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, 2004
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, 2004 was 51,654,251.
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, 2004 (unaudited) and
March 31, 2003 (unaudited) 1
Condensed Consolidated Balance
Sheets, March 31, 2004 (unaudited)
and December 31, 2003 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Three Months
Ended March 31, 2004 (unaudited)
and March 31, 2003 (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 14
Item 4. Controls and Procedures 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
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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) 2004 2003
NET SALES $ 251,815 $ 239,826
Cost of products sold 225,117 218,947
GROSS PROFIT 26,698 20,879
Selling and administrative expenses 18,884 16,244
OPERATING PROFIT 7,814 4,635
Interest expense (2,527) (2,501)
Other income (expense), net 194 (14)
EARNINGS BEFORE INCOME TAXES 5,481 2,120
Provision for income taxes 2,029 785
NET EARNINGS $ 3,452 $ 1,335
NET EARNINGS PER SHARE - BASIC $ 0.07 $ 0.03
NET EARNINGS PER SHARE - DILUTED $ 0.07 $ 0.03
Weighted average shares outstanding-basic 51,617,395 51,536,891
Weighted average shares outstanding-diluted 51,804,792 51,604,298
See Notes to Condensed Consolidated Financial Statements.
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Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) MARCH 31, December 31,
2004 2003
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 43,076 $ 36,305
Receivables, net 91,762 81,300
Refundable income taxes 289 1,668
Inventories 116,528 115,835
Deferred income taxes 12,594 12,616
Other current assets 3,698 3,694
Total current assets 267,947 251,418
Property, plant and equipment, net 555,708 565,722
Other assets 41,034 40,960
TOTAL ASSETS $864,689 $858,100
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 112 $ 112
Accounts payable 62,936 55,368
Accrued and other liabilities 56,937 59,524
Total current liabilities 119,985 115,004
Long-term debt 161,964 162,174
Deferred income taxes 115,469 115,879
Postretirement benefits 55,908 54,197
Pension 35,894 40,829
Other noncurrent liabilities 20,609 19,701
Total liabilities 509,829 507,784
Stockholders' equity 354,860 350,316
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $864,689 $858,100
See Notes to Condensed Consolidated Financial Statements.
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Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
March 31,
(Dollars in thousands) 2004 2003
Net cash provided by operating activities $14,031 $14,508
Cash (used in) investing activities:
Capital expenditures (3,937) (4,669)
Acquisition of business 0 (8,413)
(3,937) (13,082)
Cash used in financing activities:
Net borrowings under credit agreements 0 3,030
Payment under capital lease obligation (28) 0
Dividends paid (4,382) (4,381)
Proceeds from stock option exercises 1,087 0
(3,323) (1,351)
Net increase in cash and cash equivalents 6,771 75
Cash and cash equivalents, beginning of period 36,305 23,383
Cash and cash equivalents, end of period $43,076 $23,458
Interest paid-net of amount capitalized $ 5,198 $ 5,112
Income taxes paid $ 654 $ 726
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, 2003, for the Company's accounting
policies, which are pertinent to these statements.
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Note 2.Effective March 3, 2003, the Company acquired certain assets of a
laminated papers producer for approximately $8.5 million in cash, of
which $8.4 million was incurred in the first quarter of 2003. The
acquisition was accounted 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.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 grants under such plans had
been exercised on that day. For the three months ended March 31, 2004,
the provision for incentive plans was $152,000. For the three months
ended March 31, 2003, the credit for incentive plans was $251,000.
As permitted under SFAS No. 123, "Accounting for Stock-Based
Compensation," 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 are as follows:
(Dollars in thousands, except per share amounts) Three Months
Ended March 31,
2004 2003
Net earnings, as reported $3,452 $1,335
Add: Total stock-based employee compensation
expense (credit) under APB No. 25, net of
related tax effects 96 (158)
Deduct:Total stock-based compensation (expense)
credit determined under fair-value based method
for all awards, net of related tax effects (140) 133
Proforma $3,408 $1,310
Earnings per share - basic:
As reported $0.07 $0.03
Pro forma $0.07 $0.03
Earnings per share - diluted:
As reported $0.07 $0.03
Pro forma $0.07 $0.03
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Note 4. Basic and diluted earnings per share are recognized as follows:
(Dollars in thousands, except per share data) Three Months
Ended March 31,
2004 2003
Net earnings $ 3,452 $ 1,335
Basic weighted average common shares outstanding 51,617,395 51,536,891
Dilutive securities:
Stock option plans 187,397 67,407
Diluted weighted average common shares outstanding 51,804,792 51,604,298
Net earnings per share-basic $ 0.07 $ 0.03
Net earnings per share-diluted $ 0.07 $ 0.03
For the three months ended March 31, 2004, options for 465,368 shares
were excluded from the diluted EPS calculation because the options were
antidilutive. 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.
