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 SEPTEMBER 30, 2002
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 October 31, 2002 was
51,536,891.
WAUSAU-MOSINEE PAPER CORPORATION
AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations,
Three Months and Nine Months Ended
September 30, 2002 (unaudited) and
September 30, 2001 (unaudited) 1
Condensed Consolidated Balance
Sheets, September 30, 2002 (unaudited)
and December 31, 2001 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Nine Months
Ended September 30, 2002 (unaudited)
and September 30, 2001 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements 3-7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8-12
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 12
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
(i)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(AS RESTATED, SEE NOTE 2)
Three Months Ended Nine Months Ended
September 30, September 30,
(Dollars in thousands, except per share data) 2002 2001 2002 2001
NET SALES $ 251,149 $245,106 $ 714,897 $719,888
Cost of sales 223,003 215,175 632,952 650,159
GROSS PROFIT 28,146 29,931 81,945 69,729
Selling and administrative expenses 13,466 15,107 47,241 51,957
OPERATING PROFIT 14,680 14,824 34,704 17,772
Interest expense (2,679) (3,431) (8,215) (11,396)
Other income (expense), net 31 107 17 232
EARNINGS BEFORE INCOME TAXES 12,032 11,500 26,506 6,608
Provision for income taxes 4,455 4,250 9,805 2,444
NET EARNINGS $ 7,577 $ 7,250 $ 16,701 $ 4,164
NET EARNINGS PER SHARE BASIC $ 0.15 $ 0.14 $ 0.32 $ 0.08
NET EARNINGS PER SHARE DILUTED $ 0.15 $ 0.14 $ 0.32 $ 0.08
Weighted average shares outstanding-basic 51,536,891 51,500,113 51,529,695 51,452,806
Weighted average shares outstanding-diluted 51,597,637 51,613,430 51,655,471 51,550,214
See Notes to Condensed Consolidated Financial Statements.
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Wausau-Mosinee Paper Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) SEPTEMBER 30, December 31,
2002 2001
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 16,803 $ 12,010
Receivables, net 85,620 69,425
Refundable income taxes - 1,241
Inventories 114,161 124,338
Deferred income taxes 14,111 14,111
Other current assets 2,042 1,910
Total current assets 232,737 223,035
Property, plant and equipment, net 607,948 634,928
Other assets 34,377 34,045
TOTAL ASSETS $875,062 $892,008
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 63,042 $ 64,060
Accrued and other liabilities 55,338 57,251
Total current liabilities 118,380 121,311
Long-term debt 175,695 192,264
Deferred income taxes 105,638 105,638
Postretirement benefits 55,203 54,253
Pension 30,141 37,223
Other liabilities 16,886 16,464
Total liabilities 501,943 527,153
Stockholders' equity 373,119 364,855
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $875,062 $892,008
See Notes to Condensed Consolidated Financial Statements.
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Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30,
(Dollars in thousands) 2002 2001
Net cash provided by operating activities $49,021 $69,607
Cash provided by (used in) investing activities:
Capital expenditures (15,573) (22,590)
Proceeds from sale of property, plant and equipment 185 470
(15,388) (22,120)
Cash provided by (used in) financing activities:
Net payments under credit agreements (16,025) (36,965)
Proceeds on termination of swap agreement 0 6,382
Dividends paid (13,140) (13,120)
Stock options exercised 325 2,422
Other financing activities 0 (180)
(28,840) (41,461)
Net increase in cash and cash equivalent 4,793 6,026
Cash and cash equivalents, beginning of period 12,010 10,579
Cash and cash equivalents, end of period $16,803 $16,605
See Notes to Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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/A for the
year ended December 31, 2001, for the Company's accounting policies
which are pertinent to these statements.
