in the paper industry. As a result, capital expenditures
totaled $29.8 million in 2001 compared to $86.9 million in 2000 and $80.6
million in 1999. The $57.1 million reduction in 2001 spending as compared to

2000 was accomplished by limiting spending to selected higher return
opportunities and essential maintenance-related capital projects. In 2002, the
Company will continue the program implemented in 2001 that limits capital
spending to a level not to exceed the forecasted expense for depreciation,
depletion and amortization.

During 2001, the Specialty Paper Group completed work on the High Performance
Liner (HPL) project at the Rhinelander mill. 2001 spending on this project was
$3.4 million. In addition, the Mosinee mill spent $0.9 million on Cluster Rule
compliance projects.

Within the Printing & Writing Group, $1.0 million was spent on Cluster Rule
Compliance projects and $1.8 million on new converting equipment.

The Towel & Tissue Group spent $5.4 million on several new toweling and tissue
lines. The Middletown mill also performed a reel upgrade for $0.8 million.
-20-
The balance of $16.5 million in 2001 capital expenditure projects were
individually under $1.0 million. These expenditures consist of approximately
$13.6 million for essential quality and replacement projects, $2.3 million on
high-return projects, and $0.6 million for environmental control projects.

The Company believes the borrowings under its credit agreements and its
earnings for 2002 will be sufficient to meet its cash flow needs for capital,
working capital and investing activities in 2002.


DEBT AND EQUITY

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Short-term debt $- $241 $230
Long-term debt 192,264 250,465 220,476
Total debt 192,264 250,706 220,706
Stockholders' equity 364,855 376,548 393,760
Total capitalization 557,119 627,013 614,236
Long-term debt/capitalization ratio 35% 40% 36%

The Company's debt was restructured in 1999 and modified in 2001. Total debt
decreased $58.4 million from 2000 to $192.3 million at the end of 2001 while
increasing $30.0 million between 2000 and 1999. Cash provided by operations
and reduced capital spending levels resulted in the repayment of debt
obligations in 2001.

A private placement of $138.5 million in senior notes was closed and funded in
August 1999. The notes have an original maturity of 8, 10 and 12 years at $35
million, $68.5 million and $35 million, respectively. In conjunction with the
private placement, the Company entered into an interest rate swap arrangement
that effectively converted $88.5 million of fixed rate obligations to variable
rate debt. On March 17, 2001, the Company terminated its interest rate swap
agreement with respect to $30 million of its 7.43% senior notes due August 31,
2011, in exchange for a cash payment of $2.3 million. On August 10, 2001, the
Company terminated its interest rate swap agreement with respect to $58.5
million of its 7.31% senior notes due August 31, 2009, in exchange for
receiving a cash payment of $4.1 million. The premium recorded on debt during

the period the swaps were outstanding will continue to be amortized using the
effective interest rate method over the remaining term of the respective debt
instruments.

The Company also entered into a revolving credit facility in December 1999
with four banks for $200 million. The facility had a 364-day component for $50
million that expired on March 9, 2001, and a $150 million component that
matures in 2004. Upon expiration of the $50 million 364-day component, the
Company entered into a $12.5 million line of credit with one of its four major
banks. The line of credit expires on March 7, 2003.

The Company maintains a commercial paper placement agreement, with one of its
four major banks, which provides for the issuance of up to $50 million of
unsecured debt obligations. The commercial paper placement agreement requires
unused credit availability under the Company's revolving credit agreement
equal to the amount of outstanding commercial paper. On December 31, 2001, the
Company had a combined total of $114.7 million available for borrowing under
its revolving credit and commercial paper placement agreements.
-21-
In August 1995, the Company obtained $19 million in industrial development
bond financing to fund an upgrade of the Brokaw mill wastewater treatment
plant. The bonds mature in 2023 and bear interest at short-term rates. The
bonds are supported by a letter of credit that was issued under the revolving
credit facility. For additional information on debt obligations, please refer
to Note 4-Debt of the Notes to Consolidated Financial Statements.

In April 2000, the Company's Board of Directors authorized the repurchase of
2,571,000 shares of the Company's common stock. The new authorization added to
the balance remaining on a 1998 authorization to repurchase 5,650,000 shares
of the Company's common stock. During 2000, the Company repurchased 150,300
shares at prices ranging from $7.75 to $9.31. During 1999, the Company
repurchased 2,206,926 shares at prices ranging from $11.94 to $16.06 per
share. The repurchases may be made from time to time in the open market or
through privately negotiated transactions. At December 31, 2001 there were
2,638,674 shares available for purchase under the existing authorizations.

During 2001 and 2000, the Board of Directors declared cash dividends of $.34
per share.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

The Company does not have a material market risk associated with interest rate
risk, foreign currency exchange risk, or commodity price risk. The Company
conducts U.S. dollar denominated export transactions or immediately exchanges
all foreign currency attributable to export sales for U.S. dollars.

On August 31, 1999, the Company issued notes in the amount of $138,500,000.
The principal amounts, maturities, and interest rates on the notes are: (1)
$35,000,000, 8 years, 7.20%; (2) $68,500,000, 10 years, 7.31%; and (3)
$35,000,000, 12 years, 7.43%. The Company also entered into an interest rate
swap agreement under which the interest rate paid by the Company with respect
to (1) $58,500,000 of the 10-year notes is the three month LIBOR rate, plus
.4925% and (2) $30,000,000 of the 12-year notes is the three month LIBOR rate,
plus .55%. During 2001, the Company terminated its swap agreements with
respect to the 10- and 12-year notes. Additional information on the

termination of the interest rate swap agreement and the related debt is
discussed in Item 8, Notes 4 and 12 of the Notes to Consolidated Financial
Statements.
-22-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Shareholders and Board of Directors
Wausau-Mosinee Paper Corporation
Mosinee, Wisconsin

We have audited the accompanying consolidated balance sheet of Wausau-Mosinee
Paper Corporation and Subsidiaries as of December 31, 2001, and the related
consolidated statements of income, cash flows and stockholders' equity for the
year then ended. These financial statements and supplemental schedule referred
to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
supplemental schedule based on our audit. The financial statements of Wausau-
Mosinee Paper Corporation and Subsidiaries as of December 31, 2000 and 1999,
were audited by other auditors whose report dated January 25, 2001, expressed
an unqualified opinion on those statements.

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

In our opinion, the 2001 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Wausau-
Mosinee Paper Corporation and Subsidiaries at December 31, 2001, and the
results of its operations and cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States.

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


ARTHUR ANDERSEN LLP

January 25, 2002
Milwaukee, Wisconsin
-23-

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Shareholders and Board of Directors
Wausau-Mosinee Paper Corporation
Mosinee, Wisconsin

We have audited the accompanying consolidated balance sheets of
WausauMosinee Paper Corporation and Subsidiaries as of December
31, 2000 and 1999, and the related consolidated statements of income, cash
flows and stockholders' equity for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Wausau-Mosinee Paper Corporation and Subsidiaries at December 31, 2000 and
1999, and the results of its operations and cash flows for the years then
ended, in conformity with accounting principles generally accepted in the
United States.


WIPFLI ULLRICH BERTELSON LLP


January 25, 2001
Wausau, Wisconsin
-24-



Wausau-Mosinee Paper Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS

As of December 31,
(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000
ASSETS
Current assets:

Cash and cash equivalents $ 12,010 $ 10,579
Receivables, net 69,425 77,182
Refundable income taxes 1,241 5,470
Inventories 124,338 151,349
Deferred income taxes 14,111 16,463
Other current assets 1,910 1,432
Total current assets 223,035 262,475
Property, plant and equipment, net 634,928 662,204
Other assets 34,045 29,815
TOTAL ASSETS $ 892,008 $ 954,494

LIABILITIES
Current liabilities:
Current maturities of long-term debt $ - $ 241
Accounts payable 64,060 67,896
Accrued and other liabilities 57,251 55,733
Total current liabilities 121,311 123,870

Long-term debt 192,264 250,465
Deferred income taxes 105,638 106,956
Postretirement benefits 54,253 53,867
Pension 37,223 27,870
Other noncurrent liabilities 16,464 14,918
Total liabilities 527,153 577,946

Commitments and contingencies - -

STOCKHOLDERS' EQUITY
Preferred stock (500,000 shares authorized) no par value - -
Common stock (100,000,000 shares authorized) no par value 173,114 171,819
Retained earnings 316,939 324,797
Subtotals 490,053 496,616
Treasury stock, at cost (115,516) (118,595)

Accumulated other comprehensive loss (9,682) (1,473)
Total Stockholders' equity 364,855 376,548
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 892,008 $ 954,494