Note 5. Accounts receivable consisted of the following:
(Dollars in thousands) MARCH 31, December 31,
2004 2003
Trade $92,423 $82,142
Other 1,378 1,086
93,801 83,228
Less: Allowances (2,039) (1,928)
$91,762 $81,300
Note 6. The various components of inventories were as follows:
(Dollars in thousands) MARCH 31, December 31,
2004 2003
Raw Materials $ 30,183 $ 27,282
Finished Goods and Work in Process 81,833 83,757
Supplies 28,072 27,920
Subtotal 140,088 138,959
Less: LIFO Reserve (23,560) (23,124)
Net inventories $116,528 $115,835
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Note 7.The accumulated depreciation on fixed assets was $664.1 million as of
March 31, 2004, and $653.0 million as of December 31, 2003. The
provision for depreciation, amortization and depletion was $15.0 million
for the three month periods ended March 31, 2004 and March 31, 2003.
Note 8. The components of net periodic benefit costs recognized in the
Condensed Consolidated Statements of Operations for the three months
ended March 31, 2004 and 2003, are as follows:
Other
Post-retirement
Pension Benefits Benefits
2004 2003 2004 2003
Service cost $ 1,720 $ 1,379 $ 671 $ 504
Interest cost 2,423 2,329 1,541 1,162
Expected return on plan assets (2,501) (2,060) 0 0
Amortization of:
Prior service cost 487 485 (87) (89)
Actuarial loss 419 187 447 225
Transition (asset) (14) (47) 0 0
Net periodic benefit cost $ 2,534 $ 2,273 $ 2,572 $1,802
The Company previously disclosed in its consolidated financial
statements for the year ended December 31, 2003, that it expected to
contribute $21.2 million to its pension plans in 2004. As of March 31,
2004, $3.1 million of contributions have been made. The Company expects
to contribute an additional $18.1 million in 2004 for a total of $21.2
million.
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
Printing & Writing produces a broad line of premium printing and writing
grades at manufacturing facilities in Brokaw, Wisconsin and Groveton,
New Hampshire. Printing & Writing 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. Specialty Paper produces specialty papers
at its manufacturing facilities in Rhinelander, Wisconsin; Mosinee,
Wisconsin; and Jay, Maine. Towel & Tissue produces a complete line of
towel and tissue products that are marketed along with soap and
dispensing systems for the "away-from-home" market.
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Towel & Tissue operates a paper mill in Middletown, Ohio, and a
converting facility in Harrodsburg, Kentucky.
RECONCILIATIONS
The following are reconciliations to corresponding totals in the
accompanying consolidated financial statements:
Three Months
Ended March 31,
(Dollars in thousands) 2004 2003
Net sales external customers
Printing & Writing $100,101 $ 98,377
Specialty Paper 100,931 92,458
Towel & Tissue 50,783 48,991
$251,815 $239,826
Operating profit (loss)
Printing & Writing $ 2,551 $ 1,486
Specialty Paper 3,451 1,512
Towel & Tissue 5,301 4,031
Total reportable segment
operating profit 11,303 7,029
Corporate & eliminations (3,489) (2,394)
Interest expense (2,527) (2,501)
Other income (expense) 194 (14)
Earnings before income taxes $ 5,481 $ 2,120
(Dollars in thousands-unaudited) MARCH 31, December 31,
2004 2003
Segment Assets
Printing & Writing $287,628 $283,711
Specialty Paper 334,049 334,079
Towel & Tissue 162,824 165,199
Corporate & Unallocated* 80,188 75,111
$864,689 $858,100
* Segment assets do not include intersegment accounts receivable, cash,
deferred tax assets and certain other assets, which are not
identifiable with segments.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
First quarter 2004 market conditions remained competitive, although somewhat
improved, as compared to the same period last year. Market demand improved in
each of the Company's three business segments although excess production
capacity in the paper industry limited selling price increases during the
quarter. At the same time, market pulp and employee benefit costs increased
and natural gas prices remained above historical averages. In response to
these factors, the Company's efforts to enhance sales mix, reduce costs and
improve production efficiencies continued. For the first quarter of 2004, over
30% of the Company's revenues came from products developed within the previous
three years, exceeding the internal target of 25%; the Company's cost reduction
goal of 2% of prior year cost of sales was largely achieved; and production
efficiency gains of 2% exceeded the Company's target of 1%.
