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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Commission file number 1-13948

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

1-800-514-0186
(Registrant's telephone number, including area code)

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

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

        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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o.

        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 registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. o

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý    No o.

        The aggregate market value of the registrant's voting stock held by non-affiliates of registrant on June 30, 2003 was approximately $356 million.

        As of February 29, 2004, 14,964,266 shares of the Corporation's common stock, par value $.10 per share, together with preferred stock purchase rights associated therewith, were outstanding, and the aggregate market value of the common stock on such date (based on the closing price of these shares on the New York Stock Exchange) held by non-affiliates was approximately $499 million.

(Continued)

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Documents Incorporated by Reference

        Schweitzer-Mauduit International, Inc.'s 2004 Proxy Statement, filed with the Commission dated March 18, 2004, contains certain of the information required in this Form 10-K, and portions of that document are incorporated by reference herein from the applicable sections thereof. The following chart identifies the sections of this Form 10-K which incorporate by reference portions of the Company's 2004 Proxy Statement. The Items of this Form 10-K, where applicable, specify which portions of such document are incorporated by reference. The portions of such document that are not incorporated by reference shall not be deemed to be filed with the Commission as part of this Form 10-K.

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PART I

ITEM 1. BUSINESS

Background

        Schweitzer-Mauduit International, Inc. ("SWM"), headquartered in the United States of America ("United States" or "U.S."), was incorporated in Delaware on August 21, 1995 as a wholly-owned subsidiary of Kimberly-Clark Corporation ("Kimberly-Clark") in the tax-free spin-off of Kimberly-Clark's U.S., French and Canadian business operations that manufacture and sell tobacco-related papers and other specialty paper products. Pursuant to a distribution agreement dated October 23, 1995, Kimberly-Clark distributed to its stockholders all of the common stock of SWM on November 30, 1995. As a result of the spin-off, SWM became an independent public company, with its common stock listed on the New York Stock Exchange. As used herein, the "Company" means SWM, SWM and its several subsidiaries or, as determined by the context, one or more of its several subsidiaries.

        The Company's wholly-owned direct subsidiaries are Schweitzer-Mauduit Canada, Inc. ("SM-Canada") and Schweitzer-Mauduit Spain, S.L. ("SM-Spain"), a holding company organized under the Spanish holding company regime and the primary foreign investment holding company for SWM, and together SWM and SM-Canada wholly-own Schweitzer-Mauduit International China, Limited, a currently inactive holding company incorporated in Hong Kong. The Company indirectly through SM-Spain has subsidiaries in France and Brazil. SM-Spain owns directly 100 percent of Schweitzer-Mauduit Holding S.A.R.L., a French holding company ("SMH"), and together SM-Spain and SMH own 100 percent of two holding companies, Schweitzer-Mauduit Industries S.A.R.L., a French corporation ("SMI") which holds the Company's investment in its French reconstituted tobacco operations, and Schweitzer-Mauduit France S.A.R.L., a French corporation ("SMF") which holds the Company's French paper operations. SMI owns directly 72 percent of the issued and outstanding shares of LTR Industries S.A., a French corporation ("LTRI"). SMF, directly or indirectly, owns 100 percent of three principal French operating subsidiaries, Papeteries de Mauduit S.A.S. ("PdM"), Papeteries de Malaucène S.A.S. ("PdMal") and Papeteries de Saint-Girons S.A.S. ("PdStG"). SM-Spain also owns directly 99.99 percent of the issued and outstanding shares of Schweitzer-Mauduit do Brasil S.A., a Brazilian corporation ("SWM-B"). The Company did not have any unconsolidated subsidiaries, joint ventures or special purpose entities as of December 31, 2003.

        Financial information about foreign and domestic operations, contained under the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" appearing in Part II, Item 7 herein and in Notes 6, 7 and 14 ("Debt", "Income Taxes" and "Business Segments and Geography," respectively,) to Consolidated Financial Statements contained in "FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" appearing in Part II, Item 8 herein, are incorporated in this Item 1 by reference.

Description of the Business

        General.    Schweitzer-Mauduit International, Inc. is a diversified producer of premium specialty papers and the world's largest supplier of fine papers to the tobacco industry. The Company manufactures and sells paper and reconstituted tobacco products to the tobacco industry as well as specialized paper products for use in other applications. Tobacco industry products, which comprised 93 percent, 93 percent and 91 percent of the Company's 2003, 2002 and 2001 consolidated net sales, respectively, include cigarette, plug wrap and tipping papers used to wrap various parts of a cigarette ("Cigarette Papers"), reconstituted tobacco leaf ("RTL") for use as filler in cigarettes, reconstituted tobacco wrappers and binders for cigars and paper products used in cigarette packaging. These products are sold directly to the major tobacco companies or their designated converters in North and South America, Western and Eastern Europe, Asia and elsewhere.

        Products.    Each of the three principal types of paper used in cigarettes — cigarette, plug wrap and tipping papers — serves a distinct purpose in the function of a cigarette.

        Cigarette paper wraps the column of tobacco in a cigarette. Certain properties of cigarette paper, such as basis weight, porosity, opacity, tensile strength, texture and burn rate must be controlled to tight tolerances. Many of these characteristics are critical to meet the requirements of high-speed production processes utilized by cigarette manufacturers as well as their desired attributes of finished cigarettes such as reduced ignition propensity or reduced deliveries of tobacco-related smoke constituents.

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        Plug wrap paper forms the outer layer of a cigarette filter and is used to hold the filter materials in a cylindrical form. Conventional plug wrap is manufactured on flat wire paper machines using wood pulp. Porous plug wrap, a highly air permeable paper, is manufactured on inclined wire paper machines using a furnish consisting of "long fibers," such as abaca, and wood pulp. Porosity, a measure of air flow permeability, ranges from a typical level of less than 100 Coresta on conventional plug wrap to 35,000 Coresta on high porosity papers. High porosity plug wrap is sold under the registered trademark POROWRAP® and is used on filter-ventilated cigarettes. High porosity papers can also be used for such specialty products as battery separator paper.

        Tipping paper, produced in white or buff color, joins the filter element to the tobacco-filled column of the cigarette. The ability to produce tipping paper which is both printable and glueable at high speeds is critical to producing a cigarette with a distinctive finished appearance.

        Reconstituted tobacco is used by manufacturers of cigarettes, cigars and other tobacco products. The Company currently produces reconstituted tobacco in two forms: leaf or "RTL" in France, which is manufactured by LTRI, and wrapper and binder in the United States. RTL is used by manufacturers of cigarettes primarily as a filler that is blended with virgin tobacco as a design aid to achieve certain attributes of finished cigarettes, such as taste characteristics and reduced deliveries of tobacco-related smoke constituents, and to cost-effectively utilize tobacco leaf by-products. Wrapper and binder are reconstituted tobacco products used by manufacturers of machine-made cigars. Binder is used to hold the tobacco leaves in a cylindrical shape during the production process. Wrapper is used to cover the outside of the cigar, providing a uniform, finished appearance.