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-25-

Wausau-Mosinee Paper Corporation
CONSOLIDATED STATEMENTS OF INCOME



(ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER For the year ended December 31,
SHARE DATA) 2001 2000 1999

Net sales $943,729 $990,924 $982,735
Cost of sales 846,415 885,806 843,637
Restructuring charge - inventory - 599 -
Total cost of sales 846,415 886,405 843,637
Gross profit 97,314 104,519 139,098

Operating expenses:
Selling and administrative 66,707 63,580 59,452
Restructuring - 21,715 -
Operating profit 30,607 19,224 79,646

Other income (expense):
Interest expense (14,416) (15,713) (11,823)
Interest income 262 138 230
Other (1,123) (2,511) (36)
Earnings before provision for income taxes 15,330 1,138 68,017
Provision for income taxes 5,670 420 25,600

Net earnings $ 9,660 $ 718 $ 42,417
Net earnings per share-basic $ 0.19 $ 0.01 $ 0.81
Net earnings per share-diluted $ 0.19 $ 0.01 $ 0.81

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-26-



Wausau-Mosinee Paper Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31,
(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings $ 9,660 $ 718 $ 42,417
Provision for depreciation, depletion and amortization 60,948 58,860 55,012
Provision for losses on accounts receivable 1,339 396 110
Loss on property, plant and equipment disposals 1,145 622 334
Compensation expense for stock option grants 1,902 1,183 -
Deferred income taxes 1,034 1,854 12,072
Changes in operating assets and liabilities:
Receivables 6,418 2,462 (7,131)
Inventories 27,011 4,473 (5,605)
Other assets (10,243) (2,541) (1,285)
Accounts payable and other liabilities 247 16,059 (8,234)
Accrued and refundable income taxes 4,405 (3,832) 1,644
Net cash provided by operating activities 103,866 80,254 89,334

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (29,791) (86,896) (80,619)
Proceeds from property, plant and equipment disposals 607 244 1,218
Net cash used in investing activities (29,184) (86,652) (79,401)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of short-term notes - - (45,466)
Net borrowings (repayments) under credit agreements (64,190) 33,230 (45,265)
Payments under capital lease obligation (241) (230) (269)
Net borrowings (repayments) of long-term notes - (3,000) 132,500
Proceeds from termination of interest rate swap 6,382 - -
Dividends paid (17,498) (17,207) (16,233)
Proceeds from stock option exercises 2,296 87 128
Payments for purchase of treasury stock - (1,300) (32,426)
Net cash (used in) provided by financing activities (73,251) 11,580 (7,031)

Net increase in cash and cash equivalents 1,431 5,182 2,902
Cash and cash equivalents at beginning of year 10,579 5,397 2,495
Cash and cash equivalents at end of year $ 12,010 $ 10,579 $ 5,397

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amount capitalized $ 13,943 $ 16,207 $ 10,323
Income taxes paid $ 977 $ 2,399 $ 11,884

Noncash investing and financing activities: A capital lease obligation of $689
was incurred in 1999 when the Company entered into a lease for new equipment.

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-27-

Wausau-Mosinee Paper Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


Accumulated
Other
Comprehensive
Income (Loss)- Common
Common Stock Treasury Stock Minimum Stock Total
(ALL DOLLAR AMOUNTS IN Shares Retained Pension Shares Stockholders'
THOUSANDS, EXCEPT SHARE DATA) ISSUED AMOUNT EARNINGS SHARES AMOUNT LIABILITY OUTSTANDING EQUITY

Balances December 31, 1998 60,122,812 $170,686 $315,711 (6,508,973) $ (85,136) $(4,675) 53,613,839 $396,586
Comprehensive Earnings, 1999:
Net Earnings 42,417 42,417
Minimum Pension Liability
(Net Of $2,270 Deferred Tax) 3,651 3,651
Comprehensive Earnings, 1999 46,068
Cash Dividends Declared (16,598) (16,598)
Stock Options Exercised (4) 9,778 134 9,778 130
Purchases Of Treasury Stock (2,206,926) (32,426) (2,206,926)(32,426)

Balances December 31, 1999 60,122,812 170,682 341,530 (8,706,121) (117,428) (1,024) 51,416,691 393,760
Comprehensive Earnings, 2000:
Net Earnings 718 718
Minimum Pension Liability
(Net Of $278 Deferred Tax) (449) (449)
Comprehensive Earnings, 2000 269
Cash Dividends Declared (17,451) (17,451)
Stock Options Exercised (46) 10,000 133 10,000 87
Stock Option Expense 1,183 1,183
Purchases Of Treasury Stock (150,300) (1,300) (150,300) (1,300)

Balances December 31, 2000 60,122,812 171,819 324,797 (8,846,421) (118,595) (1,473) 51,276,391 376,548
Comprehensive Earnings, 2001:
Net Earnings 9,660 9,660
Minimum Pension Liability
(Net Of $4,446 Deferred Tax) (8,209) (8,209)
Comprehensive Earnings, 2001 1,451
Cash Dividends Declared (17,518) (17,518)
Stock Options Exercised (783) 229,700 3,079 229,700 2,296
Tax Benefit Related to Stock
Options 176 176
Stock Option Expense 1,902 1,902

Balances December 31, 2001 60,122,812 $173,114 $316,939 (8,616,721) $(115,516) $(9,682) 51,506,091 $364,855

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-28-


Wausau-Mosinee Paper Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Wausau-Mosinee Paper Corporation (the "Company") was formed on December 17,
1997, as a result of the merger of Wausau Paper Mills Company and Mosinee
Paper Corporation. The combined Company manufactures, converts and sells paper
and paper products within three principal segments: the Printing & Writing
Group, the Specialty Paper Group and the Towel & Tissue Group.

The Printing & Writing Group manufactures, converts and markets a broad line
of premium printing and writing grades. In addition, the Group includes two
converting facilities that produce laminated roll wrap and related specialty
finishing and packaging products.

The Specialty Paper Group produces a wide variety of technical specialty
papers that include supercalendered backing papers for pressure sensitive
labeling applications, tape backing and packaging materials for a broad range
of food, medical and industrial applications.

The Towel & Tissue Group produces a complete line of towel and tissue products
that are marketed along with soap and dispensing systems for the industrial
and commercial "away-from-home" market.

BASIS OF PRESENTATION - The consolidated financial statements include the
accounts of Wausau-Mosinee Paper Corporation and its subsidiaries. All
significant intercompany transactions and accounts have been eliminated in
consolidation.

USE OF ESTIMATES - The preparation of the accompanying financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses. Actual results may differ from these
estimates.

CASH AND CASH EQUIVALENTS - The Company defines cash equivalents as highly
liquid, short-term investments with an original maturity of three months or
less. Cash and cash equivalents are stated at cost, which approximates market.

INVENTORIES - Pulpwood, finished paper products and approximately 96% of raw
materials are valued at the lower of cost, determined on the last-in, first-
out (LIFO) method, or market. All other inventories are valued at the lower of
average cost or market. Allocation of the LIFO reserve among the components of
inventories is impractical.

PROPERTY, PLANT AND EQUIPMENT - Plant and equipment are stated at cost and are
depreciated over the estimated useful lives of the assets using the straight-
line method for financial statement purposes. Land and construction in
progress are stated at cost. The cost and related accumulated depreciation of
all plant and equipment retired or otherwise disposed of are removed from the
accounts, and any resulting gains or losses are included in the statements of
income.
-29-

Buildings are depreciated over a 20 to 45-year period; machinery and equipment
over a 3 to 20-year period. Maintenance and repair costs are charged to
expense as incurred. Improvements that extend the useful lives of the assets
are added to the plant and equipment accounts.

The Company's policy is to capitalize interest incurred on debt during the
course of projects that exceed one year in construction and $1 million or
projects that exceed $10 million. Interest capitalized in 2001, 2000 and 1999
was $0.2 million, $1.1 million and $0.6 million, respectively. Equipment
financed by long-term leases, which in effect are installment purchases,
have been recorded as assets and the related obligations as debt.
Depreciation expense includes amortization on capitalized leases.

Timber and timberlands are stated at net depleted value. The Company
capitalizes timber, timberland purchases and reforestation costs. Depletion
expense is calculated using the block and units-of-production methods.

ACCOUNTS PAYABLE - The Company's banking system provides for the daily
replenishment of major bank accounts as checks are presented for payment.
Accordingly, there were negative book cash balances of $2.5 million and $3.3
million at December 31, 2001 and 2000, respectively. These balances result
from outstanding checks that had not yet been paid by the bank and are
reflected in accounts payable in the Consolidated Balance Sheets.