OPERATIONS REVIEW
Net Sales
Three Months Ended March 31,
(Dollars in thousands) 2004 2003
Net sales $251,815 $239,826
Percent increase/(decrease) 5% 6%
For the three months ended March 31, 2004, consolidated net sales for the
Company were $251.8 million compared to $239.8 million for the same three-month
period in 2003, an increase of 5%. Company-wide shipments in the first quarter
of 2004 were 215,248 tons, a 2% improvement from the 210,756 tons shipped in
the first quarter of 2003. First quarter 2004 average selling price increased
approximately 2%, or more than $5 million, as compared to the same period in
2003 with product mix enhancements, slightly offset by product pricing
declines, accounting for the average selling price increase.
First quarter net sales and shipments for Printing & Writing increased 2% and
4%, respectively, as compared to the first quarter of 2003. As a group, net
sales improved to $100.1 million in 2004 from $98.4 million reported for the
same three-month period in 2003. Shipments grew quarter-over-quarter from
88,731 tons in 2003 to 92,240 tons in 2004. The increase in tons shipped was
driven by a 10% increase in paper mill packaging volume and a 26% increase in
consumer product shipments. Partially offsetting these increases was a 1%
reduction in product shipped to paper merchants and converters. The decline in
shipments to paper merchants and converters is due primarily to reduced
commercial printing activity and a shift in distribution patterns. Compared to
the same period last year, first quarter demand for uncoated free-sheet papers
improved approximately 5%, with growth largely driven by commodity segments of
the market such as white offset rolls. Pricing for Printing & Writing
products remained very competitive in the first quarter with average selling
price declining more than 2% from last year, as gains in product mix only
partially offset the product pricing declines experienced. Product
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pricing in the commodity segments of the uncoated free-sheet market has
begun to move higher while pricing on some value-added grades such as colored
opaque and colored bond have moved somewhat lower.
Despite essentially flat shipping volume on a quarter-over-quarter basis,
Specialty Paper net sales increased 9% to $100.9 million for the three-month
period ended March 31, 2004 compared to $92.5 million reported for the three-
month period ended March 31, 2003. Total shipments were 87,585 tons and 87,675
tons for the period ended March 31, 2004 and March 31, 2003, respectively. For
the first quarter of 2004, average selling price increased more than 8% over
the first quarter of 2003. Product selling prices increased approximately 3%,
with product mix enhancements, particularly in higher-margin, core-product
categories such as masking tape base and popcorn bag, accounting for the
balance of the average selling price improvement. Specialty Paper reduced its
volume of non-core products such as tablet papers from 13% of total shipments
in 2003 to 6% in 2004. Market conditions are generally improving for Specialty
Paper's products, allowing the group to implement select selling price
increases.
Towel & Tissue net sales improved 4% to $50.8 million in the first quarter of
2004, compared with $49.0 million in the same period last year. Overall
shipment volume of towel and tissue products increased 3% to 35,423 tons
shipped in the first quarter of 2004 from 34,350 tons shipped in the first
quarter of 2003, with strong growth in our value-added grades enhancing product
mix and related net sales. As a result, average selling price remained
relatively flat quarter-over-quarter despite product pricing declines of 3%.
The "away-from-home" segment of the towel and tissue market grew approximately
1% in the first quarter of 2004 compared with the same period in 2003. Towel &
Tissue implemented select selling price increases of 4% to 6% early in the
second quarter of 2004.