        The Company's non-tobacco industry products include lightweight printing and writing papers, coated papers for packaging and labeling applications, business forms, furniture laminates, battery separator paper, drinking straw wrap, filter papers and other specialized papers primarily for the North American, Western European and Brazilian markets. Like porous plug wrap, certain of these non-tobacco industry products use a furnish consisting of long fibers. These products are generally sold directly to converters and other end-users. The non-tobacco industry products are a diverse mix of products, certain of which represent commodity paper grades produced to maximize machine utilization.

        Business Segments.    The Company is operated and managed based on the geographical location of its manufacturing operations: the United States, France and Brazil. As such, these geographical operations also represent the Company's business segments for reporting purposes. These business segments manufacture and sell cigarette, plug wrap and tipping papers used to wrap various parts of a cigarette, reconstituted tobacco products and paper products used in cigarette packaging, as well as certain non-tobacco industry products. While the products are similar in each segment, they vary based on customer requirements and the manufacturing capabilities of each of the operations. Sales by a segment into markets primarily served by a different segment occur where specific product needs cannot be cost-effectively met by the manufacturing operations domiciled in that segment.

        Markets and Customers.    The Company's U.S. business primarily supplies the major, and many of the smaller, cigarette manufacturers in North America, and also has significant sales in South America and Japan. The customer base for the U.S. operations consists of more than 150 customers in approximately 30 countries. The Company's French businesses rely predominantly on worldwide exports, primarily to Western Europe, Asia, Eastern Europe and the former Commonwealth of Independent States, and, in lesser but substantial amounts, to Africa, the Middle East and Australia. The customer base for the French operations consists of a diverse group of over 200 customers in more than 80 countries. The Company's Brazilian business primarily supplies customers in Brazil, but with increasing sales to other South American countries. The current customer base of the Brazilian operations consists of the cigarette manufacturers in Brazil, as well as approximately 20 customers in approximately five countries outside Brazil. Customers of all three business units include international tobacco companies, regional tobacco manufacturers and government monopolies.

        Philip Morris Incorporated ("Philip Morris"), including its subsidiaries, and B.A.T. Industries PLC ("BAT"), including its U.S. subsidiary Brown & Williamson Tobacco Corporation, its Brazilian subsidiary Souza Cruz S.A. ("Souza Cruz") and its other subsidiaries, are the Company's two largest customers. Philip Morris and BAT, together with their respective affiliates and designated converters, accounted for approximately 30 percent and 19 percent, respectively, of the Company's 2003 consolidated net sales. Although the loss of one or both of these large customers could have a material adverse effect on the Company's results of operations, this is not

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considered likely given the significant share that SWM's capacity represents of the total world-wide supply available to meet the demand for cigarette-related fine papers.

        Philip Morris Supply Agreement.    Since January 1, 1993, the Company's U.S. unit has been the single source of supply of Cigarette Papers to Philip Morris' U.S. operations. In December 2002, Philip Morris and the Company reached agreement to extend the Second Amended and Restated Supply Agreement for Fine Paper Supply ("Second Amended Supply Agreement"). This agreement extends the Company's position as the supplier of Cigarette Papers to Philip Morris' U.S. operations through December 31, 2006, except that Philip Morris has the continuing right to acquire up to ten percent of its prior-year purchases of Cigarette Papers from other suppliers, although to-date it has chosen not to do so. By its terms, the current extension to the Second Amended Supply Agreement automatically renews for two additional successive terms of two years each unless either party gives notice of non-renewal 24 months before the end of the then-current contract term. If a decision is made to terminate, the agreement provides for a two-year phase-out period during the last 24 months of the then-current contract term. Further, pursuant to an addendum to the Second Amended Supply Agreement, the Company has an exclusive supply arrangement with Philip Morris U.S.A. for a jointly developed banded cigarette paper that may make a cigarette less likely to ignite certain fabrics. The Company produces banded cigarette paper in sufficient quantities to support Philip Morris' commercial sales of cigarettes in the State of New York and limited commercial sales nationally. Philip Morris and the Company also have entered into a licensing and royalty agreement covering this new paper.

        Souza Cruz Supply Agreements.    On February 2, 1998, as part of the Company's agreement to purchase a Brazilian specialty paper manufacturer named Companhia Industrial de Papel Pirahy ("Pirahy"), the predecessor of the Company's Brazilian operations, SWM-B entered into two exclusive supply agreements with its former owner and its largest customer, Souza Cruz, to supply all of Souza Cruz's needs for papers which SWM-B is capable of producing. The supply agreements for tobacco-related papers and coated paper used in the packaging of cigarette products, as amended in February 2000, have initial terms of six years through February 1, 2004 and phase-out periods of 18 months and 12 months, respectively. In July 2002, the Company was advised by Souza Cruz that these exclusive supply agreements will not be renewed under their existing terms. Although this notification was necessary in order for the tobacco-related papers agreement to not automatically renew for an additional three-year term, the Company believes it is the expectation of both parties to maintain a mutually beneficial commercial relationship following the expiration of the current supply agreements. In December 2003, SWM-B and Souza Cruz agreed to an extension of SWM-B's exclusive supply of Souza Cruz's tobacco-related paper requirements through February 1, 2005 concurrent with the first twelve months of the phase-out period.

        Employee and Labor Relations.    As of December 31, 2003, the Company had 3,357 regular full-time active employees of whom 611 hourly employees and 274 salaried employees were located in the United States and Canada, 1,142 hourly employees and 685 salaried employees were located in France and 598 hourly employees and 47 salaried employees were located in Brazil.

        North American Operations — Hourly employees at the Lee, Massachusetts, Spotswood, New Jersey and Ancram, New York mills are represented by locals of the Paper, Allied-Industrial, Chemical and Energy Workers International Union ("PACE"). Following a five-week strike in the summer of 2002 during which the mill continued to operate, a new two-year collective bargaining agreement was ratified for the Spotswood mill expiring on July 28, 2004. Also during 2002, a new three-year collective bargaining agreement was reached for the Lee mills expiring on July 31, 2005. A three-year collective bargaining agreement was signed during 2001 for the Ancram mill expiring on September 30, 2004. The strike at the Spotswood mill was the first such work stoppage at any of these locations for approximately 25 years. The Company believes employee and union relations continue to be positive.

        The fiber operations of the Company's Canadian subsidiary are non-union. The Company believes that employee relations are positive.