INCOME TAXES - Deferred income taxes have been provided under the liability
method. Deferred tax assets and liabilities are determined based upon the
estimated future tax effects of temporary differences between the financial
statement and tax bases of assets and liabilities, as measured by the current
enacted tax rates. Deferred tax expense is the result of changes in the
deferred tax asset and liability.

STOCK OPTIONS - As permitted under Statement of Financial Accounting Standard
(SFAS) No. 123, the Company continues to measure compensation cost for stock
option plans using the "intrinsic value based method" prescribed under APB No.
25, "Accounting for Stock Issued to Employees." See Note 8 for pro forma
information on the impact of the fair-value method of accounting for stock
options.

EARNINGS PER SHARE - The Company presents both basic and diluted net earnings
per share (EPS) amounts. Basic EPS is calculated based on the weighted average
number of common shares outstanding during the respective year, while diluted
EPS is calculated based on the weighted average number of common shares and
common stock equivalents (options) outstanding during the respective year. The
difference between basic and diluted EPS for the Company is solely
attributable to stock options. The Company uses the treasury stock method to
calculate the impact of outstanding stock options. Stock options for which the
exercise price exceeds the average market price over the period have an anti-
dilutive effect on EPS and, accordingly, are excluded from the calculation.

For the years ended December 31, 2001, 2000 and 1999, options for 778,855,
1,032,475, and 445,129 shares, respectively, were excluded from the diluted
EPS calculation for Wausau-Mosinee Paper Corporation common stock because the
options were anti-dilutive.
-30-



Basic and diluted earnings per share are reconciled as follows:

(ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2000 1999

Net earnings $ 9,660 $ 718 $ 42,417
Basic weighted average common shares outstanding 51,466,000 51,354,000 52,265,000
Diluted weighted average common shares outstanding 51,554,000 51,373,000 52,365,000
Net earnings per share-basic $ 0.19 $ 0.01 $ 0.81
Net earnings per share-diluted $ 0.19 $ 0.01 $ 0.81

REVENUE RECOGNITION - Revenue is recognized upon shipment of goods and
transfer of title to the customer. The Company grants credit to customers in
the ordinary course of business.

CONCENTRATION OF CREDIT RISK - A substantial portion of the Company's accounts
receivable is with customers in various paper converting, paper merchant or
distribution businesses. Net sales from one major customer was approximately
10.6% of total net sales in 2001. Receivables from the same customer as a
percent of year-end receivables amounted to 6.1% in 2001.

OTHER INCOME AND EXPENSE - During 2000 the Company recorded a pre-tax charge
of $2.0 million to cover settlements related to antitrust claims against the
Company's subsidiary, Bay West Paper Corporation. In the opinion of
management, Bay West has not violated any antitrust laws and future costs are
not expected to be significant.

DERIVATIVES - The Company adopted the Financial Accounting Standards Board
Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities," on January 1, 2001. SFAS 133
requires that as of the date of initial adoption, the difference between the
fair market value of derivative instruments recorded on the balance sheet and
the previous carrying amount of those derivatives be reported in net income or
other comprehensive income, as appropriate, as the cumulative effect of a
change in accounting principle in accordance with Accounting Principles Board
Opinion 20, "Accounting Changes." The Company has used derivative instruments
to mitigate its exposure to interest rate risk. The Company does not issue
such instruments for trading purposes. The adoption of this accounting
standard did not impact net earnings as both interest rate swaps outstanding
at January 1, 2001 were completely effective in hedging the related debt
instruments. At December 31, 2001, there are no interest rate swap agreements
outstanding. See Note 12 for additional information on the interest rate swap
agreements.

CHANGES IN ACCOUNTING POLICIES - In July 2000, the Emerging Issues Task Force
issued EITF 00-10, "Accounting for Shipping and Handling Fees and Costs." The
Company adopted EITF 00-10 and has restated all comparative prior period
financial statements. Under its provisions, all shipping and handling costs
are now classified as part of cost of sales. Previously, shipping and handling
costs were netted against gross sales in arriving at net sales. These
reclassifications have no impact on net earnings, but they do impact net sales
and cost of sales. The total shipping and handling costs reclassified from net
sales to cost of sales was $39.6 million, $38.8 million and $38.1 million in
2001, 2000 and 1999, respectively.

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) No. 141, "Business Combinations," SFAS
No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 143, "Accounting
for Asset Retirement Obligations." The FASB also issued SFAS No. 144,
-31-
"Accounting for the Impairment or Disposal of Long-Lived Assets," in August
2001.

SFAS No. 141 supersedes Accounting Principles Board (APB) Opinion No. 16,
"Business Combinations," and SFAS No. 38, "Accounting for Preacquisition
Contingencies of Purchased Enterprises." SFAS No. 141 requires all business
combinations initiated after June 30, 2001 be accounted for under the purchase
method, thus eliminating the use of the pooling-of-interest method for
business combinations.

SFAS No. 142 supersedes APB Opinion No. 17, "Intangible Assets." SFAS No. 142
addresses the financial accounting and reporting for acquired goodwill and
other intangible assets. SFAS No. 142 eliminates the amortization for goodwill
and other intangible assets with indefinite lives. Other intangible assets
with a finite life will be amortized over their useful life. Goodwill and
other intangible assets with indefinite useful lives shall be tested for
impairment annually or more frequently if events or changes in circumstances
indicate that the assets may be impaired. SFAS No. 142 is effective for fiscal
years beginning after December 15, 2001. The Company's adoption of SFAS
No. 142 on January 1, 2002 is not anticipated to have a material impact on the
consolidated financial statements as of the date of adoption.

SFAS No. 143 establishes accounting and reporting standards associated with
the retirement of tangible long-lived assets and the associated asset
retirement costs. The statement requires that if reasonably estimable, the
fair value of a liability for an asset retirement obligation is recognized in
the period in which it is incurred. The associated asset retirement costs are
capitalized as part of the carrying amount of the long-lived asset. SFAS No.
143 is effective for fiscal years beginning after June 15, 2002. The Company
is currently evaluating the impact of adopting this standard.
SFAS No. 144 addresses the timing and measurement of recognizing an impairment
loss on long-lived assets that may not be recoverable from future operating
cash flow. SFAS No.144 is effective for fiscal years beginning after December
15, 2001. The Company does not expect the adoption of this statement to have a
material impact on its results of operations.

RECLASSIFICATIONS - Certain prior-year amounts in the financial statements and
the notes have been reclassified to conform to the 2001 presentation.

NOTE 2 RESTRUCTURING

In March 2000, the Company announced the decision to close the Sorg Paper
Company mill ("Sorg") in Middletown, Ohio effective May 15, 2000 and, as a
result, recorded a $25 million pre-tax restructuring charge in the first
quarter of 2000. In the fourth quarter of 2000, the estimate was revised
downward from $25.0 million to $22.3 million, resulting in a $2.7 million pre-
tax adjustment that increased fourth quarter 2000 operating profit. The
reduction in estimated costs to close Sorg related principally to lower than
expected termination costs and favorable curtailment gains for pension and
postretirement plans. The closure resulted in the termination of 160 hourly
and salaried employees. In addition to severance benefits for terminated

employees, the restructuring charge included estimated costs related to the
write-down and disposal of the Sorg property, plant and equipment, curtailment
gains or losses for related pension and postretirement plans and other closure
related costs. The asset write-down was based upon the amount by which the
carrying values of the building, machinery and spare parts exceeded fair
-32-
values of those assets as determined by an independent third-party appraisal
firm.

The following is a summary of the restructuring charges accrued and activity
through December 31, 2001, related to the Sorg closure:


Employee Asset Pension and
(ALL DOLLAR AMOUNTS IN THOUSANDS) TERMINATION WRITE-DOWN POSTRETIREMENT OTHER TOTAL

Initial charge, March 31, 2000 $ 4,321 $ 21,622 $( 1,925) $ 982 $ 25,000
Reserve adjustments (1,800) (215) (801) 130 (2,686)
Payments/charges (2,318) (19,909) 2,726 (834) (20,335)
Balance at December 31, 2000 203 1,498 - 278 1,979
Payments/charges (101) (938) - (113) (1,152)
Balance at December 31, 2001 $ 102 $ 560 $ - $ 165 $ 827

At December 31, 2000, all employees had been terminated from Sorg and as of
December 31, 2001, severance payouts had been paid. In addition, $17.8 million
in asset disposal costs was reclassified to property, plant and equipment to
reflect the write-down to fair value of idled assets related to the closure.
As of December 31, 2001, the Sorg fixed assets including all buildings,
equipment and spare parts not usable by the Company's other mills, continue to
be actively marketed to interested parties.
-33-



NOTE 3. SUPPLEMENTAL BALANCE SHEET INFORMATION

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000

Receivables
Trade $ 73,349 $ 78,057
Other 727 2,962
74,076 81,019
Less: allowances (4,651) (3,837)
$ 69,425 $ 77,182

