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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2005
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)
100 PAPER PLACE
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 29, 2005 was 51,695,251.
WAUSAU-MOSINEE PAPER CORPORATION
AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of
Operations, Three Months Ended
March 31, 2005 (unaudited) and
March 31, 2004 (unaudited) 1
Condensed Consolidated Balance
Sheets, March 31, 2005 (unaudited)
and December 31, 2004 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Three Months Ended
March 31, 2005 (unaudited) and
March 31, 2004 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements (unaudited) 3-8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 9-14
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 15
Item 4. Controls and Procedures 15
PART II. OTHER INFORMATION
Item 6. Exhibits 16
i
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,
(all amounts in thousands, except per share data) 2005 2004
NET SALES $ 267,741 $ 251,815
Cost of products sold 244,606 225,117
GROSS PROFIT 23,135 26,698
Selling and administrative expenses 17,527 18,884
OPERATING PROFIT 5,608 7,814
Interest expense (2,650) (2,527)
Other income (expense), net 115 194
EARNINGS BEFORE INCOME TAXES 3,073 5,481
Provision for income taxes 1,137 2,029
NET EARNINGS $ 1,936 $ 3,452
NET EARNINGS PER SHARE - BASIC $ 0.04 $ 0.07
NET EARNINGS PER SHARE - DILUTED $ 0.04 $ 0.07
Weighted average shares outstanding-basic 51,690 51,617
Weighted average shares outstanding-diluted 51,991 51,805
See Notes to Condensed Consolidated Financial Statements.
1
Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(all dollar amounts in thousands) MARCH 31, December 31,
2005 2004
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 21,741 $ 51,914
Receivables, net 106,332 95,731
Inventories 136,166 126,932
Deferred income taxes 12,453 8,592
Other current assets 3,884 4,123
Total current assets 280,576 287,292
Property, plant and equipment, net 544,519 551,160
Other assets 44,336 43,782
TOTAL ASSETS $ 869,431 $ 882,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 108 $ 115
Accounts payable 73,843 74,558
Accrued and other liabilities 53,482 73,077
Total current liabilities 127,433 147,750
Long-term debt 161,630 161,833
Deferred income taxes 109,568 105,885
Postretirement benefits 58,806 57,303
Pension 30,865 30,996
Other noncurrent liabilities 22,083 21,375
Total liabilities 510,385 525,142
Stockholders' equity 359,046 357,092
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 869,431 $ 882,234
See Notes to Condensed Consolidated Financial Statements.
2
Wausau-Mosinee Paper Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
March 31,
(all dollar amounts in thousands) 2005 2004
Net cash (used in) provided by operating activities ($ 17,118) $ 14,031
Cash flows from investing activities:
Capital expenditures (8,633) (3,937)
Cash flows from financing activities:
Payment under capital lease obligation (28) (28)
Dividends paid (4,394) (4,382)
Proceeds from stock option exercises 0 1,087
Cash used in financing activities (4,422) (3,323)
Net (decrease) increase in cash and cash equivalents (30,173) 6,771
Cash and cash equivalents, beginning of period 51,914 36,305
Cash and cash equivalents, end of period $ 21,741 $ 43,076
Interest paid-net of amount capitalized $ 5,268 $ 5,198
Income taxes paid $ 6,578 $ 654
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, 2004,
for the Company's accounting policies and other disclosures, which are
pertinent to these statements.
3
Note 2. Basic and diluted earnings per share are reconciled as follows:
(all amounts in thousands, except per share data) Three Months
Ended March 31,
2005 2004
Net earnings $ 1,936 $ 3,452
Basic weighted average common shares outstanding 51,690 51,617
Dilutive securities:
Stock compensation plans 301 187
Diluted weighted average common shares outstanding 51,991 51,805
Net earnings per share-basic $ 0.04 $ 0.07
Net earnings per share-diluted $ 0.04 $ 0.07
For the three months ended March 31, 2005, options for 567,911 shares
were excluded from the diluted EPS calculation because the options were
antidilutive. 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.
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, 2005,
the credit for incentive plans on a pretax basis was $1.9 million. For
the three months ended March 31, 2004, the provision for incentive
plans on a pretax basis was $0.2 million.
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."