Gross Profit
Three Months Ended March 31,
(Dollars in thousands) 2004 2003
Gross profit on sales $26,698 $20,879
Gross profit margin 11% 9%
Gross profit for the three months ended March 31, 2004, was $26.7 million
compared to $20.9 million for the three months ended March 31, 2003. The
increase in gross margin quarter-over-quarter was driven by product mix
improvement in tons sold, operational efficiency gains and somewhat lower
energy prices, partially offset by increased market pulp and employee fringe
benefit costs. In total, natural gas prices declined nearly 6% resulting in a
benefit of $0.6 million in the first quarter of 2004 compared to the first
quarter of 2003. For the same period, market pulp prices were $46 per air-dried
metric ton, or approximately $4.8 million higher while wastepaper prices
remained relatively flat. In addition, employee fringe benefit costs, primarily
in the areas of health insurance, pension and post-retirement costs, increased
approximately $2.1 million for the period ended March 31, 2004 compared to
March 31, 2003.
With recently implemented and announced market pulp price increases, the
average price of market pulp consumed in the second quarter of 2004 is expected
to increase by 6% to 8% over first quarter levels. For the balance of 2004,
approximately 5% of the Company's expected
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market pulp purchases are protected through fixed price contracts.
Additionally, at the end of the first quarter, the Company had approximately
60% of its expected second quarter natural gas requirements protected at a
price slightly below the first quarter average price.
Printing & Writing's gross profit for the first quarter of 2004 was 9% of net
sales compared to 7% for the same period last year. The improvement in gross
margins on a quarter-over-quarter basis is attributable to operational
efficiency gains and favorable pricing in natural gas partially offset by a
reduced average selling price, unfavorable market pulp and higher employee
fringe benefit costs as discussed in the consolidated gross margin comparisons.
Specialty Paper's average selling price increase and improved operations offset
the unfavorable impacts of market pulp and employee fringe benefit costs to
report improved year-over-year gross profit margins of 8% in the first quarter
of 2004 compared to 6% in the first quarter of 2003.
The gross profit margin for the Towel & Tissue increased to 19% in the first
quarter of 2004 from 16% in the first quarter of 2003. Slightly lower average
selling price was more than offset by improved operations and cost reduction
results, to account for the higher current-year margin.
Consolidated order backlogs increased to approximately 44,400 tons at March 31,
2004, from approximately 38,800 tons at March 31, 2003. Backlog tons at March
31, 2004, represent $51.2 million in sales compared to $41.9 million in sales
at March 31, 2003. Increases in customer backlog were evident in all segments
of the business. Printing & Writing backlog tons improved from 8,400 tons as
March 31, 2003, to 10,600 tons at March 31, 2004. Specialty Paper backlog tons
increased to 30,900 tons at the end of the first quarter of 2004 compared to
29,100 tons at the end of the first quarter of 2003. Towel & Tissue
experienced an increase in backlogs with 2,900 tons and 1,300 tons reported at
the end of the first quarter of 2004 and 2003, respectively. The change in
customer order backlogs does not necessarily indicate 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) 2004 2003
Selling and administrative expense $18,884 $16,244
Percent increase/(decrease) 16% (5%)
As a percent of net sales 7% 7%
Selling and administrative expenses in the first quarter of 2004 were $18.9
million compared to $16.2 million in the same period of 2003. Incentive
compensation programs based on the market price of the Company's stock resulted
in a provision of $0.2 million for the three months ended March 31, 2004
compared to a credit of $0.3 million for the three months ended March 31, 2003.
The remaining increase quarter-over-quarter was primarily due to increases in
incentive compensation and fringe benefit costs, including health insurance,
pension and post-retirement benefits.
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Other Income and Expense
Three Months Ended March 31,
(Dollars in thousands) 2004 2003
Interest expense $2,527 $2,501
Other income(expense) 194 (14)
Interest expense was $2.5 million in both the first quarter of 2004 and 2003.
The benefit from lower average debt levels was more than offset by a slightly
higher effective interest rate quarter-over-quarter. Long-term debt was
$162.0 million and $165.6 million at March 31, 2004 and 2003, respectively.
Long-term debt at December 31, 2003, was $162.2 million. Interest expense is
expected to remain similar in 2004 as compared to 2003. Other income in the
first quarter of 2004 increased over the first quarter of 2003 due to interest
income as a result of higher cash and cash equivalent balances year-over-year.