Inventories
Raw materials $ 34,349 $ 49,530
Work in process and finished goods 80,343 101,831
Supplies 29,181 30,479

Inventories at cost 143,873 181,840
LIFO reserve (19,535) (30,491)
$ 124,338 $ 151,349

Property, plant and equipment
Buildings $ 134,979 $ 130,666
Machinery and equipment 1,043,694 1,009,881
1,178,673 1,140,547
Less: accumulated depreciation (564,108) (510,814)
Net depreciated value 614,565 629,733
Land 5,307 5,021
Timber and timberlands, net of depletion 5,620 5,478
Idle assets 98 98
Construction in progress 9,338 21,874
$ 634,928 $ 662,204

Accrued and other liabilities
Payrolls $ 7,868 $ 5,844
Vacation pay 11,163 10,669
Employee retirement plans 7,402 8,844
Taxes other than income 3,059 3,150
Cash dividends declared 4,383 4,362
Stock appreciation rights 2,621 2,194
Rebates 7,752 8,040
Other 13,003 12,630
$ 57,251 $ 55,733

-34-

NOTE 4. DEBT

The Company has a short-term bank revolving credit note that provides for the
borrowing of up to $12.5 million. The note terminates on March 7, 2003. As of
December 31, 2001, there were no borrowings against this note.


A summary of long-term debt as of December 31 is as follows:

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000
Unsecured:

Senior notes with interest at 7.20% to 7.43%,
due August 31, 2007 to August 31, 2011 $138,500 $138,500
Industrial development bonds due July 1, 2023
with interest at variable rates 19,000 19,000
Revolving credit agreement with financial institutions,
with weighted average interest rate of 2.51%
and 7.27%, respectively 25,000 63,000
Commercial paper with weighted average interest
rate of 2.39% and 7.16%, respectively 3,775 29,965
Subtotal 186,275 250,465
Premium on senior notes 5,989 -
Total long-term debt $192,264 $250,465


The Company has $138.5 million outstanding in private placement notes that
were closed and funded on August 31, 1999. The principal amounts, maturities,
and interest rates on the notes are (1) $35 million, 8 years, 7.20%; (2) $68.5
million, 10 years, 7.31%; and (3) $35 million, 12 years, 7.43%. At August 31,
1999, the Company entered into an interest rate swap agreement under which the
interest rate paid by the Company with respect to (1) $58.5 million of the 10-
year notes will be the three month LIBOR rate, plus .4925% and (2) $30 million
of the 12-year notes will be the three month LIBOR rate, plus .55%. On March
17, 2001, the Company terminated its interest rate swap agreement with respect
to its 7.43% senior notes due August 31, 2011 in exchange for receiving a cash
payment of $2.3 million. On August 10, 2001, the Company terminated its
interest rate swap agreement with respect to its 7.31% senior notes due August
31, 2009 in exchange for receiving a cash payment of $4.1 million. The amounts
received from the swap counter-parties at termination approximated the fair
values of the swaps at the respective termination dates. The premium recorded
on debt during the period the swaps were outstanding will continue to be
amortized using the effective interest rate method over the remaining term of
the respective debt instruments.

The Company has a $150 million unsecured revolving credit agreement with four
participating banks that matures on December 10, 2004. Under the facility, the
Company may elect the base for interest from either domestic or offshore
rates. In addition, the facility provides for competitive bid loan options
amongst the bank group. The Company pays the banks a facility fee under this
agreement based on quarterly debt/capitalization ratios. Facility fees paid
were $282,000 in 2001.

In addition to general business and reporting covenants customary in financing
agreements of these types, the senior notes and revolving credit facility

require the Company to comply quarterly with a consolidated debt to capital
-35-
ratio less than 60% and an adjustable minimum net worth covenant as defined in
the agreements. In addition, the revolving credit facility includes an
interest coverage ratio covenant of 3.5 times. As of December 31, 2001 and
2000, the Company was in compliance with all required covenants.

The Company maintains an unrated commercial paper placement agreement with a
bank to issue up to $50 million of unsecured debt obligations. The agreement
requires unused credit availability under the Company's revolving credit
agreement equal to the amount of outstanding commercial paper. The amounts
outstanding at December 31, 2001 and 2000 have been classified as long-term as
the Company intends and has the ability to refinance the obligations under the
revolving credit agreement.


The aggregate annual maturities of long-term debt are as follows:

(ALL DOLLAR AMOUNTS IN THOUSANDS)
2002 2003 2004 2005 2006 THEREAFTER

Annual
maturities - - $28,775 - - $ 157,500

NOTE 5. LEASE COMMITMENTS

The Company has various leases for real estate, mobile equipment and machinery
which generally provide for renewal privileges or for purchase at option
prices established in the lease agreements. Property, plant and equipment
includes the following amounts for capitalized leases:

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2000
Machinery and equipment $ 1,815
Allowance for amortization (1,571)
Net value $ 244

During 2001, the obligation under the capital lease was fully amortized and
final payment was made to the lessor. Lease amortization is included in
depreciation expense.

Future minimum payments, by year and in the aggregate, under noncancelable
operating leases with initial or remaining terms of one year or more consisted
of the following at December 31, 2001:

Operating
(ALL DOLLAR AMOUNTS IN THOUSANDS) LEASES
2002 $ 2,594
2003 2,209
2004 2,178
2005 2,105
2006 2,097
Thereafter 7,272
Total minimum payments $18,455
-36-



Rental expense for all operating leases was as follows:

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Rent expense $7,730 $6,107 $5,530


NOTE 6. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The Company and its subsidiaries sponsor defined benefit pension plans
covering substantially all employees. Retirement benefits for salaried and
non-union employees are based on pay and company performance. Plans covering
hourly employees provide benefits based on years of service and fixed benefit
amounts for each year of service. The defined benefit pension plans are funded
in accordance with federal laws and regulations.

The Company has supplemental retirement agreements with certain present and
past key officers, directors and employees. The principal cost of such plans
is being or has been accrued over the period of active employment to the full
eligibility date. The supplemental retirement agreements are unfunded.

The Company also provides certain defined benefit postretirement health and
life insurance plans that cover qualifying retirees. Benefits and eligibility
for various employee groups vary by location and union agreements. The defined
benefit postretirement plans are unfunded.
-37-



The following schedules present changes in, and components of, the Company's
net assets (liabilities) for retirement and other postretirement benefits at
December 31, 2001 and 2000:

Retirement Benefits Other Benefits
(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 2001 2000

Change in benefit obligation:
Benefit obligation at beginning of year $107,861 $104,393 $ 57,248 $ 65,096
Service cost 4,177 4,376 1,501 1,329
Interest cost 8,170 7,569 4,287 3,989
Amendments 3,905 906 - (1,615)
Net actuarial (gain) loss 7,054 (367) 4,555 (4,454)
Participant contributions - - 1,330 977
Benefits paid (8,490) (8,709) (6,475) (6,395)
Curtailments and settlements - (307) - (1,679)
Benefit obligation at end of year $ 122,677 $107,861 $ 62,446 $ 57,248

Change in plan assets:
Fair value at beginning of year $ 75,826 $ 65,073 $ - $ -
Actual return (loss) (10,269) 7,927 - -
Company contributions 13,318 9,261 5,145 5,418
Participant contributions - - 1,330 977
Benefits paid (8,490) (8,709) (6,475) (6,395)
Cash contribution subsequent to
measurement date 1,386 2,274 - -
Fair value at end of year $ 71,771 $ 75,826 $ - $ -

Net amount recognized:
Funded status $ (50,906) $(32,035) $ (62,446) $ (57,248)
Unrecognized prior service cost 14,925 12,775 (1,364) (1,721)
Unrecognized transition asset (404) (566) - -
Unrecognized net actuarial loss (gain) 18,560 (5,290) 4,834 (85)
Accrued benefit cost $ (17,825) $(25,116) $ (58,976) $ (59,054)

Amounts recognized in the Balance
Sheet consist of:
Accrued benefit liability $ (47,375) $(38,585) $ (58,976) $ (59,054)
Intangible asset 14,521 11,095 - -
Accumulated other comprehensive income 15,029 2,374 - -
Net amount recognized $ (17,825) $(25,116) $ (58,976) $ (59,054)

Weighted average assumptions at end of year:
Discount rate 7.25% 7.75% 7.25% 7.75%
Expected return on plan assets 9.0% 9.0% n/a n/a
Rate of compensation increase 5.0% 5.0% n/a n/a

The Company selected September 30, 2001 and 2000 as the measurement dates for
plan assets and obligations in 2001 and 2000, respectively.