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Note 2. As a result of a comprehensive review performed in the second
quarter of 2002, the Company determined that certain
reclassifications and adjustments were required to previously
filed financial statements. As discussed in Note 1 of the Form
10-K/A for the year ended December 31, 2001 and in Note 2 of the Form
10-Q/A for the three months ended March 31, 2002, the Company has
reclassified gains and losses on asset dispositions from other income
and expense to either cost of sales or selling and administrative
expenses and has restated amounts previously recognized as
compensation expense for stock options prior to plan approval by
shareholders to the period corresponding with shareholder approval
of the plan. Unaudited quarterly financial data for the years 2001
and 2002 has also been restated from amounts previously reported as
follows:
(i) For the three months ended September 30, 2001, net losses
from asset dispositions in the amount of $619,000 was
reclassified from other income and expense to cost of sales
and $27,000 in net gains was reclassified from other income
and expense to selling and administrative expenses. For
the nine months ended September 30, 2001, net losses of
$1,142,000 were reclassified from other income and expense
to cost of sales and $27,000 in net gains was reclassified
from other income and expense to selling and administrative
expenses. These reclassifications do not change the Company's
previously reported net earnings.
(ii) For the nine months ended September 30, 2001, previously
recognized compensation expense in the amount of $1,183,000
was restated to recognize amounts previously recognized in the
twelve months ended December 31, 2000 to correspond with the
year in which shareholder approval was obtained.
Except as otherwise stated herein, all information presented in the
Condensed Consolidated Financial Statements and related Notes
to Condensed Consolidated Financial Statements includes all such
reclassifications and restatements.
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 such plans had been
exercised on that day. For the three months ended September 30,
2002, the after-tax credit for stock incentive plans was $872,000
compared to an after-tax credit of $436,000 for the three months
ended September 30, 2001. For the nine months ended September 30,
2002, the after-tax credit for stock incentive plans was $736,000
compared to an after-tax provision of $2,319,000 for the same period
last year.
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Note 4. Basic and diluted earnings per share are recognized as follows:
(Dollars in thousands, except per share amounts)
Three Months Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
Net earnings $ 7,577 $ 7,250 $ 16,701 $ 4,164
Basic weighted average
common shares outstanding 51,536,891 51,500,113 51,529,695 51,452,806
Dilutive securities:
Stock option plans 60,746 113,317 125,776 97,408
Diluted weighted average
common shares outstanding 51,597,637 51,613,430 51,655,471 51,550,214
Net earnings per share-basic $ 0.15 $ 0.14 $ 0.32 $ 0.08
Net earnings per share diluted $ 0.15 $ 0.14 $ 0.32 $ 0.08
For the three months ended September 30, 2002, 764,255 options for shares were
excluded from the diluted EPS calculation because the options were
antidilutive. For the three months ended September 30, 2001, 901,655 options
were antidilutive.
Note 5. Accounts receivable consisted of the following:
(Dollars in thousands) SEPTEMBER 30, December 31,
2002 2001
Trade $89,206 $73,349
Other 1,209 727
90,415 74,076
Less: Allowances 4,795 4,651
$85,620 $69,425
Note 6. The various components of inventories were as follows:
(Dollars in thousands) SEPTEMBER 30, December 31,
2002 2001
Raw Materials $34,748 $ 34,349
Finished Goods and Work in Process 72,864 80,343
Supplies 28,250 29,181
Subtotal 135,862 143,873
Less: LIFO Reserve 21,701 19,535
Net inventories $114,161 $124,338
Note 7. The accumulated depreciation on fixed assets was $600,678,000 as of
September 30, 2002 and $564,108,000 as of December 31, 2001. The
provision for depreciation, amortization and depletion for the nine
months ended September 30, 2002 and September 30, 2001 was
$45,290,000 and $45,630,000, respectively.
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Note 8. Interim Segment Information
FACTORS USED TO IDENTIFY REPORTABLE SEGMENTS
The Company's operations are classified into three principal reportable
segments, the Printing & Writing Group, the Specialty Paper Group, and the
Towel & Tissue Group, each providing different products. Separate
management of each segment is required because each business unit is
subject to different marketing, production and technology strategies.