Income Taxes
Three Months Ended March 31,
(Dollars in thousands) 2004 2003
Provision for income taxes $2,029 $785
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 2004 is expected to
remain at 37%.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows and Capital Expenditures
Three Months Ended March 31,
(Dollars in thousands) 2004 2003
Cash provided by operating activities $14,031 $14,508
Capital expenditures 3,937 4,669
For the three months ended March 31, 2004, cash provided by operating
activities was $14.0 million compared to cash provided by operations for the
three months ended March 31, 2003, of $14.5 million. The reduction in cash
flows provided by operating activities quarter-over-quarter is attributable to
increased pension contributions in the current period and year-to-year changes
in operating assets and liabilities, partially offset by increased current-
quarter earnings The first quarter of 2003 also included $7.0 million in
income tax refunds received compared to $1.4 million in the first quarter of
2004. The Company expects to contribute approximately $21 million to the
pension plans in 2004.
In 2004, due to relatively weak economic conditions and to excess production
capacity in the paper industry, the Company has continued efforts initiated in
2001 to limit capital spending without sacrificing the maintenance of its
facilities and operating assets. The Company has established an objective to
achieve a weighted-average internal rate of return of 17% on capital projects
approved in 2004 and has achieved this objective for projects approved through
the first three months of the year. Capital spending for the first three months
of 2004 was $3.9 million
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compared to $4.7 million during the first three months of 2003. Total capital
spending in 2004 is expected to be less than $35 million.
For 2004, capital expenditures for projects with total spending expected to
exceed $1.0 million occurred in Towel & Tissue with $0.1 million spent on a
screw press project and $0.4 million spent for various converting lines.
The balance of spending for the first three months of 2004 was related to
projects that individually are expected to cost less than $1.0 million. These
expenditures included approximately $2.3 million for essential non-or low-
return projects, and approximately $1.1 million on projects expected to provide
a return on investment that exceeds the Company's cost of capital.
For the first quarter of 2003, capital expenditures for projects with total
spending expected to exceed $1.0 million were $0.1 million in Printing &
Writing 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 Towel & Tissue, $0.6 million was
spent on a screw press project and $0.5 million was spent for various
converting lines. The balance of the spending in the first three months of 2003
was on projects individually under $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 excess the Company's cost of capital.
Effective March 3, 2003, the Company acquired certain assets of a laminated
papers producer for approximately $8.5 million in cash. The acquisition is
being accounted 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.
Debt and Equity
MARCH 31, December 31,
(Dollars in thousands) 2004 2003
Short-term debt $ 112 $ 112
Long-term debt 161,964 162,174
Total debt 162,076 162,286
Stockholders' equity 354,860 350,316
Total capitalization 516,936 512,602
Long-term debt/capitalization ratio 31% 32%
As of March 31, 2004, there was no significant change in total debt as compared
to December 31, 2003.
On March 31, 2004, the Company had approximately $131.0 million of available
borrowing capacity from existing bank facilities. The Company's borrowing
capacity and cash provided by
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operations are expected to be sufficient to support operations, fund capital
plans and meet dividend requirements.
Dividends
On December 19, 2003, the Board of Directors declared a quarterly cash dividend
of $0.085 per common share. The dividend was paid on February 17, 2004, to
shareholders of record on February 2, 2004. On April 22, 2004, the Board of
Director's declared a cash dividend in the amount of $0.085 per share. The
dividend is payable on May 17, 2004, to shareholders of record on May 3, 2004.
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, 2003, 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.
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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, 2003.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, 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-15 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 during the period covered by this report which could significantly
affect internal controls, nor were there any significant deficiencies or
material weaknesses identified which required any corrective action to be
taken.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
31.1 Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of
2002
31.2 Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of
2002
32.1 Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley
Act of 2002
(b) Reports on Form 8-K:
Form 8-K dated January 28, 2004. The Company filed a current report on Form
8-K on January 28, 2004, reporting earnings and net sales information for
the quarter and fiscal year ended December 31, 2003, under Item 5 and
additional related information under Items 9 and 12.
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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 10, 2004 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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EXHIBIT INDEX
TO
FORM 10-Q
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
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:
31.1 Certification of CEO pursuant to Section 302 of Sarbanes-Oxley Act of
2002
31.2 Certification of CFO pursuant to Section 302 of Sarbanes-Oxley Act of
2002
32.1 Certification of CEO and CFO pursuant to Section 906 of Sarbanes-Oxley
Act of 2002
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