-38-



At December 31, 2001 and 2000, the aggregate amounts relating to underfunded
plans are as follows:

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000

Projected benefit obligation $122,677 $107,861
Accumulated benefit obligation 119,281 104,511
Fair value of plan assets 71,771 75,826

In 2000, curtailment and settlement income of $2.7 million was attributable to
the closure of the Sorg Paper Company and was recognized as a component of
restructuring expense. The restructuring plan is discussed in Note 2 to the
consolidated financial statements. The components of net periodic benefit
costs recognized in the Consolidated Statements of Income were as follows:


Pension Benefits Other Benefits
(all dollar amounts in thousands) 2001 2000 1999 2001 2000 1999

Components of net periodic
benefit cost:
Service cost $ 4,177 $ 4,376 $ 4,660 $1,501 $ 1,329 $ 1,870
Interest cost 8,170 7,569 7,221 4,287 3,989 4,501
Expected return on plan assets (6,469) (5,488) (4,919) - - -
Amortization of:
Prior service cost 1,670 1,535 1,478 (357) (508) (226)
Transition (asset) (162) (162) (163) - - -
Actuarial loss (57) 46 345 (187) (338) 90
Curtailments and settlements - - - - - (1,874)
Subtotal 7,329 7,876 8,622 5,244 4,472 4,361
Components charged to
restructuring expense:
Settlement and curtailment - 346 - - (3,076) -
Net periodic benefit cost $ 7,329 $ 8,222 $ 8,622 $5,244 $ 1,396 $ 4,361

For purposes of determining the obligation for postretirement medical benefits
in 2001, the Company has assumed a health care cost trend rate of 9%,
declining by 1% annually for four years to an ultimate rate of 5%. For 2000,
the assumed health care cost trend rate used in measuring the accumulated
post-retirement benefit was 10%, declining by 1% for five years to an ultimate
rate of 5%.

Assumed health care cost trend rates significantly impact reported amounts for
retiree medical benefits. For 2001, the effect of a one-percentage point
change in the assumed health care cost trend rate would have had the following
effects:

One percentage point
(ALL DOLLAR AMOUNTS IN THOUSANDS) INCREASE DECREASE

Effect on the postretirement benefit obligation $7,381 $(6,578)
Effect on the sum of the service cost and interest cost components 834 (727)

-39-

The Company also sponsors defined contribution pension plans, several of which
provide for Company contributions based on a percentage of employee
contributions. The cost of such plans totaled $1,091,000 in 2001, $850,000 in
2000 and $1,060,000 in 1999.

The Company has deferred compensation agreements with certain present and past
key officers, directors and employees. The principal cost of such plans is
being or has been accrued over the period of active employment to the full
eligibility date. The annual cost of the deferred compensation agreements is
not significant.

NOTE 7. INCOME TAXES

Deferred tax assets and liabilities are determined based on the estimated
future tax effects of temporary differences between the financial statement
and tax bases of assets and liabilities, as measured by the current enacted
tax rates. Deferred tax expense (benefit) is the result of changes in the
deferred tax asset and liability.


The provision (benefit) for income taxes is comprised of the following:

(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Current tax expense (benefit):
Federal $3,308 $ - $13,063
State 1,328 1,042 1,613
Total current 4,636 1,042 14,676

Deferred tax expense (benefit):
Federal 1,782 387 9,762
State (748) (1,009) 1,162
Total deferred 1,034 (622) 10,924

Total provision for income taxes $5,670 $ 420 $25,600

A reconciliation between taxes computed at the federal statutory rate and the
Company's effective tax rate follows:


(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Federal statutory tax rate $5,351 35.0% $398 35.0% $23,827 35.0%
State taxes (net of federal tax benefits) 319 2.0 22 1.9 1,804 2.6
Other - - - - (31) -
Effective tax $5,670 37.0% $420 36.9% $25,600 37.6%

At the end of 2001, $82,075,000 of unused state operating loss and credit
carryovers existed which may be used to offset future state taxable income in
various amounts through the year 2016. Because separate state tax returns are
filed, the Company is not able to offset consolidated income with the
subsidiaries' losses. Under the provisions of SFAS No. 109, the benefits of
state tax losses are recognized as a deferred tax asset, subject to
appropriate valuation allowances.
-40-

The major temporary differences that give rise to the deferred tax assets and
liabilities at December 31, 2001 and 2000 are as follows:


(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000

Deferred tax assets:
Allowances on accounts receivable $ 2,741 $ 2,279
Accrued compensated absences 3,975 3,530
Stock appreciation rights plans 1,022 1,935
Stock options 1,314 572
Pensions 8,923 9,958
Inventories 3,143 2,863
Postretirement benefits 23,589 22,814
Restructuring reserve 5,209 7,584
Postemployment benefits 274 301
Other accrued liabilities 8,091 1,367
State net operating loss carry forward 6,151 3,782
Other 512 1,485
Gross deferred tax asset 64,944 58,470
Less valuation allowance (3,713) (2,569)
Net deferred tax assets 61,231 55,901

Deferred tax liabilities:
Property, plant and equipment (143,283) (138,098)
Other (9,475) (8,296)
Gross deferred tax liability (152,758) (146,394)
Net deferred tax liability $ (91,527) $ (90,493)

The total deferred tax assets (liabilities) as presented in the accompanying
consolidated balance sheets are as follows:


(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000

Net deferred tax assets $ 14,111 $ 16,463
Net long-term deferred tax liabilities (105,638) (106,956)
Net deferred tax liability $ (91,527) $ (90,493)

A valuation allowance has been recognized for a subsidiary's state loss carry
forward and future deductible items as cumulative losses create uncertainty
about the realization of the tax benefits in future years.

NOTE 8. STOCK OPTIONS AND APPRECIATION RIGHTS

The Company maintains various employee stock option plans. The plans specify
purchase price, time and method of exercise. Payment of the option price may
be made in cash or by tendering an amount of common stock having a fair market
value equal to the option price.
-41-
Options are granted for terms up to 20 years, the option price being equal to
the fair market value of the Company's common stock at the date of grant for
incentive and non-qualified options.

On April 19, 2001, the Company's shareholders approved the 2000 Stock Option
Plan. As a result, 1,046,013 options issued prior to April 19, 2001, were
approved. Of the total 1,046,013 shares, 783,513 shares related to grants of
fixed options and 262,500 shares related to grants of performance based
options that subsequently lapsed. Prior to shareholder approval, expense was
recorded for these options to the extent that the fair market value of the
Company's stock exceeded the price of the option on the date of shareholder
approval. For the years ended December 31, 2001 and December 31, 2000, the
provision for stock options outstanding was $1,902,000 and $1,183,000,
respectively. In December 2001, the Company issued 315,000 performance-based
options that vest in relation to achieving certain operating profit levels in
2002. No compensation expense has been recorded for these options in 2001.

The following table summarizes the activity relating to the Company's stock
option plans:


____ 2001 _____ ____ 2000 ____ ____ 1999 _____
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
SHARES PRICE SHARES PRICE SHARES PRICE

Options outstanding at
beginning of year 1,312,375 $14.19 1,322,375 $14.18 1,052,250 $13.93
Granted 1,228,513 9.58 53,000 9.72 335,265 15.55
Terminated (253,620) 16.00 (53,000) 17.16 (55,362) 17.97
Exercised (229,700) 10.00 (10,000) 8.75 (9,778) 13.13
Options outstanding at end
of year 2,057,568 $13.84 1,312,375 $14.19 1,322,375 $14.18
Options exercisable at end
of year 1,722,568 $13.86 1,312,375 $14.19 1,282,375 $14.23

Additional information regarding the fixed option grants outstanding and
exercisable at December 31, 2001, is as follows:


Weighted Average
Remaining
Range of Outstanding Contractual Weighted Average Exercisable Weighted Average
EXERCISE PRICES OPTIONS LIFE (YEARS) EXERCISE PRICE OPTIONS EXERCISE PRICE

$ 8.75-$13.13 1,221,717 16.96 $12.49 1,201,717 $12.50
$15.88-$21.61 520,851 14.33 $17.01 520,851 $14.23
1,742,568 1,722,568 $17.01

The exercise price for the 315,000 performance based options outstanding at
December 31, 2001 is $10.71.
-42-

Pro forma net earnings and earnings per share had the Company elected to adopt
the "fair value based method" of Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock Based Compensation," are as follows:


(ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2000 1999
Net earnings:

As reported $9,660 $ 718 $42,417
Pro forma $9,143 $ 560 $40,976
Earnings per share - diluted:
As reported $ 0.19 $ 0.01 $ 0.81
Pro forma $ 0.18 $ 0.01 $ 0.78

The fair value of each option grant has been estimated on the grant date using
the Black-Scholes option pricing model based on the following weighted-average
assumptions:


2001 2000

Risk-free interest rate 5.84% 6.26%
Expected life in years 6 6
Price volatility 36.41% 45.12%
Dividend yield 3.58% 3.49%

STOCK APPRECIATION RIGHTS:

The Company maintains various stock appreciation rights plans that entitle
certain management employees to receive cash equal to the sum of the
appreciation in the value of the stock and the hypothetical value of cash
dividends which would have been paid on the stock covered by the grant
assuming reinvestment in Company stock. The stock appreciation rights granted
may be exercised in whole or in such installments and at such times as
specified in the grant. In all instances, the rights lapse if not exercised
within 20 years of the grant date. Additions or reductions to compensation
expense are recorded in each period based upon the quoted market value of the
shares and the exercise provisions.