        French Operations — Hourly employees at the Company's mills in Quimperlé, Malaucène, Saint- Girons and Spay, France are union represented. New collective bargaining agreements have been signed in 2004 in Malaucène and Spay expiring December 31, 2004 and February 28, 2005, respectively, and two of the three unions representing employees in Quimperlé have signed a new bargaining agreement expiring December 31, 2005. The current collective bargaining agreement in Saint-Girons is scheduled to expire April 30, 2004. Over the years, there have been intermittent work stoppages at the French operations lasting from a few hours to

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several days. The Company believes that, overall, employee relations are positive and comparable to similar French manufacturing operations.

        Brazilian Operations — Hourly employees at the Pirahy mill are represented by a union. The current annual collective bargaining agreement expires on May 31, 2004. The Company believes that, overall, employee relations are positive and comparable to similar Brazilian manufacturing operations.

        Raw Materials and Energy.    Wood pulp is the primary fiber used in the Company's operations. These operations consumed approximately 97,000 and 96,000 metric tons of wood pulp in 2003 and 2002, respectively, all of which was purchased. Company operations also use other cellulose fibers, the most significant of which are in the form of flax fiber and tobacco leaf by-products, as the primary raw materials for the Company's Cigarette Papers and reconstituted tobacco products, respectively. While tobacco leaf by-products are generally the property of the cigarette manufacturer for whom the reconstitution is contracted, the Company and LTRI purchase some tobacco leaf by-products for use in the production of RTL and wrapper and binder products. In addition to cellulose fibers, the Company's operations use calcium carbonate as another significant raw material in the production of many of its paper products. Calcium carbonate, or chalk, is used in the production of Cigarette Papers, as well as in certain of the Company's other paper products, to provide desired qualities and characteristics, such as opacity, as well as end-product performance attributes.

        Flax straw is purchased and subsequently processed into flax tow at processing facilities in Canada and France. The flax tow is then converted into flax pulp at pulping facilities in the United States and France. Flax tow and flax pulp are also purchased externally, but these purchases only represent approximately 35 percent of the flax pulp currently consumed by the Company's operations in the United States, France and Brazil. Certain specialty papers are manufactured by the Company's operations in France, requiring small amounts of other cellulose fibers, all of which are purchased.

        All of the Company's needs for calcium carbonate are purchased. The Company's Quimperlé mill in France and Pirahy mill in Brazil have third-party vendor-operated calcium carbonate plants on-site which supply significant quantities toward the needs of those mills. In addition, the Company's mills also purchase calcium carbonate produced by vendors at plants not on-site at the Company's mills.

        The Company believes that the raw materials purchased by the Company are readily available from several sources and that the loss of a single supplier would not have a material adverse effect on the Company's ability to procure needed raw materials from other suppliers.

        The papermaking processes use significant amounts of energy, primarily electricity and natural gas, to run the paper machines and other equipment used in the manufacture of pulp and paper. In France and in the United States, availability of energy is generally not expected to be an issue, although prices can fluctuate significantly based on variations in demand. In Brazil, where that country's production of electricity is heavily reliant upon hydroelectric plants, availability of electricity has been affected in the past by weather and rain variations. The Company's Brazilian business currently has a sufficient supply of energy to continue its current level of operation.

        Working Capital.    The Company normally maintains approximately 30 to 60 days of inventories to support its operations. The Company's sales terms average between 30 and 60 days for payment by its customers, dependent upon the products and markets served. For a portion of the Company's business, particularly the Company's French businesses' export sales, extended terms are provided. With respect to the Company's accounts payable, the Company typically carries approximately a 30 to 60 day level, in accordance with its purchasing terms, which vary by business segment. The accounts payable balance varies in relationship to changes in the Company's manufacturing operations, particularly due to changes in prices of wood pulp and the level and timing of capital expenditures related to projects in progress.

        Competition.    The Company is the leading producer of Cigarette Papers in the world. LTRI is the leading independent producer of RTL for use in cigarettes. The Company does not sell its products directly to consumers or advertise its products in consumer media. The specialized nature of these tobacco-related papers requires research and development capability to develop them and special papermaking equipment and skills to meet exacting customer specifications. These factors have limited the number of competitors in each of the tobacco-related paper categories discussed separately below.

        Cigarette Paper — Management believes that the Company has an estimated 70 to 75 percent share of the North American cigarette paper market. RFS Ecusta Inc. ("Ecusta"), a former subsidiary of Purico (IOM) Ltd.,

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was the Company's sole domestic competitor in the sale of cigarette paper in North America until it ceased operations in the third quarter of 2002 and subsequently declared bankruptcy. With the deteriorating condition of Ecusta's business during 2002, the Company along with European suppliers, such as Wattens GmbH ("Wattens"), an Austrian subsidiary of Trierenberg Holding ("Trierenberg"), and Miquel y Costas & Miquel S.A., a Spanish corporation ("Miquel y Costas"), increased their shares of the North American market. Management believes that the bases of cigarette paper competition are security of supply, price, consistent quality, level of technical service and performance requirements of the customer's cigarette-making equipment.

        The Company has developed two technologies to address the potential market for cigarette paper for reduced ignition propensity cigarettes in the United States and Canada — banded cigarette paper and print banded cigarette paper. The Company is not aware of any commercially proven technology for competitive cigarette paper for reduced ignition propensity cigarettes developed by its competitors.

        The principal competitors of the Company's French cigarette paper businesses are Wattens, Miquel y Costas and Julius Glatz GmbH, an independent German company. PdM and PdStG, indirect wholly-owned subsidiaries of the Company in France, sell approximately 70 percent of their products in Western Europe and Asia. Management believes that the bases of competition for PdM's and PdStG's products are the same as for the Company's U.S. business.

        The principal competitors of the Company's Brazilian cigarette paper business are Wattens, Miquel y Costas and Cartieira Del Maglio S.p.A, an independent Italian company. SWM-B has an estimated 80 percent share of the cigarette paper market in Brazil and an estimated 60 to 65 percent share of the cigarette paper market in South America. Management believes that the bases of cigarette paper competition for SWM-B are the same as for the Company's U.S. business.

        In recent years, the number of cigarette paper manufacturers has declined worldwide. In addition to the bankruptcy of Ecusta in the United States, smaller cigarette paper manufacturers in the United Kingdom, Argentina, Mexico and Colombia have either ceased or significantly reduced their production of cigarette paper, reflecting the competitive nature of this product and efforts by the world's major cigarette manufacturers to consolidate their suppliers. This reduction of worldwide cigarette paper production capacity has been partially offset by cigarette paper production capacity added by SWM, Wattens and in China.

