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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2003
OR
[ ] 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: 1-13923
WAUSAU-MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)
WISCONSIN 39-0690900
(State of incorporation) (I.R.S. Employer Identification
Number)
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
(Address of principal executive office)
Registrant's telephone number, including area code: 715-693-4470
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
The number of common shares outstanding at April 30, 2003 was 51,551,891.
WAUSAU-MOSINEE PAPER CORPORATION
AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Statements of Operations,
Three Months Ended
March 31, 2003 (unaudited) and
March 31, 2002 (unaudited) 1
Condensed Consolidated Balance
Sheets, March 31, 2003 (unaudited)
and December 31, 2002 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Three Months
Ended March 31, 2003 (unaudited)
and March 31, 2002 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements (unaudited) 3-7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8-13
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 13
Item 4. Controls and Procedures 13
PART II. OTHER INFORMATION
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
March 31,
(Dollars in thousands, except per share data) 2003 2002
NET SALES $239,826 $ 225,928
Cost of products sold 218,947 200,600
GROSS PROFIT 20,879 25,328
Selling and administrative expenses 16,244 17,072
OPERATING PROFIT 4,635 8,256
Interest expense (2,501) (2,763)
Other income (expense), net (14) (55)
EARNINGS BEFORE INCOME TAXES 2,120 5,438
Provision for income taxes 785 2,010
NET EARNINGS $ 1,335 $ 3,428
NET EARNINGS PER SHARE - BASIC $ 0.03 $ 0.07
NET EARNINGS PER SHARE - DILUTED $ 0.03 $ 0.07
Weighted average shares outstanding-basic 51,536,891 51,515,064
Weighted average shares outstanding-diluted 51,604,298 51,640,827
See Notes to Condensed Consolidated Financial Statements.
-1-
Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) MARCH 31, December 31,
2003 2002
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 23,458 $ 23,383
Receivables, net 83,284 70,806
Refundable income taxes 3,234 10,264
Inventories 123,706 119,033
Deferred income taxes 12,787 12,812
Other current assets 3,655 4,100
Total current assets 250,124 240,398
Property, plant and equipment, net 590,994 597,979
Other assets 38,573 35,380
TOTAL ASSETS $879,691 $873,757
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 75,045 $ 63,422
Accrued and other liabilities 49,544 58,578
Total current liabilities 124,589 122,000
Long-term debt 165,612 162,763
Deferred income taxes 110,389 111,377
Postretirement benefits 53,364 52,534
Pension 50,253 51,142
Other noncurrent liabilities 18,201 17,993
Total liabilities 522,408 517,809
Stockholders' equity 357,283 355,948
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $879,691 $873,757
See Notes to Condensed Consolidated Financial Statements.
-2-
Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended
March 31,
(Dollars in thousands) 2003 2002
Net cash provided by (used in) operating activities $14,508 ($1,498)
Cash (used in) investing activities:
Capital expenditures (4,669) (6,881)
Acquisition of business (8,413) -
(13,082) (6,881)
Cash provided by (used in) financing activities:
Net borrowings under credit agreements 3,030 13,039
Dividends paid (4,381) (4,378)
Stock options exercised - 324
(1,351) 8,985
Net increase in cash and cash equivalents 75 606
Cash and cash equivalents, beginning of period 23,383 12,010
Cash and cash equivalents, end of period $23,458 $12,616
See Notes to Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. The condensed consolidated financial statements include the results of
Wausau-Mosinee Paper Corporation and our consolidated subsidiaries.
All significant intercompany transactions have been eliminated. The
accompanying condensed financial statements, in the opinion of
management, reflect all adjustments which are normal and recurring in
nature and which are necessary for a fair statement of the results for
the periods presented. Results for the interim period are not
necessarily indicative of future results. In all regards, the
financial statements have been presented in accordance with accounting
principles generally accepted in the United States of America. Refer
to notes to the financial statements which appear in the Annual Report
on Form 10-K for the year ended December 31, 2002, for the Company's
accounting policies which are pertinent to these statements.