The following table summarizes the activity relating to the Company's stock
appreciation rights plans:


2001 2000 1999

Rights outstanding at beginning of year
(number of shares) 470,855 624,855 952,991
Granted - - 106,558
Terminated (101,683) - (405,905)
Exercised (61,367) (154,000) (28,789)
Rights outstanding and exercisable at end of year
(number of shares) 307,805 470,855 624,855
Price range of rights exercised $5.88-9.42 $6.49-9.70 $ 4.46
Price range of outstanding and exercisable rights:
$4.06-$9.70 292,930 354,297 508,297
$15.88 -$17.16 14,875 116,558 116,558

-43-
At December 31, 2001, the weighted average remaining contractual life on
outstanding stock appreciation rights with an exercise price of $4.06-$9.70
was 8.6 years and with an exercise price of $15.88-$17.16 was 17.0 years.

DIVIDEND EQUIVALENTS:

The Company maintains the 1991 Dividend Equivalent Plan. Upon termination of
employment, or at the time of exercise of options granted in tandem with the
dividend equivalents, participants are entitled to receive the cash value of
the grant. The cash value is determined by the sum of the value of cash
dividends that would have been paid on the stock covered by the grant had it
been actual stock and assuming all such hypothetical dividends had been
reinvested in Company stock. Additions or reductions to compensation expense
are recorded in each period based upon the quoted market value of the shares
and the exercise provisions.

The following table summarizes the activity relating to the Company's dividend
equivalent plan:


2001 2000 1999

Equivalents outstanding at
beginning of year (number of shares) 205,433 205,433 257,930
Exercised (31,319) - (52,497)
Equivalents outstanding and exercisable
at end of year (number of shares) 174,114 205,433 205,433


The provision (credit) for stock appreciation rights and dividend equivalents
were as follows:


(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

Stock appreciation rights $744 $19 $(3,242)
Dividend equivalents 97 63 (8)
Total $841 $82 $(3,250)


NOTE 9. RESEARCH EXPENSES

Expenditures for product development were $4,058,000 in 2001, $3,968,000 in
2000 and $2,293,000 in 1999.

NOTE 10. COMMITMENTS, CONTINGENCIES AND RELATED PARTIES

LITIGATION AND OTHER CLAIMS. The Company may be involved from time to time in
various legal and administrative proceedings or be subject to various claims
in the normal course of its business. Although the ultimate disposition of
legal proceedings cannot be predicted with certainty, in the opinion of
management, the ultimate disposition of any threatened or pending matters,
either individually or on a combined basis, will not have a material adverse
effect on the consolidated financial condition, liquidity, or results of
operations of the Company.
-44-
ENVIRONMENTAL MATTERS. The Company is subject to extensive regulation by
various federal, state, provincial, and local agencies concerning compliance
with environmental control statutes and regulations. These regulations impose
limitations, including effluent and emission limitations, on the discharge of
materials into the environment, as well as require the Company to obtain and
operate in compliance with conditions of permits and other governmental
authorizations. Future regulations could materially increase the Company's
capital requirements and certain operating expenses in future years.

In 1986, the Wisconsin Department of Natural Resources ("DNR") notified a
subsidiary of the Company that it may be a potentially responsible party
("PRP") for the Gorski landfill in Mosinee, Wisconsin, and nominated the
landfill to the Environmental Protection Agency's ("EPA") National Priorities
List. No action was taken by either the DNR or the EPA until June 2000, when
the DNR requested certain parties who had disposed of waste at the site to
form a PRP group to cooperatively investigate the environmental contamination
at the site. In October 2001, the Company entered into an agreement with
certain other PRPs to fund a study of the landfill to determine possible
remediation strategies. The Company contributed approximately $31,000 to this
study. The DNR is evaluating the proposed study and is expected to approve or
recommend modifications to the proposed study in 2002. As of year-end, the
Company estimated that the costs of remediation of the entire site will be
approximately $3 million, based on the remediation method the Company's
consultants believe to be the most likely to be used. This estimate is
preliminary and is based on information now known to the Company. Actual costs
of remediation of the site could be materially different and no timetable for
the actual remediation work has yet been developed. The Company's share of the
cost of such remediation cannot be determined with certainty at this time, but

based on the estimated costs at year-end and the number and nature of the
other potential responsible parties, the Company is of the opinion that such
costs will not have a material adverse impact on the operations, financial
condition, or liquidity of the Company.

The U.S. Environmental Protection Agency has published regulations, commonly
referred to as the "Cluster Rules," affecting pulp and paper industry
discharges of wastewater and gaseous emissions. These rules require changes in
the pulping and bleaching processes presently used in some U.S. pulp mills,
including some of the Company's mills. Based on its evaluation of the rules,
the Company spent approximately $1.9 million in 2001 to comply with the
Cluster Rules. No additional capital spending is expected to be spent related
to these regulations.

OTHER COMMITMENTS. As of December 31, 2001, the Company was committed to
spend approximately $6.0 million to complete capital projects which were in
various stages of completion.

The Company's Groveton, New Hampshire mill is committed to the transportation
of a fixed volume of natural gas until November 2019 under a natural gas
transportation agreement with the Portland Natural Gas Transmission System
Company. The contract is only for the transportation of natural gas from the
Company's natural gas suppliers to the Company's mill in New Hampshire. The
Company is not required to buy or sell minimum gas volumes under the
agreement. The Company is required to pay a minimum transportation fee of
approximately $1.0 million annually per the agreement; however, the Company's
natural gas requirements exceed the level required to be transported.
-45-
NOTE 11. PREFERRED SHARE PURCHASE RIGHTS PLAN

The Company maintains a rights plan under which one preferred share purchase
right is issued for each outstanding share of common stock. Each right
entitles its holder to purchase one one-thousandth of a share of Series A
Junior Participating Preferred Stock, at an exercise price of $60 per one one-
thousandth of a preferred share, subject to adjustment. The rights will become
exercisable only if a person or group (with certain exceptions) acquires
beneficial ownership of 15% or more of the outstanding common stock (an
"Acquiring Person"). Once exercisable, each holder of a right, other than the
Acquiring Person, will thereafter have the right to receive common stock
having a market value of two times the exercise price of the right. Upon the
occurrence of certain events, each holder of a right, other than an Acquiring
Person, will have the right to receive (in lieu of preferred shares) common
stock of the Company (or a successor company) that has a market value of two
times the exercise price of the right. Until exercisable, the rights will not
be issued or traded in separate form from the common stock. After any person
or group becomes an Acquiring Person, and prior to the acquisition by the
Acquiring Person of 50% or more of the common stock, the Company may exchange
the rights, other than rights owned by the Acquiring Person, at an exchange
ratio of one share per right (subject to adjustment). At any time prior to any
person or group becoming an Acquiring Person, the Company may redeem the
rights at a price of $.01 per right. The rights will expire on October 31,
2008.

NOTE 12. FINANCIAL INSTRUMENTS

Financial instruments consisted of the following:

CASH AND CASH EQUIVALENTS - The carrying amount approximates fair value due to
the relatively short period to maturity for these instruments.

LONG-TERM DEBT - The fair value of the Company's long-term debt is estimated
based on current rates offered to the Company for debt of the same remaining
maturities. At December 31, 2001, the fair value of the long-term debt
exceeded the carrying value by approximately $0.7 million.

INTEREST RATE AGREEMENT - Interest rate swaps designated in fair value hedge
relationships were used by the Company to mitigate the risk of reductions in
the fair value of existing fixed rate long-term notes due to decreases in
LIBOR based interest rates. Gains and losses on these instruments were
reflected in interest expense in the period in which they occurred and an
offsetting gain or loss is also reflected in interest expense based on changes
in the fair value of the debt instrument being hedged due to changes in LIBOR
based interest rates.