PRODUCTS FROM WHICH REVENUE IS DERIVED
The Printing & Writing Group produces a broad line of premium printing and
writing grades at manufacturing facilities in Brokaw, Wisconsin and
Groveton, New Hampshire. The Printing & Writing Group also includes
converting facilities which produce wax-laminated roll wrap and related
specialty finishing and packaging products, and a converting facility
which converts printing and writing grades. The Specialty Paper Group
produces specialty papers at its manufacturing facilities in Rhinelander,
Wisconsin; Mosinee, Wisconsin; and Jay, Maine. The Towel & Tissue Group
markets a complete line of towel, tissue, soap and dispensing systems for
the "away-from-home" market. The Towel & Tissue Group operates a paper
mill in Middletown, Ohio and a converting facility in Harrodsburg,
Kentucky.
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RECONCILIATIONS
The following are reconciliations to corresponding totals in the
accompanying consolidated financial statements:
Three Months Nine Months
Ended September 30, Ended September 30,
(Dollars in thousands-unaudited) 2002 2001 2002 2001
Net sales external customers
Printing & Writing $103,161 $102,106 $295,258 $301,996
Specialty Paper 90,672 89,927 262,348 268,892
Towel & Tissue 57,316 53,073 157,291 149,000
$251,149 $245,106 $714,897 $719,888
Net sales intersegment
Printing & Writing $ 1,669 $ 1,798 $ 5,274 $ 6,756
Specialty Paper 70 119 220 353
Towel & Tissue 0 0 0 0
$ 1,739 $ 1,917 $ 5,494 $ 7,109
Operating profit (loss)
Printing & Writing $ 5,951 $ 10,376 $ 23,279 $ 17,805
Specialty Paper 59 (1,250) (3,725) (8,050)
Towel & Tissue 9,193 7,343 21,011 18,744
Total reportable segment
operating profit 15,203 16,469 40,565 28,499
Corporate & eliminations (523) (1,645) (5,861) (10,727)
Interest expense (2,679) (3,431) (8,215) (11,396)
Other income (expense) 31 107 17 232
Earnings before income taxes $ 12,032 $ 11,500 $ 26,506 $ 6,608
SEPTEMBER 30, December 31,
(Dollars in thousands-unaudited) 2002 2001
Segment Assets
Printing & Writing $289,037 $294,241
Specialty Paper 355,098 368,595
Towel & Tissue 175,929 177,708
Corporate & Unallocated* 54,998 51,464
$875,062 $892,008
<FN>
*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
RESULTS OF OPERATIONS
NET SALES
For the three months ended September 30, 2002, consolidated net sales for
the Company were $251.1 million compared to $245.1 million for the same
three month period in 2001, an increase of 2.4%. Company-wide shipments
in the third-quarter of 2002 were 220,000 tons, a 3.3% improvement over
the 213,000 tons shipped in the third-quarter of 2001. Year-to-date, net
sales were $714.9 million in 2002 compared to $719.9 million in 2001, a
decrease of less than 1%. Although total tons shipped improved 3.8% to
629,000 tons for the nine-months ended September 30, 2002 compared to
606,000 tons for the nine months ended September 30, 2001, overall average
selling price declined approximately 4% for the same period. Net sales to
xpedx, International Paper Company's distribution division and the
Company's major customer that accounted for 10.6% of consolidated net
sales for the year ended December 31, 2001, were 7.8% and 10.4% for the
third quarters of 2002 and 2001, respectively, and 8.6% and 10.1% for the
first nine months of 2002 and 2001, respectively.
Net sales for the Printing & Writing Group were $103.2 million and $102.1
million for the third quarters of 2002 and 2001, respectively. Total tons
shipped increased 6.2% to 94,500 tons in 2002 compared to 89,000 tons for
the comparable period in 2001. Average selling price declined
approximately 5% as compared to the third quarter of 2001 with the decline
evenly split between product mix differences and selling price reductions.