Note 2. Effective March 3, 2003, the Company acquired certain assets of a
laminated papers producer for approximately $8.4 million in cash. The
acquisition is being accounted
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for as a purchase business combination
and, accordingly, the purchase price has been allocated using the fair
values of the acquired receivables, inventory, machinery and equipment,
and identifiable intangible assets. No goodwill was recorded as a
result of this acquisition. The pro forma disclosures required under
Statement of Financial Accounting Standard (SFAS) No. 141 "Business
Combinations" have not been presented as the impact of this acquisition
does not materially impact the results of operations.
Note 3. SFAS No. 143, "Accounting for the Impairment or Disposal of Long-Lived
Assets," establishes accounting and reporting standards associated with
the retirement of tangible long-lived assets and the associated asset
retirement costs. The Company adopted SFAS No. 143 on January 1, 2003.
There was no significant impact on the results of operations as a
result of the adoption.
Note 4. Net earnings include provisions, or credits, for stock incentive plans
calculated by using the average price of the Company's stock at the
close of each calendar quarter as if all such plans had been exercised
on that day. For the three months ended March 31, 2003, the credit for
incentive plans was $251,000. For the three months ended March 31,
2002, the provision for incentive plans was $534,000.
As permitted under 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."
Pro forma net earnings and earnings per share had the Company elected
to adopt the fair-value based method" of SFAS No. 123, "Accounting for
Stock-Based Compensation," are as follows:
(Dollars in thousands, except per share amounts)
Three Months
Ended March 31,
2003 2002
Net earnings, as reported $1,334 $3,428
Add: Total stock-based employee compensation
expense (credit) under APB No. 25, net of
related tax effects (158) 336
Deduct: Total stock-based compensation (expense)
credit determined under fair-value based method
for all awards, net of related tax effects 133 (339)
Proforma $1,309 $3,425
Earnings per share - basic:
As reported $0.03 $0.07
Pro forma $0.03 $0.07
Earnings per share - diluted:
As reported $0.03 $0.07
Pro forma $0.03 $0.07
-4-
Note 5. Basic and diluted earnings per share are recognized as follows:
(Dollars in thousands, except per share amounts)
Three Months
Ended March 31,
2003 2002
Net earnings $ 1,335 $ 3,428
Basic weighted average common shares outstanding 51,536,891 51,515,064
Dilutive securities:
Stock option plans 67,407 125,763
Diluted weighted average common shares outstanding 51,604,298 51,640,827
Net earnings per share-basic $ 0.03 $ 0.07
Net earnings per share-diluted $ 0.03 $ 0.07
For the three months ended March 31, 2003, options for 881,255 shares
were excluded from the diluted EPS calculation because the options were
antidilutive. For the three months ended March 31, 2002, options for
738,855 shares were excluded from the diluted EPS calculation because
the options were antidilutive.
Note 6. Accounts receivable consisted of the following:
(Dollars in thousands) MARCH 31, December 31,
2003 2002
Trade $83,902 $71,655
Other 1,713 1,527
85,615 73,182
Less: Allowances 2,331 2,376
$83,284 $70,806
Note 7. The various components of inventories were as follows:
(Dollars in thousands) MARCH 31, December 31,
2003 2002
Raw Materials $ 36,701 $ 33,989
Finished Goods and Work in Process 80,541 79,200
Supplies 28,476 27,463
Subtotal 145,718 140,652
Less: LIFO Reserve 22,012 21,619
Net inventories $123,706 $119,033
Note 8. The accumulated depreciation on fixed assets was $627,257,000 as of
March 31, 2003 and $613,840,000 as of December 31, 2002. The provision
for depreciation, amortization and depletion for the three months ended
March 31, 2003 and March 31, 2002 was $15,045,000 and $15,196,000,
respectively.
-5-
Note 9. Interim Segment Information
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
converting facilities which produce wax-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 produces a complete line of towel and tissue products
that are marketed along with 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.