During 2001, the interest rate agreements were terminated. The amounts
received from the swap counter-parties at termination approximated the fair
values of the swaps at the respective termination dates. Accordingly, the
amount of the swap asset recorded has been eliminated from the balance sheet
at the termination date. The premium recorded on debt during the period the
swaps were outstanding will continue to be amortized using the effective
interest rate method over the remaining term of the respective debt
instruments. Debt premium amortization reduced interest expense by $367,000
for the year ended December 31, 2001. The agreement decreased interest expense
by $589,000, $230,000 and $320,000 in 2001, 2000 and 1999, respectively. At
December 31, 2000, the fair value of the interest rate swap agreement was
unfavorable by $6.1 million.
-46-
NOTE 13. SEGMENT DATA

FACTORS USED TO IDENTIFY REPORTABLE SEGMENTS
The Company's operations are classified into three principal reportable
segments: the Printing & Writing Group, the Specialty Paper Group and the
Towel & Tissue Group, each providing different products. Separate management
of each segment is required because each business unit is subject to different
marketing, production and technology strategies.

PRODUCTS FROM WHICH REVENUE IS DERIVED
The Printing & Writing Group produces a broad line of premium printing and
writing grades at manufacturing facilities in Brokaw, Wisconsin and Groveton,
New Hampshire. The Printing & Writing Group also includes two converting
facilities which produce laminated roll wrap and related specialty finishing
and packaging products, and a converting facility which converts printing and
writing grades. The Specialty Paper Group produces specialty papers at its
manufacturing facilities in Rhinelander, Wisconsin; Mosinee, Wisconsin and
Jay, Maine. The Towel & Tissue Group manufactures a complete line of towel,
tissue, soap and dispensing systems for the "away-from-home" market. The Towel
& Tissue Group operates a paper mill in Middletown, Ohio and a converting
facility in Harrodsburg, Kentucky.

MEASUREMENT OF SEGMENT PROFIT AND ASSETS
The Company evaluates performance and allocates resources based on operating
profit or loss. The accounting policies of the reportable segments are the
same as those described in the summary of significant accounting policies.

RECONCILIATIONS
The following are reconciliations to corresponding totals in the accompanying
consolidated financial statements:


(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

NET SALES EXTERNAL CUSTOMERS
Printing & Writing $392,026 $395,992 $403,276
Specialty Paper 354,181 408,979 412,419
Towel & Tissue 197,522 185,953 167,040
$943,729 $990,924 $982,735

NET SALES INTERSEGMENT
Printing & Writing $ 8,687 $ 8,003 $ 3,343
Specialty Paper 462 1,708 9,190
Towel & Tissue - 21 126
$ 9,149 $ 9,732 $ 12,659

OPERATING PROFIT
Printing & Writing $ 25,807 $ 20,109 $ 40,658
Specialty Paper (9,390) 10,942 21,532
Specialty Paper - restructuring expense - (22,314) -
Total Specialty Paper (9,390) (11,372) 21,532
Towel & Tissue 26,382 21,631 22,381
-47-
TOTAL REPORTABLE SEGMENT
OPERATING PROFIT 42,799 30,368 84,571
Corporate and eliminations (12,192) (11,144) (4,925)
Interest expense (14,416) (15,713) (11,823)
Other income (expense) (861) (2,373) 194
Earnings before income taxes $ 15,330 $ 1,138 $ 68,017

SEGMENT ASSETS
Printing & Writing $294,241 $314,774
Specialty Paper 368,595 402,522
Towel & Tissue 177,708 180,857
Corporate & unallocated 51,464 56,341
$ 892,008 $954,494




OTHER SIGNIFICANT ITEMS

Depreciation, Expenditures
Interest Depletion and for Long-Lived
(ALL DOLLAR AMOUNTS IN THOUSANDS) INCOME AMORTIZATION ASSETS

2001
Printing & Writing $ - $16,972 $ 9,308
Specialty Paper 15 25,277 8,615
Towel & Tissue - 17,214 10,902
Corporate & unallocated 247 1,485 966
$262 $60,948 $29,791

2000
Printing & Writing $ 15 $16,546 $18,273
Specialty Paper 3 24,037 59,937
Towel & Tissue - 16,405 5,793
Corporate & unallocated 120 1,872 2,893
$138 $58,860 $86,896

1999
Printing & Writing $ 66 $15,757 $23,023
Specialty Paper 8 22,978 47,234
Towel & Tissue - 14,848 9,652
Corporate & unallocated 156 1,429 710
$230 $55,012 $80,619

-48-
COMPANY GEOGRAPHIC DATA
The Company has no long-lived assets outside the United States. Net sales to
customers within the United States and other countries are as follows:


(ALL DOLLAR AMOUNTS IN THOUSANDS) 2001 2000 1999

United States $884,088 $918,468 $917,692

All foreign countries 59,641 72,456 65,043
$943,729 $990,924 $982,735




QUARTERLY FINANCIAL DATA (UNAUDITED)

(ALL DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
First Second Third Fourth
QUARTER* QUARTER QUARTER QUARTER** ANNUAL
2001

Net sales*** $234,145 $240,637 $245,106 $223,841 $943,729
Gross profit 16,189 24,132 30,550 26,443 97,314
Operating profit (loss) (3,064) 7,718 15,415 10,538 30,607
Net earnings (loss) (4,749) 2,410 7,250 4,749 9,660
Net earnings (loss) per share
basic and diluted $(0.09) $0.05 $0.14 $0.09 $0.19

2000
Net sales*** $253,736 $254,980 $250,650 $231,558 $990,924
Gross profit 28,242 31,885 25,837 18,555 104,519
Operating profit (loss) (15,977) 18,232 11,885 5,084 19,224
Net earnings (loss) (12,921) 7,798 4,746 1,095 718
Net earnings (loss) per share
basic and diluted $(0.25) $0.15 $0.09 $0.02 $0.01

1999
Net sales*** $235,308 $243,777 $255,592 $248,058 $982,735
Gross profit 38,663 37,159 33,697 29,579 139,098
Operating profit 25,131 17,649 22,539 14,327 79,646
Net earnings 14,104 9,727 11,786 6,800 42,417
Net earnings per share basic $ 0.27 $ 0.19 $ 0.23 $ 0.13 $ 0.81
Net earnings per share diluted $ 0.26 $ 0.19 $ 0.23 $ 0.13 $ 0.81

* In 2000, includes an after-tax expense of $16.3 million ($25.0 million pre-
tax) or $0.32 per share for restructuring expenses relating to the closure of
the Sorg Paper Company.

** In 2000, includes an after-tax income of $2.3 million ($2.7 million pre-
tax) or $0.04 per share for a change in restructuring expense estimate
relating to the closure of the Sorg Paper Company.

*** The Company has adopted EITF 00-10, "Accounting for Shipping and Handling
Fees and Costs." Under its provisions, all shipping and handling costs were
reclassified from Net Sales to Cost of Sales. All comparative prior year
periods presented have been restated to reflect the change.

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MARKET PRICES FOR COMMON SHARES (UNAUDITED)

_______ 2001 ________ _______ 2000 _________ ________ 1999 _________
Cash Cash Cash
Prices Dividends Prices Dividends Prices Dividends
Paid Paid Paid
QUARTER HIGH LOW PER SHARE HIGH LOW PER SHARE HIGH LOW PER SHARE

1st $13.00 $ 9.94 $0.085 $14.63 $9.50 $0.080 $18.00 $13.94 $0.07
2nd 14.00 11.52 0.085 13.25 8.50 0.085 18.44 12.63 0.08
3rd 13.58 7.85 0.085 10.19 7.75 0.085 18.00 11.94 0.08
4th 12.16 9.65 0.085 12.13 7.56 0.085 14.19 10.63 0.08

All prices represent the high and the low sales prices for the common stock as
reported on the New York Stock Exchange.
-50-
Schedule II - Valuation and Qualifying Accounts

Allowable for
Doubtful
ACCOUNTS
Balance December 31, 1998 $ 4,120
Charges to cost and
expense 183
Deductions (733)

Balance December 31, 1999 3,570
Charges to cost and
expense 630
Deductions (363)

Balance December 31, 2000 3,837
Charges to cost and
expense 1,397
Deductions (583)

Balance December 31, 2001 $ 4,651

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.

On October 19, 2001, Arthur Andersen LLP was appointed as independent auditor
for the 2001 fiscal year. Information required by Item 304 of Regulations S-K
is incorporated by reference to the Company's Form 8-K dated October 19, 2001.
-51-

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information relating to directors of the Company is incorporated into this
Form 10-K by this reference to the disclosure in the Company's proxy statement
relating to the 2002 annual meeting of shareholders (the "2002 Proxy
Statement") beginning under the caption "Proposal No. 1 - Election of
Directors" and ending at the subcaption "Committees and Meetings."
Information relating to the identification of executive officers of the
Company is found in Part I of this Form 10-K. Information required under Rule
405 of Regulation S-K is incorporated into this Form 10-K by this reference to
the disclosure in the 2002 Proxy Statement under the subcaption "Section 16(a)
Beneficial Ownership Reporting Compliance."

