Exhibit 99.1
NEWS RELEASE
WAUSAU-MOSINEE PAPER CORPORATION
REPORTS HIGHER SECOND-QUARTER EARNINGS
MOSINEE, WI...JULY 21, 2004...Wausau-Mosinee Paper Corporation
(NYSE:WMO) today reported second-quarter earnings of $3.7 million, or $0.07 per
share, compared with 2003 second-quarter earnings of $3.2 million, or $0.06 per
share. Net sales rose 9 percent to $264.1 million from $242.8 million last
year, while shipments increased 5 percent.
Net income for this year's second quarter included an after-tax charge of $1.3
million, or $0.02 per share, related to the Company's stock incentive plans,
compared with a charge of $0.4 million, or $0.01 per share, for the same period
last year. Second-quarter results also included after-tax costs of
approximately $1 million, or $0.02 per share, associated with operational
issues affecting Printing & Writing's Brokaw pulp mill.
Net earnings for the first half of 2004 were $7.2 million, or $0.14 per share,
compared with $4.6 million, or $0.09 per share, for the first half of 2003.
Earnings included stock incentive charges of $0.03 per share in 2004 and $0.01
per share in 2003. Net sales increased 7 percent to $515.9 million, while
shipments increased 3 percent.
"Market-share gains and product-mix enhancements drove strong top-line growth
during the second quarter as each of our three businesses reported increased
sales and shipments," explained Thomas J. Howatt, president and CEO.
"Particularly encouraging was the 9 percent sales gain, which represents the
largest year-over-year improvement since the fourth quarter of 1999.
"While market conditions and product pricing improved modestly during the
quarter, nearly half of our gain in average selling price was the result of
product mix improvements," Howatt said. "These mix improvements were achieved
largely from our focused product and business development efforts," Mr. Howatt
said. "Revenues from products developed within the past three years approached
40 percent, handily exceeding our corporate goal of 25 percent.
"At the same time, market pulp and wastepaper costs increased by nearly $4
million, while energy costs continued at historically high levels. Despite
these pressures, we remain focused on key elements of our business that will
drive long-term improvement in profitability."
Specialty Paper reported its eighth consecutive quarter of year-over-year
improvement with operating profits of $3.4 million, compared with $0.1 million
last year. Net sales and shipments increased 18 percent and 11 percent,
respectively, with shipments of higher-priced core products up 13 percent over
year-ago levels. "Select selling price increases, improved demand for
industrial papers and market-share gains drove significant improvement in net
sales and operating profit," Mr. Howatt pointed out.
Printing & Writing reported second-quarter operating profits of $2.0 million,
compared with $2.7 million last year. Current-year results include costs of
approximately $1.7 million related to operational issues involving the Brokaw
pulp mill's recovery system and power boiler. "As part of the mill's annual
utilities outage in June, we identified significant issues with the recovery
boiler and took an extended outage to make the necessary repairs that will
optimize the long-term operation of the boiler," said Mr. Howatt. "This work
was completed during the quarter and we do not anticipate any continuing
operational impact."
Net sales and shipments were up slightly over year-earlier results, while
premium paper shipments increased 12 percent. "Consumer product shipments
increased nearly 20 percent compared with 2003, helping drive significant
growth in higher-value premium products," Mr. Howatt continued.
Towel & Tissue reported second-quarter operating profits of $8.1 million
compared with $8.4 million last year. Prior-year results included pre-tax
income of $4.2 million as a license fee in settlement of a patent infringement
lawsuit. "On the strength of a selling price increase early in the quarter,
average selling price improved 4 percent," Mr. Howatt said. "This increase,
combined with strong cost reduction results, offset higher wastepaper costs and
enabled us to achieve substantial year-over-year profit improvement, excluding
the impact of the patent infringement settlement."
Looking to the third quarter, Mr. Howatt said, "Market conditions are steadily
improving although higher fiber costs and historically high energy prices have
somewhat offset the benefit of recent selling price increases. Our focus
remains on those key drivers of our business that will ensure long-term
success: product leadership, emphasis on niche markets, operational excellence
and benchmark service to our customers. As a result, we expect our positive
earnings trend to continue with third-quarter earnings comfortably exceeding
prior year results of $0.12 per share."
Wausau-Mosinee's second-quarter conference call is scheduled for 11:00 a.m.
(EDT) on Thursday, July 22, and can be accessed through the Company's web site
at www.wausaumosinee.com under "Investor Information." A replay of the webcast
will be available at the same site through July 29.
Wausau-Mosinee Paper Corporation produces fine printing and writing papers,
technical specialty papers, and "away-from-home" towel and tissue products.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The
matters discussed in this news release concerning the Company's future
performance or anticipated financial results are forward-looking statements and
are made pursuant to the safe harbor provisions of the Securities Reform Act of
1995. Such statements involve risks and uncertainties which may cause results
to differ materially from those set forth in these statements. Among other
things, these risks and uncertainties include the strength of the economy and
demand for paper products, increases in raw material and energy prices,
manufacturing problems at Company facilities, and other risks and assumptions
described in Item 1 of the Company's Form 10-K for the year ended December 31,
2003. The Company assumes no obligation to update or supplement forward-
looking statements that become untrue because of subsequent events.