-6-
RECONCILIATIONS
The following are reconciliations to corresponding totals in the
accompanying consolidated financial statements:
Three Months
Ended March 31,
(Dollars in thousands-unaudited) 2003 2002
Net sales external customers
Printing & Writing $ 98,377 $ 96,307
Specialty Paper 92,458 82,920
Towel & Tissue 48,991 46,701
$ 239,826 $ 225,928
Net sales intersegment
Printing & Writing $ 1,478 $ 1,844
Specialty Paper 0 83
Towel & Tissue 0 0
$ 1,478 $ 1,927
Operating profit (loss)
Printing & Writing $ 1,486 $ 6,804
Specialty Paper 1,512 (930)
Towel & Tissue 4,031 5,558
Total reportable segment
operating profit 7,029 11,432
Corporate & eliminations (2,394) (3,176)
Interest expense (2,501) (2,763)
Other income (expense) (14) (55)
Earnings before income taxes $ 2,120 $ 5,438
(Dollars in thousands-unaudited) MARCH 31, December 31,
2003 2002
Segment Assets
Printing & Writing $297,315 $284,652
Specialty Paper 347,083 347,380
Towel & Tissue 171,804 170,854
Corporate & Unallocated* 63,489 70,871
$879,691 $873,757
* Segment assets do not include intersegment accounts receivable,
cash, deferred tax assets and certain other assets which are not
identifiable with segments.
Note 10. Subsequent to the close of the first quarter, the Company and its
wholly-owned subsidiary, Bay West Paper Corporation, reached a
favorable settlement of all claims of the parties in the litigation
with Georgia-Pacific Corporation in the U.S. District Court for the
Eastern District of Kentucky. The Company had alleged infringement by
Georgia-Pacific on a patent used in the Bay West
WAVE 'N DRY{reg-trade-mark} dispenser.
-7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net Sales
Three Months Ended March 31,
(Dollars in thousands) 2003 2002
Net sales $239,826 $225,928
Percent increase/(decrease) 6% 4%
For the three months ended March 31, 2003, consolidated net sales for the
Company were $239.8 million compared to $225.9 million for the same three month
period in 2002, an increase of 6%. Company-wide shipments in the first quarter
of 2003 were 210,756 tons, a 6% improvement over the 199,123 tons shipped in
the first quarter of 2002. First quarter 2003 average selling price increased
less than 1% as compared to the same period in 2002 with product mix
improvements offsetting a slight decrease in product selling prices. Actual
product selling prices were less than 1% lower in the current-year quarter
affecting net sales by $0.5 million, while product mix enhancements improved
average selling price and net sales by approximately 1% and $2.7 million,
respectively.
First quarter net sales and shipments for the Printing & Writing Group were
similar in 2003 compared to the first quarter of 2002. As a group, net sales
improved 2% to $98.4 million in 2003 from $96.3 million reported for the same
three-month period in 2002. Shipments grew by 2% quarter-over-quarter from the
87,069 tons in 2002 to 88,731 tons in 2003. Average net selling price increased
1% for the comparable quarters, with mix improvement offsetting selling price
declines. First quarter retail product shipments increased 19% compared to last
year and premium paper shipments increased 6%. Demand for uncoated free-sheet
papers decreased approximately 2% compared to the same period last year. Market
conditions remained weak and pricing competitive as the second quarter began.
During the first quarter of 2003, the Company acquired the production assets,
customer base, and certain components of working capital of Laminated Papers,
Inc., a producer of moisture barrier laminated roll wrap product. The
acquisition increases the Printing & Writing Group's estimated share of the
laminated roll wrap product to slightly more than 50%, or approximately 80,000
tons.
The Specialty Paper Group's net sales improved to $92.5 million for the three
months ended March 31, 2003 compared to $82.9 million in the three months ended
March 31, 2002, or 12%. Volume gains accounted for the improvement in revenues
as average selling prices remained flat when comparing the first quarter of
2003 to the first quarter of 2002. Shipments increased 11% to 87,675 tons in
the first quarter of 2003 compared to 78,685 tons in 2002. Despite sluggish
market conditions, current year shipment increases were due, in part, to the
volume ramp-up of new products including pressure-sensitive release liners and
food packaging grades. Revenues from products introduced within the previous
three years exceeded 40% for both periods.