For the first nine months of 2002, Printing & Writing Group net sales were
$295.3 million compared to $302.0 million for the same nine-month period
in 2001, a decrease of 2.2%. Shipment volume improved to 268,000 tons
through September 30, 2002, or 1.5% higher than the 264,000 tons shipped
in the period ended September 30, 2001, while average selling price
declined approximately 3% year-over-year.
The Specialty Paper Group's net sales for the three months ended September
30, 2002 and 2001 were $90.7 million and $89.9 million, respectively.
Quarter-over-quarter, volume shipments remained relatively flat at 86,000
tons and 86,500 tons in 2002 and 2001, respectively. Average selling price
increased approximately 1% as an improved mix of products offset product
selling price declines. Year-to-date net sales for the Specialty Paper
Group decreased 2.5% to $262.3 million in 2002 from $268.9 million in
2001, while year-to-date volumes increased to 251,000 tons in 2002, or
5.5% over 2001 shipment volumes of 238,000. For the same year-to-date
periods, average selling price deteriorated by approximately 8%.
Third quarter net sales for the Towel & Tissue Group were $57.3 million
and $53.1 million in 2002 and 2001, respectively, representing an increase
of 7.9%. Shipments were 39,000 tons in the third quarter of 2002 compared
to 37,500 tons in the third quarter of 2001 while average selling price
increased quarter-over-quarter approximately 3%. Product mix improvements
offset a slight decrease in product selling prices, resulting in higher
third
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quarter 2002 average selling prices. Towel & Tissue Group net sales
for the first nine months of 2002 were $157.3 million, an increase of 5.6%
over the $149.0 million reported in the first nine months of 2001.
Shipments year-over-year increased 6.3% to 110,500 tons in 2002 from
104,000 tons in 2001. Year-to-date selling prices declined by less than
1% in 2002 compared to the same year-to-date period in 2001.
Consolidated order backlogs increased to 40,900 tons at September 30,
2002, compared to 34,800 tons at September 30, 2001. Backlog tons at
September 30, 2002 represent $43.6 million in sales compared to $36.1
million at September 30, 2001. The change in customer order backlogs does
not necessarily indicate the strengthening of business conditions since a
substantial portion of orders are shipped directly from inventory upon
receipt and, therefore, do not impact backlog tons or dollars.
GROSS PROFIT
Gross profit for the three months ended September 30, 2002 was $28.1
million or 11.2% of net sales, compared to gross profit of $29.9 million
or 12.2% of net sales for the same period in 2001. The decline in gross
profit margin from 2001 is principally due to higher market pulp and
wastepaper pricing partially offset by lower natural gas costs, improved
production efficiencies and cost reduction efforts. In total, market pulp
pricing was approximately $40 per air-dried metric ton higher in the third
quarter of 2002 than the third quarter of 2001, increasing costs
approximately $3.9 million quarter-over-quarter. Similarly, wastepaper
prices increased slightly more than $40 per ton, increasing production
costs approximately $1.8 million. Natural gas prices were approximately
19% lower in the three months ended September 30, 2002 than the three
months ended September 30, 2001 and improved gross margin by $1.2 million.
Year-to-date gross profit improved to $81.9 million, or 11.5% of net sales
compared to $69.7 million or 9.7% of net sales in 2001. In the year-to-
date comparison, 2002 gross margins benefited from declines in market pulp
and natural gas costs, while wastepaper prices trended higher.
The Printing & Writing Group's gross profit margin for the third quarters
of 2002 and 2001 were 11.6% and 15.5%, respectively. The current year
quarter was impacted by a decline in average selling price and increased
market pulp costs. For the nine months ended September 30, 2002, the
gross profit margin was 13.6% of net sales compared to 11.2% of net sales
for the nine months ended September 30, 2001. As indicated in the
consolidated gross margin comparison, the Printing & Writing Group gross
margin benefited by year-over-year declines in market pulp and natural gas
costs. These benefits were partially offset by a year-over-year
deterioration in average selling price.