        Plug Wrap Paper — Management believes that the Company's U.S. business has an estimated 85 to 90 percent share of the North American market for plug wrap papers. The remainder of the North American market is shared by two competitors: Miquel y Costas and Wattens. The Company's French businesses hold an estimated 60 percent of the Western European high porosity plug wrap market. Wattens is the Company's principal competitor in that market. Through the Brazilian business' supply of conventional plug wrap papers and the U.S. business' supply of porous plug wrap papers, the Company has an estimated 70 percent share of the South American market for plug wrap papers. Miquel y Costas and Wattens are the Company's principal competitors in that market.

        Management believes that the primary basis of competition for high porosity plug wrap is technical capability with price being a less important consideration. On the other hand, conventional plug wrap entails less technical capability with the result that price and quality are the primary bases of competition.

        Tipping Paper — Management believes that the Company's U.S. business has an estimated 60 to 65 percent share of the North American market for base tipping paper which is subsequently printed by converters. Its principal competitor in this market is Tervakoski Oy, a Finnish subsidiary of Trierenberg. Sales of tipping paper by Ecusta, which was previously a major competitor of the Company in the tipping paper market, declined and eventually ceased during 2002 (see comment under "Cigarette Paper" above). Management believes that the bases for competition are consistent quality, price and, most importantly, the ability to meet the runnability and printability requirements of converting equipment and high-speed cigarette-making machines.

        PdMal, another of the Company's indirect wholly-owned French subsidiaries, operates a base paper and finished tipping paper mill in Malaucène, France, and ranks among the largest converted tipping paper producers in Western Europe, with an estimated 15 percent market share. PdMal produces printed and unprinted, and laser and electrostatically perforated tipping papers. PdStG and SWM-B also produce base tipping paper that is converted and sold by PdMal. PdMal's principal European competitors are Tann-Papier GmbH, an Austrian subsidiary of Trierenberg, Benkert GmbH (Germany) and Miquel y Costas. Management

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believes that the bases of competition for perforated tipping paper in Europe are perforation technology, consistent quality and price.

        The Company's Brazilian business has an estimated 65 to 70 percent share of the South American market for base tipping paper which is subsequently printed by converters. The Company's principal competitor in Latin America is Miquel y Costas. Management believes that the bases of tipping paper competition for SWM-B are the same as for the Company's U.S. business.

        Reconstituted Tobacco — LTRI is the leading independent producer of RTL in the world. Management believes that the basis of competition in this market is primarily quality. However, sales volumes are influenced by worldwide virgin tobacco prices as lower prices of virgin tobacco may result in lower reconstituted tobacco sales volumes.

        LTRI's principal competitors are (i) R.J. Reynolds Tobacco Company, which produces RTL for both internal and external use, (ii) Yelets, an affiliate of Japan Tobacco Inc. which operates in Russia, (iii) B.V. Deli-HTL Tabak Maatschappiji B.V., an independent producer which operates in Holland, and (iv) cigarette companies such as Philip Morris and BAT, which produce RTL primarily for internal use.

        Management estimates that approximately 50 percent of reconstituted cigar wrapper and binder used in the U.S. market is produced internally by domestic cigar manufacturers. The Company's Ancram mill and Nuway Tobacco, a cast process manufacturer, produce the balance.

        Other Products — As noted above, the Company and its subsidiaries produce papers for lightweight printing and writing, coated papers for packaging and labeling applications, business forms, furniture laminates, battery separator papers, wrapping paper for drinking straws, filter papers and other specialized papers. Management believes that price is the primary basis of competition for drinking straw wrap, printing and writing and filter papers, while consistent quality and customer service are believed to be the primary competitive factors for battery separator and business forms papers. The Company does not possess a significant market share in any of the above segments, except for battery separator papers, where it holds approximately 30 percent of the worldwide market. The Company continues, to the extent feasible, to convert its production of less profitable papers to more profitable niche applications.

        Research and Development; Patents and Trademarks.    The Company has research and laboratory facilities in Spay, France, Santanésia, Brazil and Alpharetta, Georgia and employs more than 55 research personnel. The Company is dedicated to developing Cigarette Papers, reconstituted tobacco and non-tobacco paper product innovations and improvements to meet the needs of individual customers. The development of new components for tobacco products and the development of new non-tobacco paper products are the primary focuses of these research and development functions, including several development projects for the Company's major customers. The Company expensed $8.3 million in 2003 and $7.6 million in both 2002 and 2001 on product research and development.

        The Company believes that its research and product development capabilities are unsurpassed in the industry and have played an important role in establishing the Company's reputation for high quality, superior products. The Company's commitment to research and development has enabled the Company, for example, to (i) produce high-performance papers designed to run on the high-speed manufacturing machines of its customers, (ii) produce papers to exacting specifications with very high uniformity, (iii) produce cigarette paper with extremely low basis weights, (iv) develop cigarette paper for reduced ignition propensity cigarettes, (v) produce highly porous cigarette and plug wrap papers, and (vi) produce papers with other specifically engineered properties required for end-product performance attributes. The Company believes it is in the forefront of the specialty paper manufacturing process, having invested heavily in modern technology, including on-line banding and off-line printing capabilities for reduced ignition propensity cigarette papers, laser technology and modern paper-slitting equipment. The Company believes that its commitment to research and development, coupled with its investment in new technology and equipment, has positioned the Company to take advantage of growth opportunities abroad where the demand for American-style premium cigarettes continues to increase.

        As of December 31, 2003, the Company and its subsidiaries collectively owned 138 patents and had pending 69 patent applications covering a variety of Cigarette Papers, RTL and cigar wrapper and binder products and processes in the United States, Western Europe and several other countries. The Company believes that such patents, together with its papermaking expertise and technical sales support, have been instrumental in

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establishing it as the leading worldwide supplier of Cigarette Papers, RTL and reconstituted wrapper and binder made by the papermaking process.

        Management believes that the Company's "POROWRAP®" trademark for highly porous plug wrap paper, the "PDM" logo and the "JOB PAPIER A CIGARETTES", "PAPETERIES DE MAUDUIT" and "SCHWEITZER" trade names also have been important contributors to the marketing of the Company's products.

        Backlog; Seasonality.    The Company has historically experienced a steady flow of orders. Its mills typically receive and ship orders within a 30-day period, except in the case of RTL where orders are generally placed well in advance of delivery. The Company plans its manufacturing schedules and raw material purchases based on its evaluation of customer forecasts and current market conditions.

        The U.S. business does not calculate or maintain records of order backlogs. Philip Morris, its largest customer, provides forecasts of future demand, but actual orders for Cigarette Papers are typically placed two weeks in advance of shipment.

        The French businesses do maintain records of order backlogs. For Cigarette Papers, the order backlog was approximately $54 million and $45 million on December 31, 2003 and 2002, respectively. This represented approximately 69 and 64 days of Cigarette Paper sales for the French businesses in 2003 and 2002, respectively. LTRI's RTL business operates under a number of annual supply agreements. The order backlog for RTL was approximately $106 million and $85 million on December 31, 2003 and 2002, respectively.