-8-
Net sales for the first quarter of 2003 increased 5% over the first quarter of
2002 for the Towel & Tissue Group with net sales of $49.0 million and $46.7
million for the three months ended March 31, 2003 and 2002, respectively. Mix
enhancement and product changes improved average net selling price
approximately 2% quarter-over-quarter. In addition, gains were realized in
shipments with 34,350 tons shipped in the first quarter of 2003 compared to
33,369 tons shipped in the first quarter of 2002-a 3% improvement
quarter-over-quarter. The "away-from-home" segment of the towel and tissue
market grew nearly 2% in the first quarter of 2003 compared with the same
period in 2002.
Gross Profit
Three Months Ended March 31,
(Dollars in thousands) 2003 2002
Gross profit on sales $20,879 $25,328
Gross profit margin 9% 11%
Gross profit for the three months ended March 31, 2003, was $20.8 million
compared to $25.3 million for the three months ended March 31, 2002. The
decrease in the gross profit margin year-over-year was principally due to
increases in energy and fiber prices. These increases were partially offset by
volume gains, operational efficiencies and cost-reduction efforts. In total,
the natural gas price per decatherm increased 102% resulting in additional cost
of $5.8 million in the first quarter of 2003 compared to the first quarter of
2002 while fuel oil costs increased by $0.8 million. Compared to the first
quarter of 2002, market pulp prices were higher by $33 per air-dried metric
ton, or approximately $3.4 million, quarter-over-quarter while wastepaper
prices were higher by $34 per standard ton, or approximately $1.4 million.
As the second quarter began, market pulp costs continued to climb while natural
gas prices declined from peak first quarter levels but remained well above
historical averages. At quarter-end, approximately 25% of the Company's May
through December natural gas requirements were protected through purchase
contracts, with approximately half of the May and June requirements protected
and reduced volumes protected in later months. The price of these contracts is
approximately 15% below the Company's first quarter average price.
The Printing & Writing Group's gross profit for the first quarter of 2003 was
7% of net sales compared to 13% for the same period last year. The decline in
quarter-over-quarter gross margins is attributable to unfavorable pricing in
both natural gas and market pulp as discussed in the consolidated gross margin
comparisons.
The Specialty Paper Group's improved operations and cost-reduction efforts
offset the unfavorable impacts of natural gas and market pulp to report
improved year-over-year margins-from 4% in the first three months of 2002 to 6%
in the first three months of 2003.
The gross profit margin for the Towel & Tissue Group declined from 20% in the
first quarter of 2002 to 16% in the first quarter of 2003. As indicated in the
consolidated gross profit margin comparisons, unfavorable wastepaper prices
contributed to the reduced margin.
-9-
Consolidated order backlogs increased to approximately 38,800 tons at March 31,
2003 from approximately 32,500 tons at March 31, 2002. Backlog tons at March
31, 2003 represent $41.9 million in sales compared to $36.1 million in sales at
March 31, 2002. Improvements in customer backlog were most significant in the
Specialty Paper Group with backlog tons improving to 29,100 tons at the end of
the first quarter of 2003 compared to 20,800 tons at the end of the first
quarter of 2002. The Printing & Writing Group backlog tons declined from
10,100 tons as of March 31, 2002 to 8,400 tons at March 31, 2003. The Towel &
Tissue Group experienced a slight decline in backlogs compared to the first
quarter of 2002 at 1,300 tons compared to 1,600 tons. The change in customer
order backlogs 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.
Selling and Administrative Expenses
Three Months Ended March 31,
(Dollars in thousands) 2003 2002
Selling and administrative expense $16,244 $17,072
Percent increase/(decrease) (5%) (3%)
As a percent of net sales 7% 8%
In the first quarter of 2003, the income recorded for the stock-incentive
programs was $0.3 million and in the same period of 2002, the expense
recognized for these programs was $0.5 million.
Other Income and Expense
Three Months Ended March 31,
(Dollars in thousands) 2003 2002
Interest expense $2,501 $2,763
Other expense 14 55
Interest expense was $2.5 million in the first quarter of 2003 compared to $2.8
million in the first quarter of 2002. The decrease quarter-over-quarter was
attributable to lower average debt levels partially offset by a slightly higher
effective interest rate. Long-term debt was $165.6 million and $205.1 million
at March 31, 2003 and 2002, respectively. Long-term debt at December 31, 2002,
was $162.8 million. Interest expense is expected to remain slightly lower in
2003 than in 2002 due to reduced borrowings against the Company's credit
facilities.