The Specialty Paper Group's gross profit margin improved to 4.2% of net
sales in the third quarter of 2002 compared to 3.5% of net sales in the
same period of 2001. For the nine months ended September 30, 2002 and
2001, gross margin was 3.4% and 2.1% of net sales, respectively.
Consistent with the explanation provided in the consolidated gross margin
comparison, market pulp costs were higher than prior year in the quarterly
comparison but lower on a year-to-date basis while natural gas costs
declined in both comparisons. In
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addition, the Specialty Paper Group's broad-based cost reduction process
has begun to improve gross margins as identified cost savings opportunities
are fully implemented.
The gross profit margin for the Towel & Tissue Group was 22.3% in the
third quarter of 2002 compared to a gross profit margin of 20.3% for the
same period in 2001. For the year-to-date periods ended September 30,
2002 and 2001, gross profit margins were a comparable 20.7% and 20.2%,
respectively. Quarter-over-quarter, increased wastepaper costs were
offset by improvements in average selling price and operating
efficiencies. Year-over-year, increased wastepaper costs and slightly
lower average selling prices were offset by sales volume gains and
improved operating efficiencies to result in a modestly higher 2002 gross
profit margin.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses for the three months ended September
30, 2002 were $13.5 million compared to $15.1 million in the same period
in 2001. Incentive compensation programs based on the market price of the
Company's stock resulted in third quarter credits of $1.4 million and $0.7
million in 2002 and 2001, respectively.
For the nine months ended September 30, 2002 and 2001, selling and
administrative expenses were $47.2 million and $52.0 million,
respectively. A credit of $1.2 million was recognized in the first nine
months of 2002 for stock incentive programs compared to an expense of $3.7
million in the same period of 2001.
INCOME TAXES
The effective tax rate for the quarters ended September 30, 2002 and 2001
and for the nine months ended September 30, 2002 and 2001 was 37%. The
effective tax rate is expected to be 37% for 2002.
CAPITAL RESOURCES AND LIQUIDITY
CASH PROVIDED BY OPERATIONS
For the nine months ended September 30, 2002, net cash provided by
operations was $49.0 million, compared to $69.6 million in the nine months
ended September 30, 2001. The decrease in operating cash flows in 2002
compared to 2001 is primarily due to one-time inventory reductions during
2001 which occurred as a result of a concentrated effort to reduce working
capital.
CAPITAL EXPENDITURES
Capital expenditures totaled $15.6 million for the nine months ended
September 30, 2002, compared to $22.6 million for the same period last
year.
For the nine months ended September 30, 2002, capital expenditures for
projects with total spending expected to exceed $1.0 million were $0.8
million for a pulp mill digester
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replacement and $0.8 million for process control equipment at the Brokaw
and Groveton mills of the Printing & Writing Group, respectively. In the
Towel & Tissue Group, $2.7 million was spent on various converting
equipment. The balance of capital spending in 2002 was for projects
individually under $1.0 million.
During the first nine months of 2001, capital expenditures for projects
with total spending expected to exceed $1.0 million included $1.0 million
on Cluster Rule compliance projects at the Brokaw mill, as well as, $1.1
million on paper mill improvement projects at the Brokaw and Groveton
mills of the Printing & Writing Group. The Specialty Paper Group incurred
$3.9 million on the completion of the High Performance Liner (HPL) project
at the Rhinelander mill. In addition, $0.8 million was spent at the Mosinee
mill on Cluster Rule compliance projects. The Towel & Tissue Group spent $5.1
million on several converting lines at the Harrodsburg, Kentucky facility.
Additionally, $0.7 million was spent at the Middletown mill on a reel upgrade.
The balance of capital spending in 2002 was for projects individually under
$1.0 million.
FINANCING
Net payments to retire debt were $16.0 million for the nine months ended
September 30, 2002, as available cash flows, net of capital spending and
dividend payments, were used to pay down debt.