4
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:
(all dollar amounts in thousands, except per share amounts) Three Months
Ended March 31,
2005 2004
Net earnings:
As reported $1,936 $3,452
Add: Total stock-based employee compensation
expense (credit) under APB No. 25, net of
related tax effects (1,196) 96
Deduct:Total stock-based compensation (expense)
credit determined under fair-value based method
for all awards, net of related tax effects 1,050 (140)
Pro forma $1,790 $3,408
Net earnings per share - basic:
As reported $0.04 $0.07
Pro forma $0.03 $0.07
Net earnings per share - diluted:
As reported $0.04 $0.07
Pro forma $0.03 $0.07
In December 2004, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 123 (revised
2004), "Share-Based Payment" ("SFAS 123R"), which was to be effective
for the Company on July 1, 2005. On April 14, 2005, the Securities and
Exchange Commission ("SEC") announced the adoption of a rule that defers
the effective date of 123R. As a result, the effective date for the
Company is now January 1, 2006.
Note 4. Accounts receivable consisted of the following:
(all dollar amounts in thousands) MARCH 31, December 31,
2005 2004
Trade $106,215 $ 95,787
Other 2,178 1,778
108,393 97,565
Less: allowances for doubtful accounts (2,061) (1,834)
$106,332 $ 95,731
5
Note 5. The various components of inventories were as follows:
(all dollar amounts in thousands) MARCH 31, December 31,
2005 2004
Raw materials $ 40,457 $ 38,247
Work in process and finished goods 96,984 89,992
Supplies 29,987 28,731
Inventories at cost 167,428 156,970
Less: LIFO reserve (31,262) (30,038)
$136,166 $ 126,932
Note 6. The accumulated depreciation on fixed assets was $698.7 million as of
March 31, 2005, and $685.9 million as of December 31, 2004. The
provision for depreciation, amortization and depletion for the three
months ended March 31, 2005 and March 31, 2004 was $15.3 million and
$15.0 million, respectively.
Note 7. The components of net periodic benefit costs recognized in the
Condensed Consolidated Statements of Operations for the three months
ended March 31, 2005 and 2004 are as follows:
Other
Post-retirement
Pension Benefits Benefits
2005 2004 2005 2004
Service cost $1,810 $1,720 $ 629 $ 671
Interest cost 2,396 2,423 1,185 1,541
Expected return on plan assets (2,708) (2,501) 0 0
Amortization of:
Prior service cost 549 487 (764) (87)
Actuarial loss 466 419 338 447
Transition (asset) 0 (14) 0 0
Settlement 305 0 0 0
Net periodic benefit cost $2,818 $2,534 $1,388 $2,572
The company previously disclosed in its consolidated financial
statements for the year ended December 31, 2004, that although it does
not have a minimum funding requirement for defined benefit pension plans
in 2005, it may elect to make contributions of up to $16.0 million to
pension plans. As of March 31, 2005, the Company has made payments of
$2.2 million to its pension plans. In addition, as previously reported,
the Company expects to contribute $4.1 million directly to post-
retirement plans. As of March 31, 2005, the Company has contributed
$0.9 million to its post-retirement plans.
6
Note 8. Interim Segment Information
The Company has reclassified certain prior-year interim segment
information to conform to the 2005 presentation. The reclassification
is the result of a change in the management of two converting facilities
from the Printing & Writing segment to the Specialty Products segment.
FACTORS USED TO IDENTIFY REPORTABLE SEGMENTS
The Company's operations are classified into three principal reportable
segments: Specialty Products, Printing & Writing, and Towel & Tissue,
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
Specialty Products produces specialty papers at its manufacturing
facilities in Rhinelander, Wisconsin; Mosinee, Wisconsin; and Jay, Maine.
Specialty Products also includes two converting facilities that produce
laminated roll wrap and related specialty finishing and packaging
products. Printing & Writing produces a broad line of premium printing
and writing grades at manufacturing facilities in Brokaw, Wisconsin;
Groveton, New Hampshire; and Brainerd, Minnesota. Printing & Writing
also includes a converting facility which converts printing and writing
grades. 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.