Income Taxes
Three Months Ended March 31,
(Dollars in thousands) 2003 2002
Provision for income taxes $785 $2,010
Effective tax rate 37 %37%
The effective tax rates for the periods presented are indicative of the
Company's normalized tax rate. The effective rate for 2003 is expected to
remain at 37%.
-10-
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows and Capital Expenditures
Three Months Ended March 31,
(Dollars in thousands) 2003 2002
Cash provided by (used in) operating activities $14,508 ($1,498)
Capital expenditures 4,669 6,881
For the three months ended March 31, 2003, cash provided by operating
activities was $14.5 million and improved from the cash used in operations for
the three months ended March 31, 2002, of $1.5 million. The improvement in
cash flows provided by operating activities quarter-over-quarter is
attributable to $7.0 million in refunds received in the first quarter of 2003
on income taxes, seasonal inventory builds at levels lower than realized in the
first quarter of 2002, and the timing of payments in other assets and accounts
payable in the first quarter of 2003 compared to the same period in 2002.
In 2003, the Company has continued efforts initiated in 2001 to limit capital
spending due to weak economic conditions and to excess production capacity in
the paper industry. As a result, capital spending in the first quarter of 2003
was $4.7 million, a decline of 32% from the first quarter of 2002. The
reduction in spending compared with 2002 was accomplished by limiting capital
spending to projects which the Company had identified as providing a return on
investment exceeding the Company's cost of capital, and capital projects
required to maintain current production levels or efficiencies. Capital
spending for 2003 is expected to be less than $40 million, or two-thirds the
Company's rate of depreciation, depletion, and amortization.
For 2003, capital expenditures for projects with total spending expected to
exceed $1.0 million were $0.1 million in the Printing & Writing Group as part
of a capital project to expand premium papers production capabilities at the
Brokaw mill and $0.3 million on a process control system computer replacement
at the Groveton mill. In the Towel & Tissue Group, $0.6 million was spent on a
screw press project and $0.5 million was spent for various converting lines.
The balance of spending for the first quarter of 2003 was related to projects
that individually are expected to cost less than $1.0 million. These
expenditures included approximately $1.8 million for essential non or
low-return projects, and approximately $1.4 million on projects expected to
provide a return on investment that exceeds the Company's cost of capital.
During the first three months of 2002, capital expenditures for projects with
total spending expected to exceed $1.0 million were $0.6 million for a pulp
mill digester replacement and $0.3 million for a paper machine process control
system replacement at the Printing & Writing Group's Brokaw and Groveton mills,
respectively. At the Towel & Tissue Group, $2.0 million was spent on various
converting lines. The balance of the spending in the first quarter of 2002 was
on projects individually under $1.0 million.
Effective March 3, 2003, the Company acquired certain assets of a laminated
papers producer for approximately $8.4 million in cash. The acquisition is
being accounted for as a purchase
-11-
business combination and, accordingly, the purchase price has been allocated
using the fair values of the acquired receivables, inventory, machinery and
equipment, and identifiable intangible assets. No goodwill was recorded as a
result of this acquisition.
Debt and Equity
March 31, December 31,
(Dollars in thousands) 2003 2002
Total debt $165,612 $162,763
Stockholders' equity 357,283 355,948
Total capitalization 522,895 518,711
Long-term debt/capitalization ratio 32% 31%
As of March 31, 2003, total debt increased from December 31, 2002 by $2.8
million to $165.6 million. The increase in total debt is due primarily to the
acquisition of a business that occurred on March 3, 2003. For additional
information, please refer to the preceding discussion and Note 3 in the Notes
to Condensed Consolidated Financial Statements.
In the first quarter of 2003, the Company elected not to renew a $12.5 million
revolving note agreement which expired on March 8, 2003. On March 31, 2003,
the Company had approximately $128.0 million available from existing bank
facilities. The Company's borrowing capacity and cash provided by operations
are expected to meet capital and dividend requirements.