Interest expense was $2.7 million and $3.4 million for the three months
ended September 30, 2002 and 2001, respectively. The decrease in interest
expense was due primarily to lower debt levels in 2002 compared to 2001.
Cash provided by operations and the Company's borrowing capacity are
expected to meet capital needs and dividend requirements. The Company had
approximately $130.8 million in borrowing capacity from existing bank
facilities as of September 30, 2002.
DIVIDENDS
Cash dividends of $.085 per common share were paid on May 15, 2002 and
August 15, 2002. On October 23, 2002, the Board of Directors declared a
quarterly cash dividend of $.085 payable on November 15, 2002 to
shareholders of record on November 1, 2002.
OUTLOOK
The fourth quarter is traditionally the Company's weakest shipment period
of the year. Compared to the third quarter of 2002, cost improvements are
expected from lower market pulp prices, as well as ongoing cost reduction
and efficiency improvement efforts. As a result, fourth quarter earnings
are expected to modestly exceed prior year results.
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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/A for the year ended December 31, 2001, and, from time
to time, in the Company's other filings with the Securities and Exchange
Commission. The Company assumes no obligations to update or supplement
forward-looking statements that become untrue because of subsequent
events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the information provided in response
to Item 7A of the Company's Form 10-K/A for the year ended December 31,
2001.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's
reports under the Securities Exchange Act of 1934 (the "Exchange Act") is
recorded, processed, summarized, and reported in accordance with
Securities and Exchange Commission rules, and that such information is
accumulated and communicated to the Company's management, including its
President and Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
Management necessarily applied its judgment in assessing the costs and
benefits of such controls and procedures which, by their nature, can
provide only reasonable assurance regarding management's control
objectives.
Within 90 days prior to the date of this report, the Company carried out
an evaluation, under the supervision and with the participation of the
Company's management, including the Company's President and Chief
Executive Officer along with the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon
the foregoing, the Company's President and Chief Executive Officer along
with the Company's Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in timely alerting them
to material information relating to the Company (including its
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consolidated subsidiaries) required to be included in the Company's
Exchange Act reports. There have been no significant changes in the
Company's internal controls or in other factors which could significantly
affect internal controls subsequent to the date the Company carried out
its evaluation.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On September 20, 2002, Bay West Paper Corporation, a wholly-owned
subsidiary of the Company, filed a complaint against Georgia-Pacific
Corporation in the U.S. District Court for the Eastern District of
Kentucky. The complaint alleges that Georgia-Pacific's ENMOTION towel
dispenser infringes on a patent used in the Bay West WAVE 'N
DRYreg-trade-mark dispenser and seeks an injunction that will prohibit
Georgia-Pacific from using the infringing device in any of its cabinets
and monetary damages that result from the infringement. On November 5,
2002 Georgia-Pacific filed an answer to the complaint denying liability on
various grounds, including the invalidity of the Company's patent.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
99.1 Certification under Section 906 of Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
FORM 8-K DATED JULY 22, 2002. The Company filed a current report on Form
8-K on July 22, 2002, reporting earnings and net sales information for the
quarter ended June 30, 2002 under Item 5 and additional related
information under Item 9, Regulation FD Disclosure.
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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
November 14, 2002 SCOTT P. DOESCHER
Scott P. Doescher
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
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CERTIFICATIONS
I, Thomas J. Howatt, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Wausau-
Mosinee Paper Corporation (the "registrant");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
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6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
THOMAS J. HOWATT
Thomas J. Howatt
President and Chief Executive Officer
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CERTIFICATIONS
I, Scott P. Doescher, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Wausau-
Mosinee Paper Corporation (the "registrant");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified
for the registrant's auditors any material weaknesses in internal
controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
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6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 14, 2002
SCOTT P. DOESCHER
Scott P. Doescher
Senior Vice President, Finance
(Principal Financial Officer)
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EXHIBIT INDEX
TO
FORM 10-Q
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
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:
99.1 Certification under Section 906 of Sarbanes-Oxley Act of 2002
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