7
RECONCILIATIONS
The following are reconciliations to corresponding totals in the
accompanying consolidated financial statements:
Three Months
Ended March 31,
(all dollar amounts in thousands) 2005 2004
Net sales external customers:
Specialty Products $118,364 $114,137
Printing & Writing 92,604 86,895
Towel & Tissue 56,773 50,783
$267,741 $251,815
Operating profit (loss):
Specialty Products $ 3,940 $ 4,983
Printing & Writing (4,569) 1,019
Towel & Tissue 7,884 5,301
Corporate & eliminations (1,647) (3,489)
$ 5,608 $ 7,814
MARCH 31, December 31,
2005 2004
Specialty Products $344,857 $342,724
Printing & Writing 292,290 281,378
Towel & Tissue 172,023 171,080
Corporate & Unallocated* 60,261 87,052
$869,431 $882,234
* Segment assets do not include intersegment accounts receivable, cash,
deferred tax assets and certain other assets, which are not
identifiable with segments.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Net earnings for the first quarter of 2005 were $1.9 million or $0.04 per share
compared to prior-year net earnings of $3.5 million or $0.07 per share. Net
earnings for the first three months of 2005 included after-tax losses of $3.2
million, or $0.06 per share, related to the operation of the Printing & Writing
segment's mill in Brainerd, Minnesota, which was acquired in October 2004.
Also unfavorably impacting the current quarter were significant energy,
freight, fiber and other raw material cost increases. Despite business
conditions that have softened from late 2004, first quarter 2005 net sales
increased over the same period of 2004 in all three of the Company's business
segments. Effective with the first quarter of 2005, the Specialty Products
business segment includes the results from two of the Company's converting
facilities, which were previously included in the Printing & Writing business
segment. As a result, the Company has reclassified certain prior-year interim
segment information to conform to the 2005 presentation.
OPERATIONS REVIEW
Net Sales
Three Months Ended March 31,
(all dollar amounts in thousands) 2005 2004
Net sales $267,741 $251,815
Percent increase 6% 5%
Consolidated net sales of $267.7 million for the three months ended March 31,
2005 improved 6% over consolidated net sales of $251.8 million for the three
months ended March 31, 2004. Shipments increased approximately 3% quarter-
over-quarter with 221,235 tons shipped during the first quarter of 2005 and
215,248 tons shipped during the first quarter of 2004. During the same
comparative periods, average net selling price improved nearly 4%, or
approximately $9 million with actual product selling price increases offsetting
a slight decline in product mix.
Specialty Products' net sales for the first quarter of 2005 were $118.4
million, an increase of 4% over net sales of $114.1 million reported during the
same period in 2004. The increase in net sales was driven by an average net
selling price increase of nearly 6% or approximately $6 million, with actual
selling price increases generating three-quarters of the improvement.
Partially offsetting the improvement in average selling price was a 2%
reduction in volume of products shipped. In the first three months of 2005,
the business segment shipped 104,788 tons compared to 106,635 tons in the first
quarter of 2004. The decline is due primarily to reduced current year volumes
of laminated roll wrap product.
For the three months ended March 31, 2005, Printing & Writing recorded net
sales of $92.6 million, an increase of 7% over reported net sales in the first
three months of 2004 of $86.9 million. The current quarter improvement in net
sales was due to a 10% increase in volume as 80,160 tons were shipped during
the first quarter of 2005 compared to 73,190 tons during the first quarter of
2004. The improvement in shipment tons quarter-over-quarter was somewhat
9
offset by a decline in average net selling price of approximately 3%. The
decrease in average net selling price is principally due to the commodity-
oriented product mix produced and shipped from the Brainerd mill. Actual
product selling prices increased less than 2% as compared with last year as
inconsistent demand for uncoated freesheet papers has made it difficult to
increase selling prices.
Towel & Tissue reported net sales of $56.8 million for the three-month period
ended March 31, 2005, an increase of 12% from net sales of $50.8 million
reported in the same three-month period of 2004. Shipments of higher-margin
value added products increased 6% in the current quarter as total shipments
increased 2% to 36,287 tons from 35,423 tons during the same period last year.
Average net selling price increased 10%, or more than $5 million, in the first
quarter of 2005 over the first quarter of 2004 with modest mix improvement
adding to the more significant pricing gains experienced in this business
segment.
Gross Profit
Three Months Ended March 31,
(all dollar amounts in thousands) 2005 2004
Gross profit on sales $23,135 $26,698
Gross profit margin 9% 11%
Gross profit for the three months ended March 31, 2005, was $23.1 million
compared to $26.7 million for the three months ended March 31, 2004. Gross
profit margins decreased compared to those reported in the same period last
year as increases in energy, fiber-related costs and losses at Printing &
Writing's newly acquired Brainerd mill more than offset improvements in average
net selling price. In total, natural gas prices increased approximately 20%
resulting in an additional cost of $2.0 million in the first quarter of 2005
compared to the first quarter of 2004 while electricity costs increased $1.1
million in the same comparative period. In addition, market pulp prices
increased $46 per air-dried metric ton, or approximately $5.2 million, pulpwood
prices were more than 17% higher, or $1.3 million, linerboard increased $1.3
million, or approximately 24 %, and purchased towel and tissue parent roll
prices increased nearly 9%, or $1.0 million. Brainerd mill results unfavorably
impacted gross profit margin by 2 percentage points in the first quarter of
2005.