ITEM 11. EXECUTIVE COMPENSATION.

Information relating to director compensation is incorporated into this Form
10-K by this reference to the disclosure in the 2002 Proxy Statement under the
subcaption "Director Compensation." Information relating to the compensation
of executive officers is incorporated into this Form 10-K by this reference to
(1) the disclosure in the 2002 Proxy Statement beginning under the caption
"Compensation of Executive Officers," through the disclosure ending under the
subcaption, "Retirement Benefits," and (2) the disclosure in the 2002 Proxy
Statement under the subcaption "Committee Interlocks and Insider
Participation."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information relating to security ownership of certain beneficial owners and
management is incorporated into this Form 10-K by this reference to the
disclosure in the 2002 Proxy Statement beginning under the caption "Beneficial
Ownership of Common Stock" and ending at the subcaption "Section 16(a)
Beneficial Ownership Reporting Compliance."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information relating to certain relationships and related transactions with
directors and officers is incorporated into this Form 10-K by this reference
to the disclosure in the 2002 Proxy Statement under the subcaption "Certain
Relationships and Related Transactions."
-52-
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Documents filed as part of this report.

(1) The following financial statements are filed as part of this report:

(i) Consolidated Balance Sheets as of December 31, 2001 and 2000

(ii) Consolidated Statements of Income for the years ended December 31,
2001, 2000, and 1999

(iii) Consolidated Statements of Cash Flows for the years ended December
31, 2001, 2000, and 1999

(iv) Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2001, 2000, and 1999

(v) Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

The following financial statement schedule is filed as part of this
report:

(i) Schedule II - Valuation and Qualifying Accounts for the years ended
December 31, 2001, 2000, and 1999 (page 48)

All other schedules prescribed by Regulation S-X are not submitted because
they are not applicable or not required, or because the required information
is included in the Consolidated Financial Statements and Notes thereto.
-53-
(3) Exhibits

The following exhibits required by Item 601 of Regulation S-K are filed as
part of this report:

Exhibit
NUMBER DESCRIPTION

3.1 Restated Articles of Incorporation, as amended October 21, 1998
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form 8-A dated October 21, 1998)

3.2 Restated Bylaws, as amended December 17, 1997 (incorporated by
reference to Exhibit 4.2 to the Company's Registration Statement
on Form S-8 dated December 17, 1997)

4.1 Rights Agreement, dated as of October 21, 1998, including the
Form of Restated Articles of Incorporation as Exhibit A and the
Form of Rights Certificate as Exhibit B (incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement
on Form 8-A dated October 21, 1998)

4.2 First Amendment dated August 22, 2000 to Rights Agreement
dated October 21, 1998 (incorporated by reference to Exhibit 4.1
(a) to Amendment No. 1 to the Company's Registration Statement on
Form 8-A, filed on December 19, 2000)

4.3 Summary of Rights to Purchase Preferred Shares, Exhibit C to
Rights Agreement filed as Exhibit 4.1 hereto (incorporated by
reference to Exhibit 4.2 to the Company's Registration Statement
on Form 8-A, filed on October 29, 1998)

4.4 $138,500,000 Note Purchase Agreement dated August 31, 1999
(incorporated by reference to Exhibit 4.3 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999)

4.5 Revolving Credit Agreement dated December 10, 1999 among the
Company and Bank of America, N.A., Bank One, NA, M&I Marshall &
Ilsley Bank, and Harris Trust and Savings Bank, as amended April
14, 2000, December 8, 2000, and January 23, 2001 (incorporated
by reference to Exhibit 4.5 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000)*

4.6 $12,500,000.00 364-day Credit Facility Between the Company
and Marshall & Ilsley Bank Dated March 8, 2002

10.1 Supplemental Retirement Plan, as last amended October 19, 2000
(incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on form 10-Q for the quarterly period ended
March 31, 2001)*

10.2 1988 Stock Appreciation Rights Plan, as last amended March 4,
1999 (incorporated by reference to Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998)*
-54-
10.3 1990 Stock Appreciation Rights Plan, as last amended March 4,
1999 (incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998)*

10.4 Deferred Compensation Agreement dated July 1, 1994, as last
amended March 4, 1999 (incorporated by reference to Exhibit 10.7
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998)*

10.5 1991 Employee Stock Option Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*

10.6 1991 Dividend Equivalent Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*

10.7 Supplemental Retirement Benefit Plan dated January 16, 1992,
as last amended March 4, 1999 (incorporated by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998)*

10.8 Directors' Deferred Compensation Plan, as last amended March 4,
1999 (incorporated by reference to Exhibit 10.11 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998)*

10.9 Directors Retirement Benefit Policy, as amended April 16, 1998
(incorporated by reference to Exhibit 10.12 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998)*

10.10 Mosinee Paper Corporation 1985 Executive Stock Option Plan, as
last amended March 4, 1999 (incorporated by reference to Exhibit
10.14 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998)*

10.11 Mosinee Paper Corporation 1988 Stock Appreciation Rights Plan,
as last amended March 4, 1999 (incorporated by reference to
Exhibit 10.15 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998)*

10.12 Mosinee Paper Corporation Supplemental Retirement Benefit
Agreement dated November 15, 1991, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.18 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*

10.13 Mosinee Paper Corporation 1994 Stock Option Plan, as last amended
March 4, 1999*

10.14 2001 Incentive Compensation Plan for Executive Officers
(incorporated by reference to Exhibit 10.16 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 2000)*

10.15 2002 Incentive Compensation Plan for Executive Officers*
-55-
10.16 Former President and CEO Severance Agreement (incorporated by
reference to Exhibit 10.22 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2000)

10.17 2000 Stock Option Plan (incorporated by reference to Exhibit
10.19 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2001)*

21.1 Subsidiaries (incorporated by reference to Exhibit 21.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998)

23.1 Consent of Arthur Andersen LLP

23.2 Consent of Wipfli Ullrich Bertelson LLP

*Executive compensation plans or arrangements. All plans are sponsored or
maintained by the Company unless otherwise noted.

(b) Reports on Form 8-K:

(1) FORM 8-K DATED OCTOBER 17, 2001. The Company filed a current report on
Form 8-K on October 17, 2001, reporting earnings and net sales information
for the quarter ended September 30, 2001 under Item 5 and additional
related information under Item 9, Regulation FD Disclosure.

(2) FORM 8-K DATED OCTOBER 19, 2001. The Company filed a current report on
Form 8-K on October 19, 2001 to report that effective on that date, Arthur
Andersen LLP had been engaged as the Company's independent public
accountant.
-56-

SIGNATURES

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

WAUSAU-MOSINEE PAPER
CORPORATION


March 29, 2002 SCOTT P. DOESCHER
Scott P. Doescher
Senior Vice President-Finance,
Secretary and Treasurer

(On behalf of the Registrant and as
Principal Financial Officer)
-57-
Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


March 29, 2002



THOMAS J. HOWATT RICHARD L. RADT
Thomas J. Howatt Richard L. Radt
President and Chief Executive Officer Vice Chairman of the Board
(Principal Executive Officer)


SAN W. ORR, JR WALTER ALEXANDER
San W. Orr, Jr. Walter Alexander
Chairman of the Board Director


DENNIS J. KUESTER DAVID B. SMITH, JR.
Dennis J. Kuester David B. Smith, Jr.
Director Director


GARY W. FREELS HARRY R. BAKER
Gary W. Freels Harry R. Baker
Director Director
-58-

EXHIBIT INDEX dagger
TO
FORM 10-K
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
PURSUANT TO SECTION 102(D) OF REGULATION S-T
(17 C.F.R. section 232.102(D))


Exhibit 4.6 $12,500,000.00 364-day Credit Facility Between the Company and
Marshall & Ilsley Bank Dated March 8, 2002

Exhibit 10.13 Mosinee Paper Corporation 1994 Stock Option Plan, as last
amended March 4, 1999*

Exhibit 10.15 2002 Incentive Compensation Plan for Executive Officers

Exhibit 23.1 Consent of Arthur Andersen LLP

Exhibit 23.2 Consent of Wipfli Ullrich Bertelson LLP


dagger Exhibits required by Item 601 of Regulation S-K which have previously
been filed and are incorporated herein by reference are set forth in Part IV,
Item 14 of Form 10-K to which this Exhibit Index relates.
-59-