        The Brazilian business does not calculate or maintain records of order backlogs. Approximately one-half of its sales are to Souza Cruz, its largest customer. Souza Cruz provides forecasts of its future demand, typically eight weeks in advance, in order for the Brazilian operations to manage production and ensure a sufficient supply to meet Souza Cruz's anticipated requirements.

        Sales of the Company's products are not subject to seasonal fluctuations, except in the United States where customer shutdowns of one to two weeks in duration typically occur in July and December, and in Brazil where customer orders are typically lower in December due to a January and February holiday season.

        Sales and Distribution.    Essentially all sales of tobacco-related products by the U.S., French and Brazilian businesses are sold by the Company's marketing, sales and customer service organizations directly to cigarette manufacturers or their designated converters, and to cigar manufacturers, except in China where sales are generally made to trading companies for resale to cigarette producers. Most of the Company's U.S. and French businesses' non-tobacco related products, which represent approximately five percent of each of their respective net sales, are sold on a direct basis. The Brazilian business' non-tobacco related products comprise approximately 25 percent of its net sales, substantially all of which are channeled through agents.

        Environmental Matters.    Capital expenditures for environmental controls to meet legal requirements and otherwise relating to the protection of the environment at the Company's facilities in the United States, France, Brazil and Canada are estimated to be approximately $2 to $3 million in 2004 and approximately $1 million in 2005, of which no material amount is the result of environmental fines or settlements. These expenditures are not expected to have a material adverse effect on the Company's financial condition, results of operations or competitive position; however, these estimates could be modified as a result of changes in the Company's plans, changes in legal requirements or other factors.

        Risks for Foreign Operations.    In addition to its U.S. operations, the Company has manufacturing facilities in France, Brazil and Canada. The Company, principally through its French and Brazilian subsidiaries, markets and sells products in over 90 countries, many of which are third world markets. While not an exhaustive list of the various risks that may impact its foreign operations, and while the level of risk varies amongst countries, the Company's operations in foreign countries are subject to possible material international business risks, including unsettled political and economic conditions; expropriation; import and export tariffs, controls and restrictions; monetary exchange controls; inflationary economies; changes in currency value; changes in business and income tax regulations and risks related to restrictions on repatriation of earnings or proceeds from liquidated assets of foreign subsidiaries.

        Insurance.    The Company maintains insurance coverage with reputable insurers in such amounts and against such risks as is customarily maintained by companies of similar size and engaged in similar businesses.

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        Information Available on the Company's Web Site.    The Company maintains an Internet Web site address at http://www.schweitzer-mauduit.com. The Web site provides background information about the Company, including information on the Company's history, products, locations and employment opportunities. The Company's periodic reports on Forms 3, 4 and 5, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as well as the annual report to stockholders and other information, are available free of charge on or through this Web site as soon as reasonably practicable after the reports are filed with or furnished to the Securities and Exchange Commission. The Company's Code of Conduct, which applies to all U.S. employees and officers, including the Chief Executive Officer, Chief Financial Officer and Treasurer, and Controller (the principal executive officer, principal financial officer and principal accounting officer, respectively), the Company's corporate governance guidelines, and the Company's Board of Directors committee charters are also provided on the Company's Web site. Any amendment to or waivers of the Code of Conduct granted to any of the aforementioned officers will also be disclosed on the Company's Web site. The Company's Internet Web site and the information contained therein or connected thereto are not incorporated by reference into this Form 10-K. Copies of the Code of Conduct will be provided free of charge upon request made to the Company's Corporate Secretary.

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ITEM 2. PROPERTIES

        As of December 31, 2003, the Company operated eight mills (which include four fiber pulping operations) in the United States, France and Brazil that produce tobacco-related and other specialty papers or reconstituted tobacco products. The Company has approximately 178,000 metric tons of annual paper production capacity and approximately 83,000 metric tons of annual reconstituted tobacco products production capacity. The Company also operates flax fiber processing operations in France and Canada. The Company or one of its subsidiaries owns each of these facilities and the associated operating equipment except for a flax tow storage facility in Killarney, Manitoba, which is leased.

        The Company and its subsidiaries maintain administrative and sales offices in Alpharetta, Georgia, in Quimperlé, Spay and Paris, France, in Hong Kong, China, in Santanésia and Rio de Janeiro, Brazil and in Madrid, Spain. The Company's world headquarters are also located in Alpharetta. All of these offices are leased except for the Quimperlé, Spay and Santanésia offices, which are owned by PdM, LTRI and SWM-B, respectively. The administrative and sales office in Paris, France is being closed during the first quarter of 2004.

        In February 2004, the Company completed the acquisition of a tobacco-related papers manufacturer located in Medan, Indonesia. This acquisition provides the Company with a manufacturing location on a fourth continent. The mill consists of one paper machine, having annual production capacity of approximately 3,200 metric tons, and associated finishing equipment which manufactures cigarette paper and conventional plug wrap for sale to cigarette manufacturers.

        Management believes that each of these facilities is well-maintained, suitable for conducting the Company's operations and business, and adequately insured.

        Machine operating schedules at all of the Company's locations are currently at or near capacity, except that the Company has more capacity than is currently being used for long fiber products in France, for RTL in France as the result of new RTL capacity added in 2003 and for all product lines in the United States. Capital projects are in process to increase capacity for cigarette paper in France and Brazil. During 2003, the Company sold 157,000 metric tons of paper products and 50,000 metric tons of reconstituted tobacco products.

        In addition to the operating equipment listed on the following page, the Company's Brazilian subsidiary has a paper machine which was taken out of service in 2001 and was fully written off. There are no plans to operate this equipment in the future.

        The Company operates at its Lee Mills facility a machine that is owned by Kimberly-Clark. Ownership of the machine was retained by Kimberly-Clark in the 1995 spin-off of the Company as it operates solely for the purpose of producing a proprietary product used as an in-process material by Kimberly-Clark. Under the contract for its continued operation, the current term of which is scheduled to expire in December 2009, the Company essentially bills Kimberly-Clark the actual costs of operating the machine, including allocations of indirect and fixed overhead costs. While certain of such costs could be eliminated if the contract is not renewed or is otherwise terminated, the Company may be unable to eliminate a portion of the approximately $2 million of indirect and fixed overhead costs that are currently absorbed by that operation.