Dividends
A dividend declared on December 12, 2002 of $0.085 per common share was paid on
February 17, 2003 to shareholders of record on February 1, 2003. At the April
17, 2003 meeting of the Board of Directors, a quarterly cash dividend was
declared in the amount of $0.085 per common share. The dividend is payable on
May 15, 2003 to shareholders of record on May 1, 2003.
-12-
INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
This report contains certain of management's expectations and other
forward-looking information regarding the Company pursuant to the
safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
While the Company believes that these forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of future
performance, and all such statements involve risk and uncertainties that could
cause actual results to differ materially from those contemplated in this
report. The assumptions, risks, and uncertainties relating to the
forward-looking statements in this report include general economic and business
conditions, changes in the prices of raw materials or energy, competitive
pricing in the markets served by the Company as a result of economic conditions,
overcapacity in the industry and the demand for paper products, manufacturing
problems at Company facilities and various other risks and assumptions. These
and other assumptions, risks, and uncertainties are described under the caption
"Cautionary Statement Regarding Forward-Looking Information" in Item 1 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2002, and
from time to time, in the Company's other filings with the Securities and
Exchange Commission. The Company assumes no obligation to update or supplement
forward-looking statements that become untrue because of subsequent events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the information provided in response to
Item 7A of the Company's Form 10-K for the year ended December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
During the 90-day period prior to the filing date of this Form 10-Q,
management, under the supervision, and with the participation, of the Company's
President and Chief Executive Officer and the Chief Financial Officer,
evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Rule 13a-14 under the Securities
Exchange Act of 1934. Based upon, and as of the date of such evaluation, the
President and Chief Executive Officer and the Chief Financial Officer concluded
that the Company's disclosure controls and procedures were effective in all
material respects. There have been no significant changes in the Company's
internal controls or in other factors which could significantly affect internal
controls subsequent to the date the Company carried out its evaluation, nor
were there any significant deficiencies or material weaknesses identified which
required any corrective action to be taken.
-13-
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Subsequent to the close of the first quarter, the Company and its wholly-owned
subsidiary, Bay West Paper Corporation, reached a favorable settlement of all
claims of the parties in the litigation with Georgia-Pacific Corporation in the
U.S. District Court for the Eastern District of Kentucky. The Company had
alleged infringement by Georgia-Pacific on a patent used in the Bay West
WAVE 'N DRY{reg-trade-mark} dispenser.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
10.1 Executive Deferred Compensation Plan
99.1 Certification under Section 906 of Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
Form 8-K dated January 29, 2003. The Company filed a current report on Form
8-K on January 29, 2003, reporting earnings and net sales information for
the fourth quarter ended December 31, 2002 and for the fiscal year ended
December 31, 2002 under Item 5 and additional related information under Item
9, Regulation FD Disclosure.
Form 8-K dated March 5, 2003. The Company filed a current report on Form 8-
K on March 5, 2003, reporting the acquisition of the production assets and
customer base of Laminated Products, Inc. under Item 5 and additional
related information under Item 9, Regulation FD Disclosure.
-14-
SIGNATURES
Pursuant to the requirements 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
May 14, 2003 SCOTT P. DOESCHER
Scott P. Doescher
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
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CERTIFICATIONS
I, Thomas J. Howatt, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Wausau-
Mosinee Paper Corporation (the "registrant");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
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6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003
THOMAS J. HOWATT
Thomas J. Howatt
President and Chief Executive Officer
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CERTIFICATIONS
I, Scott P. Doescher, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Wausau-
Mosinee Paper Corporation (the "registrant");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
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6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 14, 2003
SCOTT P. DOESCHER
Scott P. Doescher
Senior Vice President, Finance
(Principal Financial Officer)
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EXHIBIT INDEX
TO
FORM 10-Q
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. Section 232.102(d))
The following exhibits are filed as part of this report:
10.1 Executive Deferred Compensation Plan
99.1 Certification under Section 906 of Sarbanes-Oxley Act of 2002
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