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 -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, (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. -1- 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. -2- 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. -3- 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 -4- 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 -5- 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. -6- 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. -7- 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 -8- 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 -9- 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. -10- 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 -11- 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 -12- 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. -13- 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. -14- 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. -15- 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) -16- 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 -17-