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        The following are locations of the Company's principal facilities and operating equipment as of December 31, 2003, which are owned by the Company except as noted otherwise:

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ITEM 3. LEGAL PROCEEDINGS

        The following is a brief description of potentially material legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their properties is subject:

Litigation

ICMS Matter

        On December 27, 2000, SWM-B received two assessments from the tax authorities of the State of Rio de Janeiro, Brazil concerning Imposto sobre Circulação de Mercadorias e Serviços ("ICMS"), a form of value-added tax, consisting of unpaid ICMS taxes from January 1995 through November 2000, together with interest and penalties in the total amount of approximately $13.6 million, based on the foreign currency exchange rate at December 31, 2000 (collectively, the "Assessment"). The Assessment concerned the accrual and use by SWM-B of ICMS tax credits generated from the production and sale of certain non-tobacco related grades of paper sold domestically that are immune from the tax to offset ICMS taxes otherwise owed on the sale of products that are not immune. One of the two assessments, estimated at December 31, 2000 at approximately $9.1 million, related in part to tax periods that predated the Company's acquisition of Pirahy and is covered in part by an indemnification from the sellers of Pirahy ("Assessment 1"). The second assessment pertains exclusively to periods that SWM-B owned the Pirahy mill ("Assessment 2"). While SWM-B is primarily responsible for the full payment of the Assessment in the event of an ultimate unfavorable outcome, SWM-B is not aware of any difficulties that would be encountered in obtaining reimbursement of that portion of any payment resulting from Assessment 1 from the previous owner under the indemnification.

        SWM-B contests the Assessment based on Article 150, VI of the Brazilian Federal Constitution of 1988, which grants immunity from ICMS taxes to papers used in the production of books, newspapers and periodicals ("immune papers") and the raw material inputs used to produce immune papers. SWM-B further contends that the statutory provision relied on by the State of Rio de Janeiro to argue that ICMS tax credits generated in the course of the production of immune papers must be reversed rather than applied to other ICMS taxes owed violates the Brazilian Federal Constitution and the legal principle of "non-cumulativity" for ICMS tax set forth in Article 155, Section 2, II, of the Brazilian Federal Constitution of 1988. Additionally, SWM-B contends that the statutory provisions relied on by the government do not address "immunity" from the incidence of the ICMS tax, but are addressed to "exception" from the tax. This distinction is central to SWM-B's further contention that the only exceptions permitted to the constitutionally mandated principle of non-cumulativity are for exemptions from tax and no exceptions from this principle are permitted in cases of immunity from tax.

        Administrative appeals were filed on the Assessment, and in April 2001 and August 2001 decisions were rendered on these administrative appeals. The State of Rio de Janeiro tax authorities denied the appeal of Assessment 2 in its entirety and reduced the original amount of Assessment 1 by approximately $1.6 million based on SWM-B's argument that Assessment 1 in part covered periods barred by the applicable statute of limitations. Following these decisions at the administrative level, judicial actions captioned Schweitzer-Mauduit do Brasil S.A. vs State of Rio de Janeiro were filed in the Judiciary Branch of the 11th Public Treasury Court of the State of Rio de Janeiro to annul the tax and to enjoin enforcement pending final adjudication of the Assessment. The courts issued injunctions, which were upheld on appeal, against enforcement of the Assessment without the requirement for any bond or posting of other collateral by SWM-B, pending final determination of SWM-B's action to annul the tax debts. In August and November 2003, the court hearing the challenges in the State of Rio de Janeiro ruled in SWM-B's favor in its suits to vacate Assessment 2 and Assessment 1, respectively, affirming the bases of SWM-B's legal challenges of the Assessment, and ruled that the government should pay the Company's legal and court fees in the cases. While the favorable decisions by the court with respect to the Assessment provide further support for SWM-B's positions, these decisions will be automatically appealed, as provided for under Brazilian legislation for cases involving an adverse financial outcome for the government in lower courts. SWM-B continues to vigorously contest the Assessment and believes that the Assessment will ultimately be resolved in its favor. However, the final resolution of this matter may still entail judicial proceedings up to and including presentation of the matter to the Supreme Court of Brazil and is not likely to be finally resolved for several years. Based on the foreign currency exchange rate at December 31, 2003, the Assessment, as reduced in August 2001, totaled approximately $11.6 million as of December 31, 2003, of which approximately $5.2 million is covered by the above-discussed indemnification. No liability has been recorded in the Company's consolidated financial statements for the Assessment based on the Company's

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evaluation that SWM-B is more likely than not to prevail in its challenge of the Assessment under the facts and law as presently understood.

        In February 2004, SWM-B filed suit against the State of Rio de Janeiro to recover ICMS credits previously reversed in 2000 following receipt of the Assessment. After the Assessment was filed against the Company, SWM-B changed its procedures and did not utilize ICMS tax credits through the end of production and sale of immune papers during 2001. As a result of having received the August and November 2003 favorable lower court rulings to the above Assessment 2 and Assessment 1, respectively, SWM-B has petitioned the court for permission to offset overpaid ICMS taxes against current tax liabilities. SWM-B believes it has a reasonable chance of success in this case. The amount of the claim totals approximately $1.3 million, based on the foreign currency exchange rate at December 31, 2003. As of December 31, 2003, no asset has been recorded for this potential recovery.

Solvay Matter

        During 1998, PdM, a wholly-owned indirect French subsidiary of the Company, entered into an agreement with one of its vendors, Solvay Specialties France S.A. ("Solvay"), in connection with PdM's purchases of calcium carbonate. Solvay agreed to construct and operate an on-site plant at the Quimperlé, France mill at a capital cost of approximately 40 million French franc ($7.7 million at the December 31, 2003 exchange rate). If PdM buys less than the minimum purchase commitments under the agreement, for reasons not permitted under the agreement, Solvay can terminate the contract and require PdM to pay Solvay the then net book value of the building and equipment, determined using a straight-line method of depreciation over the life of the agreement, which amount was approximately $4.6 million at December 31, 2003, as well as costs to dismantle the mill and severance pay for the employees, together estimated at approximately $0.4 million. During the first six months of 2002, PdM determined that the slurry-form calcium carbonate produced by the on-site plant was causing variations in some of its products. The agreement provides generally that use of the slurry-form calcium carbonate will not have a notable effect on PdM's products compared to their production using the dry-form of calcium carbonate provided by Solvay. Because of the product variations it was detecting and in order to comply with customers' specifications for its products, PdM reduced its consumption of slurry-form calcium carbonate and subsequently purchased less than the minimum annual purchase commitment of slurry-form calcium carbonate produced by the on-site plant during 2002, substituting dry-form calcium carbonate from Solvay in its place. The on-site plant continues to operate and supply a portion of PdM's calcium carbonate requirements. The quality problems with the slurry-form calcium carbonate continued in the latter half of 2002 and in 2003, but PdM undertook efforts to mitigate the issues associated with use of the slurry, which allowed it to increase its consumption of the slurry such that the minimum annual commitment of slurry-form calcium carbonate was purchased by PdM in 2003. Since the amount of slurry-form calcium carbonate purchased from Solvay prior to 2003 had been less than the original amount contemplated, Solvay has requested payment corresponding to a reduction in the contractual quantity discounts that had been provided to PdM in 2002 and prior years, to which PdM disagrees. Additionally, PdM has continued to apply the contractual quantity discounts against subsequent invoices, to which Solvay disagrees.