The list price of northern bleached softwood kraft increased $30 per air-dried
metric ton during the first quarter of 2005 after a $30 per air-dried metric
ton increase late in the fourth quarter of 2004. During this period, the list
price of most other market pulps have moved higher by comparable amounts. Some
market pulp producers of northern bleached softwood kraft have recently
announced a $30 per air-dried metric ton price decrease effective May 1, 2005.
The Specialty Products' average selling price increase, improved operations and
cost-reduction efforts were more than offset by the unfavorable impacts of
energy, market pulp and linerboard to report quarter-over quarter gross profit
margins of 8% in the first quarter of 2005 compared to 10% in the first quarter
of 2004.
Printing & Writing's gross profit margin for the first quarter of 2005 was 2%
of net sales compared to 8% of net sales for the first quarter of 2004. In
addition to the unfavorable impacts
10
of energy and market pulp prices described in the consolidated comparison, the
Printing & Writing business segment absorbed operational losses of $5.1 million
incurred at the Brainerd mill which was acquired in October 2004. Difficulties
in ramping-up production at the mill resulted in higher than expected losses
during Brainerd's first full quarter of operation. These difficulties
unfavorably impacted both manufacturing throughput and the ability to produce
a profitable mix of products.
The gross profit margin for Towel & Tissue was 21% in the first quarter of 2005
compared to 19% in the first quarter of 2004. Increased average selling price
and improved operations more than offset unfavorable purchased towel and tissue
parent roll and energy prices to drive the improvement in gross margin on a
quarter-over-quarter basis.
Consolidated order backlogs decreased to approximately 38,700 tons at March 31,
2005, from approximately 44,400 tons at March 31, 2004. Backlog tons at March
31, 2005 represent $46.9 million in sales compared to $51.2 million in sales at
March 31, 2004. Improvements in customer backlog were evident in Printing &
Writing, while Specialty Products' customer backlogs declined and Towel &
Tissue's backlogs remained flat quarter-over-quarter. Specialty Products'
backlog tons declined from 34,400 tons as of March 31, 2004, to 24,000 tons at
March 31, 2005. Printing & Writing backlog tons improved to 11,800 tons at the
end of the first quarter of 2005 compared to 7,100 tons at the end of the first
quarter of 2004. Towel & Tissue experienced similar backlogs with 2,900 tons
reported at the end of the first quarter of 2005 and 2004, 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,
(all dollar amounts in thousands) 2005 2004
Selling and administrative expense $17,527 $18,884
Percent increase/(decrease) (7%) 16%
As a percent of net sales 7% 7%
Selling and administrative expenses in the first quarter of 2005 were $17.5
million compared to $18.9 million in the same period of 2004. Incentive
compensation programs based on the market price of the Company's stock resulted
in a credit of $1.9 million for the three months ended March 31, 2005 compared
to a provision of $0.2 million for the three months ended March 31, 2004.
Partially offsetting the impact of the first quarter credit were administrative
costs associated with the Brainerd mill and consulting expenses.
11
Other Income and Expense
Three Months Ended March 31,
(all dollar amounts in thousands) 2005 2004
Interest expense $2,650 $2,527
Other income(expense), net 115 194
Interest expense was similar between comparable periods of 2005 and 2004 at
$2.6 million. Long-term debt was $161.6 million and $162.0 million at March
31, 2005 and 2004, respectively. Long-term debt at December 31, 2004, was
$161.8 million. Interest expense in 2005 is expected to be similar to 2004
levels. Other income in the first quarter of 2005 is lower than the same
period last year due to reduced interest income as a result of lower cash and
cash equivalent balances in the current period.
Income Taxes
Three Months Ended March 31,
(all dollar amounts in thousands) 2005 2004
Provision for income taxes $1,137 $2,029
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 2005 is expected to
remain at 37%.