(tables follow)
WAUSAU-MOSINEE PAPER CORPORATION
INTERIM REPORT - QUARTER-ENDED JUNE 30, 2004
(in thousands, except share amounts)
CONDENSED CONSOLIDATED STATEMENTS Three Months Six Months
OF OPERATIONS (UNAUDITED) Ended June 30, Ended June 30,
2004 2003 2004 2003
Net Sales $ 264,109 $ 242,833 $ 515,924 $ 482,659
Cost of Sales 235,973 217,737 461,090 436,684
Gross Profit 28,136 25,096 54,834 45,975
Selling & Administrative Expense 19,754 17,419 38,638 33,663
Operating Profit 8,382 7,677 16,196 12,312
Interest Expense (2,550) (2,570) (5,077) (5,071)
Other Income / (Expense), Net 98 15 292 1
Earnings Before Income Taxes 5,930 5,122 11,411 7,242
Provision for Income Taxes 2,193 1,894 4,222 2,679
Net Earnings $ 3,737 $ 3,228 $ 7,189 $ 4,563
Net Earnings Per Share (Basic & Diluted) $ 0.07 $ 0.06 $ 0.14 $ 0.09
Weighted Average Shares Outstanding (Basic) 51,663,152 51,550,078 51,640,274 51,543,521
CONDENSED CONSOLIDATED BALANCE SHEETS (NOTE 1) June 30, December 31,
2004 2003
Current Assets $285,938 $251,418
Property, Plant & Equipment, Net 548,218 565,722
Other Assets 41,363 40,960
Total Assets $875,519 $858,100
Current Liabilities $133,299 $115,004
Long-term Debt 161,754 162,174
Other Liabilities 230,258 230,606
Stockholders' Equity 350,208 350,316
Total Liabilities & Stockholders' Equity $875,519 $858,100
CONDENSED CONSOLIDATED STATEMENTS Six Months
OF CASH FLOW (UNAUDITED) Ended June 30,
2004 2003
Net Cash Provided by Operating Activities $40,085 $27,965
Cash Provided by (Used in) Investing Activities:
Capital Expenditures (9,471) (9,975)
Acquisition of Business 0 (8,413)
Proceeds on Sale of Property, Plant & Equipment 12 6
(9,459) (18,382)
Cash Provided by (Used in) Financing Activities:
Payments Under Capital Lease Obligation (55) (34)
Dividends Paid (8,773) (8,763)
Proceeds from Stock-Option Exercises 1,279 135
(7,549) (8,662)
Net Increase in Cash $23,077 $ 921
Note 1 -Balance sheet amounts at June 30, 2004, are unaudited. The December
31, 2003, amounts are derived from audited financial statements.
Note 2 -Effective March 3, 2003, the Company acquired certain assets of a
laminated papers producer. 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.
Note 3 -During the second quarter of 2003, the Company's Towel & Tissue Group
reached a settlement of all claims of the parties in its previously
announced patent litigation. As a result of the settlement, the
Company recognized $4.2 million in pre-tax income as a fee for
licensing certain patented dispenser technologies.
Note 4 -Interim Segment Information.
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.
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 two
converting facilities that produce laminated roll wrap and related
specialty finishing and packaging products, and a converting facility
that 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.
Towel & Tissue operates a paper mill in Middletown, Ohio, and a
converting facility in Harrodsburg, Kentucky.
Sales, operating profit, and asset information by segment is as
follows:
(in thousands, except ton data) June 30, December 31,
2004 2003
Segment Assets (Note 1)
Printing & Writing $282,836 $283,711
Specialty Paper 330,944 334,079
Towel & Tissue 163,514 165,199
Corporate & Unallocated* 98,225 75,111
$875,519 $858,100
Three Months Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
Net Sales External Customers (unaudited)
Printing & Writing $101,181 $ 99,458 $201,282 $197,835
Specialty Paper 105,771 89,701 206,702 182,159
Towel & Tissue 57,157 53,674 107,940 102,665
$264,109 $242,833 $515,924 $482,659
Operating Profit (unaudited)
Printing & Writing $ 1,971 $ 2,704 $ 4,522 $ 4,190
Specialty Paper 3,375 64 6,826 1,576
Towel & Tissue 8,131 8,372 13,432 12,403
Total Reportable Segment Operating Profit 13,477 11,140 24,780 18,169
Corporate & Eliminations (5,095) (3,463) (8,584) (5,857)
Interest Expense (2,550) (2,570) (5,077) (5,071)
Other Income/(Expense), Net 98 15 292 1
Earnings Before Income Taxes $ 5,930 $ 5,122 $ 11,411 $ 7,242
Three Months Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
Depreciation, Depletion and
Amortization (unaudited)
Printing & Writing $ 4,172 $ 4,499 $ 8,348 $ 8,657
Specialty Paper 5,977 6,297 12,002 12,419
Towel & Tissue 4,506 4,529 9,002 9,111
Corporate & Unallocated 285 188 570 371
$ 14,940 $ 15,513 $ 29,922 $ 30,558
Tons Sold (unaudited)
Printing & Writing 90,881 90,672 183,121 179,403
Specialty Paper 91,726 82,651 179,311 170,326
Towel & Tissue 38,710 38,091 74,133 72,441
221,317 211,414 436,565 422,170
<FN>
*Segment assets do not include intersegment accounts receivable, cash,
deferred tax assets and certain other assets which are not identifiable
with the segments.