        On November 22, 2002, PdM received service of process concerning an action filed by Solvay in the Tribunal de Commerce court sitting in Paris, France. The principal parties to this action are Solvay and PdM. The action petitions the court to appoint an expert for the purpose of determining the rights and obligations under the contract concerning the satellite precipitated calcium carbonate plant installed at the PdM mill by Solvay, which had not, according to PdM, produced product in accordance with the contract terms. The action, the factual basis of which is described above, asks the court to adjudicate the price level that should apply under the contract to deliveries of product from the satellite plant and from other Solvay production facilities. The dispute over the applicable price arises due to contractual price provisions that are based upon levels of consumption of product from the satellite plant that PdM contends it could not consume due to the plant's inability to deliver product of a quality contemplated by the contract. PdM has good and meritorious defenses to Solvay's claims and, based on the Company's current understanding of the facts and law and the expected outcome if fully litigated, this matter is not expected to have a material adverse effect on the Company's operations or financial results. The Company believes that the matter will be resolved short of a full and final adjudication by the court, and PdM has established an accounting reserve in an amount it considers reasonable to achieve a settlement that would be less than the estimated cost and associated uncertainty inherent in fully litigating the matter.

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Indemnification Matter

        In connection with the Company's spin-off from Kimberly-Clark and pursuant to the resulting Transfer, Contribution and Assumption Agreement and the related Distribution Agreement between Kimberly-Clark and the Company dated October 23, 1995, the Company undertook to indemnify and hold Kimberly-Clark harmless from claims and liabilities related to the businesses transferred to the Company that were not identified as excluded liabilities in the above-mentioned agreements. To date, no claims which the Company deems material to its financial condition or results of operations have been tendered to the Company under this indemnification that have not been previously disclosed. As of the date of these financial statements, there are no claims pending under this indemnification that the Company deems to be material.

General Matters

        The Company is involved in certain other legal actions and claims arising in the ordinary course of business. Management believes that such litigation and claims will be resolved without a material adverse effect on the Company's consolidated financial statements.

Environmental Matters

        The Company's operations are subject to federal, state and local laws, regulations and ordinances relating to various environmental matters. The nature of the Company's operations expose it to the risk of claims with respect to environmental matters, and there can be no assurance that material costs or liabilities will not be incurred in connection with such claims. While the Company has incurred in the past several years, and will continue to incur, capital and operating expenditures in order to comply with environmental laws and regulations, the Company believes that its future cost of compliance with environmental laws, regulations and ordinances, and its exposure to liability for environmental claims and its obligation to participate in the remediation and monitoring of certain hazardous waste disposal sites, will not have a material adverse effect on the Company's financial condition or results of operations. However, future events, such as changes in existing laws and regulations, or unknown contamination of sites owned, operated or used for waste disposal by the Company (including contamination caused by prior owners and operators of such sites or other waste generators) may give rise to additional costs which could have a material adverse effect on the Company's financial condition or results of operations.

        The Company incurs spending necessary to meet legal requirements and otherwise relating to the protection of the environment at the Company's facilities in the United States, France, Brazil and Canada. For these purposes, the Company incurred total capital expenditures of $5.8 million in 2003, and anticipates that it will incur approximately $2 to $3 million in 2004 and approximately $1 million in 2005, of which no material amount is the result of environmental fines or settlements. The major projects included in these amounts are wastewater treatment facility upgrade projects in conjunction with capacity expansions, one each in France and the United States with spending of approximately $3 million for each during these periods. The foregoing capital expenditures are not expected to reduce the Company's ability to invest in other appropriate and necessary capital projects and are not expected to have a material adverse effect on the Company's financial condition or results of operations.

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

        No matters were submitted to a vote of the Company's stockholders during the fourth quarter of 2003.

EXECUTIVE OFFICERS OF THE REGISTRANT

        The names and ages of the executive officers of the Company as of March 4, 2004, together with certain biographical information, are as follows:

        Wayne H. Deitrich, 60, has served as Chief Executive Officer of the Company since August 1995 and was elected Chairman of the Board of Directors immediately after the spin-off on November 30, 1995, and has served continuously in that capacity since that date. From June 1995 through August 1995, Mr. Deitrich served as President — Specialty Products Sector of Kimberly-Clark. From 1993 through May 1995, Mr. Deitrich was the President — Paper and Specialty Products Sector of Kimberly-Clark, and from 1992 to 1993, he was President — Paper Sector of Kimberly-Clark. From 1988 through 1992, Mr. Deitrich served as the President of Neenah Paper, a business unit of Kimberly-Clark.

        Jean-Pierre Le Hétêt, 60, has served as Chief Operating Officer of the Company since April 1998 in addition to having served as President — French Operations of the Company from August 1995 through October 2002. Mr. Le Hétêt was elected to the Board of Directors immediately after the spin-off on November 30, 1995, and has served continuously since that date. From 1991 through August 1995, Mr. Le Hétêt was the President of Specialty Products, France, a business unit of Kimberly-Clark. Prior to that time, Mr. Le Hétêt served as General Manager of Specialty Products, France.

        Thierry E. Bellanger, 51, has served as President — French Operations of the Company since November 2002. From July 1999 through October 2002, Mr. Bellanger was Director of Operations for the Company's Paper Sector in France. From March 1997 through June 1999, he served as Director of Operations for the Company's Tobacco Sector in France. Prior to March 1997, Mr. Bellanger served in various positions at PdM and LTRI.

        Peter J. Thompson, 41, has served as President — U.S. Operations of the Company since November 1998. From April 1998 through November 1998, Mr. Thompson was Director — Sales and Marketing for the U.S. Operations of the Company. Mr. Thompson joined the Company in January 1997 as a Marketing Manager in the U.S. Operations. Prior to joining the Company, he was employed by Tape, Inc. from May 1995 through January 1997, where he held several senior management positions in marketing, sales and finance. Mr. Thompson was employed by Kimberly-Clark from June 1984 through May 1995 in a variety of financial positions.

        Otto R. Herbst, 44, has served as President — Brazilian Operations of the Company since April 1999. Prior to April 1999, he served as General Manager for New Business and Services from 1997 through March 1999 for Interprint, a manufacturer of security documents, telephone cards and business forms. From 1990 through 1997, Mr. Herbst served as Director of Agaprint, a manufacturer of packaging materials, business forms, commercial printing papers, personalized documents and envelopes.