On October 22, 2004, the American Jobs Creation Act of 2004 (the "Act") was
signed into law. The Act contains $137 billion in tax cuts over a ten year
period beginning in 2005, which are mainly U.S. manufacturing businesses and
multinational companies. The Company has not yet completed its assessment of
how the Act might impact its future results of operations or cash flows.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows and Capital Expenditures
Three Months Ended March 31,
(all dollar amounts in thousands) 2005 2004
Cash (used in) provided by operating activities ($17,118) $14,031
Capital expenditures 8,633 3,937
For the three months ended March 31, 2005, cash used in operating activities
was $17.1 million compared to cash provided by operating activities of $14.0
million for same period in 2004. In the first quarter of 2005, receivables and
inventories increased a combined $19.8 million while accounts payable, accrued
income taxes, and other liabilities decreased approximately $12.5 million. For
the three months ended March 31, 2004, receivables and inventories increased a
combined $11.0 million. This use of cash was somewhat offset by a nearly $9.0
million increase in accounts payable, accrued income taxes and other
liabilities. While both the first quarter of 2005 and 2004 reflect seasonal
builds in receivables and inventories, inventories in the first quarter of 2005
increased approximately $8.0 million more than the first quarter of 2004 in
order
12
to support the requirements of the Brainerd mill, acquired during the
fourth quarter of 2004, and the Company's growing towel and tissue business
segment.
The Company has established an average internal rate of return target of 17% on
all capital projects approved in 2005. This objective was achieved on projects
approved during the first three months of the year. Capital spending for the
first three months of 2005 was $8.6 million compared to $3.9 million during the
first three months of 2004. Total capital spending for the full-year of 2005
is expected to be between $40 million and $50 million.
For 2005, capital expenditures for projects with total spending expected to
exceed $1.0 million occurred in Towel & Tissue with $0.3 million spent on
various converting lines.
The balance of spending for the first three months of 2005 was related to
projects that individually are expected to cost less than $1.0 million. These
expenditures included approximately $5.7 million for essential non-or low-
return projects, and approximately $2.6 million on projects expected to provide
a return on investment that exceeds the Company's cost of capital.
For the first quarter of 2004, capital expenditures for projects with total
spending expected to exceed $1.0 million occurred at Printing & Writing's
Brokaw mill with $0.6 million spent on a digester replacement project. In
addition, Towel & Tissue spent $0.1 million on a screw press project and $0.4
million spent for various converting lines. The balance of the spending in the
first three months of 2004 was on projects that individually were under $1.0
million. These expenditures included approximately $1.7 million for essential
non or low-return projects, and approximately $1.1 million on projects expected
to provide a return on investment that exceeded the Company's cost of capital.
The Company recently announced its intent to sell approximately 12,000 acres of
timberlands, generating expected after-tax earnings of $16 million, or $0.31
per share, over the next three years. The timberlands identified for sale are
not considered strategic sources of supply for the Company's pulp mills.
Debt and Equity
MARCH December 31,
(all dollar amounts in thousands) 2005 2004
Short-term debt $ 108 $ 115
Long-term debt 161,630 161,833
Total debt 161,738 161,948
Stockholders' equity 359,046 357,092
Total capitalization 520,784 519,040
Long-term debt/capitalization ratio 31% 31%
As of March 31, 2005, there was no significant change in total debt as compared
to December 31, 2004.
13
On March 31, 2005, the Company had approximately $100 million available
borrowing capacity under a bank facility that expires on August 31, 2008. The
Company's cash position and borrowing capacity is expected to provide
sufficient liquidity to support operations, meet capital spending requirements,
fund dividend payments to shareholders, and pursue a plan to repurchase shares
of the Company's common stock.
Early in the second quarter of 2005, the Company announced its intent to
reactivate its common stock buy-back program. A total of 2.6 million shares
remain available for repurchase through authorizations approved by the Board of
Directors in 1998 and 2000. Repurchases may be made from time to time in the
open market or through privately negotiated transactions.
Dividends
On December 17, 2004, the Board of Directors declared a quarterly cash dividend
of $0.085 per common share. The dividend was paid on February 15, 2005, to
shareholders of record on February 1, 2005. On April 21, 2005, the Board of
Director's declared a cash dividend in the amount of $0.085 per share. The
dividend is payable on May 16, 2005, to shareholders of record on May 2, 2005.
14
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, 2004, and from time to time, in the
Company's other filings with the Securities and Exchange Commission. The
Company assumes no obligation to update or supplement forward-looking
statements that become untrue because of subsequent events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the information provided in response to
Item 7A of the Company's Form 10-K for the year ended December 31, 2004.
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
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
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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, 2005 SCOTT P. DOESCHER
Scott P. Doescher
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
EXHIBIT INDEX
TO
FORM 10-Q
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
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
17