        Paul C. Roberts, 55, has served as Chief Financial Officer and Treasurer of the Company since August 1995. From June 1995 through August 1995, he served as Chief Financial Officer — Specialty Products Sector of Kimberly-Clark. From January 1995 through May 1995, he was Director — Corporate Strategic Analysis of Kimberly-Clark, and from 1988 through 1994, Mr. Roberts was Director — Operations Analysis and Control, Pulp and Paper Sector of Kimberly-Clark.

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        John W. Rumely, Jr., 50, has served as General Counsel and Secretary of the Company since January 2000. From March 1998 through December 1999, he served as Associate General Counsel of the Company. From May 1989 through February 1998, Mr. Rumely was Assistant General Counsel of Alumax Inc., an international integrated producer of aluminum products that was subsequently acquired by Alcoa Inc.

        Wayne L. Grunewald, 52, has served as Controller of the Company since August 1995. From July 1995 through August 1995, he served as Controller — Specialty Products Sector of Kimberly-Clark. From December 1989 through June 1995, he was Controller — U.S. Pulp and Newsprint, a business unit of Kimberly-Clark.

        There are no family relationships, as defined, between any of the above executive officers. No officer of the Company was selected pursuant to any arrangement or understanding between the officer and any person other than the Company. All executive officers are elected annually by the Company's Board of Directors.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Principal Market

        Since its spin-off from Kimberly-Clark on November 30, 1995, the Company's common stock has been listed on the New York Stock Exchange under the trading symbol "SWM".

Approximate Number of Holders of Common Stock

        As of March 4, 2004, there were 4,664 stockholders of record of the Company's common stock. This number does not include shares held in "nominee" or "street" name.

Stock Price and Dividend Information

        The following table sets forth the high, low and closing sales price of the Company's common stock on the New York Stock Exchange — Composite Transactions reporting system during each of the respective periods of the years ended December 31, 2003 and 2002:

        The Company has declared and paid annual cash dividends of $0.60 per share of the Company's common stock during each of the last three fiscal years. The Company has declared and paid quarterly dividends of $0.15 per share since the second quarter of 1996. Management currently expects to continue this level of quarterly dividend. The Company has credit agreement covenants that require the Company to maintain certain financial ratios, as disclosed in Note 6 to the Consolidated Financial Statements, none of which under normal business conditions materially limit the Company's ability to pay such dividends, and the Company does not currently anticipate any change in business conditions of a nature that would cause future restrictions on dividend payments as a result of its need to maintain these financial ratios.

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Equity Compensation Plan Information

        The following table provides information, as of December 31, 2003, with respect to the shares of the Company's common stock that may be issued under the Company's existing equity compensation plans:

N/A — Not applicable.

(1)

The Equity Participation Plan is described in Note 9 of the Notes to Consolidated Financial Statements appearing in Part II, Item 8 herein.

(2)

The Outside Directors Stock Plan consists of shares registered for the purpose of issuance to the Company's outside Directors for payment of their retainer fees quarterly in advance. Directors retainer fees are $6,750 quarterly effective January 1, 2004 (previously $5,500 quarterly), which are payable in the Company's common stock. The number of shares issued each quarter is determined based on the then fair value of the shares, which is determined in accordance with the plan as the average of the high and low price of the Company's common stock on the last business day preceding the date of issuance. Certain Directors have elected to defer receipt of quarterly retainer fees under the terms of the Company's Deferred Compensation Plan for Non-Employee Directors, resulting in an accumulation of stock unit credits. The Director has the option, upon retirement or earlier termination from the Board of Directors, to have these stock unit credits distributed in the form of the Company's common stock or in the form of cash. While held in the deferred compensation plan account, these stock unit credits carry no voting rights and cannot be traded as common stock, although declared dividends create additional stock unit credits. As of December 31, 2003, deferred retainer fees have resulted in 15,880 accumulated stock unit credits, excluding credited dividends (16,816 accumulated stock unit credits including credited dividends).

(3)

The Restricted Stock Plan is described in Note 9 of the Notes to Consolidated Financial Statements appearing in Part II, Item 8 herein. Shares awarded under the terms of this plan are both subject to forfeiture and cannot be sold or otherwise transferred until fully vested or such restrictions are otherwise lifted. Such shares are deemed by the Company to be issued and outstanding and are subject to all other financial interests, including dividends declared by the Company. As of December 31, 2003, 78,000 shares issued under this plan remained restricted.

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Repurchases of Equity Securities

        The Company did not repurchase any shares of its Common Stock during the fourth quarter of 2003. The following table indicates the remaining amount of share repurchases currently authorized by the Company's Board of Directors:

*  As announced in the Company's press release dated January 30, 2003, the Company's Board of Directors authorized the repurchase of shares of the Company's Common Stock during the period January 1, 2003 through December 31, 2004 in an amount not to exceed $20 million. Corporate 10b5-1 plans have been used by the Company so that share repurchases can be made at predetermined stock price levels, without restricting such repurchases to specific windows of time. However, further common stock repurchases during 2004 will be dependent upon various factors, including the stock price, strategic opportunities and cash availability.

Company Web Site and Quarterly Earnings Release Dates

        The Company's Web site address is http://www.schweitzer-mauduit.com. The Web site provides background information about the Company, including information on the Company's history, products, locations and employment opportunities. The Web site also allows access to the Company's Securities and Exchange Commission filings, historical financial information, press releases and quarterly earnings conference calls, the Company's Code of Conduct, corporate governance guidelines, Board of Directors committee charters, as well as disclosure of any amendment to or waivers of the Company's Code of Conduct granted to any of the principal executive officer, principal financial officer or principal accounting officer. Quarterly earnings press releases are posted immediately to the Company's Web site, making them available to the Company's stockholders and other interested parties.

        The Company's quarterly earnings conference calls are typically held on the same dates as the Company's quarterly earnings releases and are likewise available through the Company's Web site via a webcast. The tentative dates for the Company's quarterly earnings conference calls related to 2004 financial results are April 29, 2004, July 29, 2004, October 28, 2004 and January 27, 2005. These dates are subject to change. Instructions on how to listen to the webcasts and updated information on times and actual dates are available through the Company's Web site.

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ITEM 6. SELECTED FINANCIAL DATA

        The following selected financial data are qualified in their entirety by reference to, and should be read in conjunction with, the Consolidated Financial Statements of the Company and the notes thereto included elsewhere in this Annual Report. Data for 2002 and prior years reflect restated financial information as a result of the Company's U.S. business segment's change in inventory accounting method during 2003 for financial reporting purposes from Last-In, First-Out to First-In, First-Out. See Note 3 of the Notes to Consolidated Financial Statements for more information concerning this change in accounting method.