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, 1998
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: 0-7574
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
The number of common shares outstanding at April 30, 1998 was 57,892,170.
<PAGE>
WAUSAU-MOSINEE PAPER CORPORATION
AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Three Months Ended
March 31, 1998 (unaudited) and
March 31, 1997 (unaudited) 1
Condensed Consolidated Balance
Sheets, March 31, 1998 (unaudited)
and December 31, 1997 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Three Months
Ended March 31, 1998 (unaudited)
and March 31, 1997 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements 4-5
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 6-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 12-14
-i-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
WAUSAU-MOSINEE PAPER CORPORATION AND SUBSIDIARIES
<CAPTION>
Three Months Ended
March 31,
($ thousands, except per share data - unaudited) 1998 1997
<S> <C> <C>
NET SALES $ 237,660 $ 211,892
Cost of products sold 191,351 163,286
GROSS PROFIT 46,309 48,606
Selling, administrative and
research expenses 19,987 14,665
Restructuring expense 37,700 0
OPERATING PROFIT (LOSS) (11,378) 33,941
Interest expense (2,046) (1,639)
Other 136 164
INCOME (LOSS) BEFORE INCOME TAXES (13,288) 32,466
Provision (credit) for income taxes (5,050) 12,511
NET INCOME (LOSS) $ (8,238) $ 19,955
NET INCOME (LOSS) PER SHARE BASIC $ (0.14) $ 0.34
NET INCOME (LOSS) PER SHARE DILUTED $ (0.14) $ 0.34
WEIGHTED AVERAGE COMMON SHARES 57,804,542 57,828,626
</TABLE>
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<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Wausau-Mosinee Paper Corporation and Subsidiaries
<CAPTION>
($ thousands - unaudited) March 31, December 31,
ASSETS 1998 1997
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 5,580 $ 2,584
Receivables, net 77,914 69,674
Refundable income taxes 712 2,799
Inventories 138,334 143,610
Deferred income taxes 20,852 15,152
Other current assets 2,447 1,110
Total current assets 245,839 234,929
Property, plant and equipment - net 608,073 604,930
Other assets 32,211 32,205
TOTAL ASSETS $ 886,123 $ 872,064
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $ 6,143 $ 6,207
Accounts payable 45,187 53,181
Accrued and other liabilities 84,723 48,888
Total current liabilities 136,053 108,276
Long-Term Liabilities
Long-term debt 133,140 140,500
Deferred income taxes 94,612 92,947
Other long-term liabilities 88,989 88,926
Total long-term liabilities 316,741 322,373
Commitments and contingencies --- ---
Preferred stock of subsidiary 1,255 1,255
Shareholders' equity 432,074 440,160
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 886,123 $ 872,064
</TABLE>
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<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Wausau-Mosinee Paper Corporation and Subsidiaries
<CAPTION>
Three Months Ended
March 31,
($ thousands - unaudited) 1998 1997
OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ (8,238) $ 19,955
Noncash items:
Provision for depreciation, depletion
and amortization 12,167 10,786
Recognition of deferred revenue (10) 0
Provision for losses on accounts receivable 14 53
Gain on property, plant
and equipment disposals (76) (117)
Deferred income taxes (4,035) 4,910
Changes in operating assets and liabilities:
Accounts receivable (8,254) (15,291)
Inventories 5,276 (8,853)
Other assets (870) (1,129)
Accounts payable and other liabilities 33,318 (6,689)
Accrued income taxes 2,087 3,081
NET CASH PROVIDED BY OPERATING ACTIVITIES 31,379 6,706
INVESTING ACTIVITIES:
Capital expenditures (17,608) (15,463)
Proceeds from property, plant and
equipment disposals 108 133
Cash distributed from IRB trust fund 0 1,297
NET CASH USED IN INVESTING ACTIVITIES (17,500) (14,033)
FINANCING ACTIVITIES:
Borrowings (payments) under
revolving credit agreements (7,424) 22,149
Dividends paid (3,625) (5,376)
Proceeds from stock options exercised 166 32
Payments for purchase of company stock 0 (10,915)
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (10,883) 5,890
Net increase (decrease) in cash and cash
equivalents 2,996 (1,437)
Cash and cash equivalents at beginning of year 2,584 483
Cash and cash equivalents at end of period $ 5,580 $ (954)
Supplemental Cash Flow Information:
Interest paid - net of amount capitalized $ 2,055 $ 1,569
Income taxes paid (refunded) (3,102) 4,505
</TABLE>
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. 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. Some adjustments
involve estimates which may require revision in subsequent
interim periods or at year-end. In all regards, the financial
statements have been presented in accordance with generally
accepted accounting principles. Refer to notes to the financial
statements which appear in the Annual Report on Form 10-K for the
year ended August 31, 1997, for the company's accounting policies
which are pertinent to these statements.
Note 2. On December 17, 1997, Wausau Paper Mills Company ("Wausau")
completed a merger with Mosinee Paper Corporation ("Mosinee") in
which Mosinee became a wholly-owned subsidiary of Wausau.
Simultaneous with the consummation of the merger, Wausau changed
its name to Wausau-Mosinee Paper Corporation ("the company").
Wausau issued 1.4 shares of common stock for each share of
Mosinee outstanding common stock. A total of 21,281,795 shares
of the company's common stock were issued as a result of the
merger (after adjustment for fractional shares).
The merger qualified as a tax-free exchange and was accounted for
as a pooling of interests. Accordingly, all prior period
financial statements presented have been restated to include the
financial position, results of operations, and cash flows for
Wausau and Mosinee combined. Prior to the merger, Wausau's
fiscal year-end was August 31 and Mosinee's was December 31.
Subsequent to the merger, the company adopted a calendar year-
end.
Note 3. In connection with the merger, the company has implemented a
plan to reduce its work force by over 8%. An after-tax expense
of $23.4 million ($37.7 million pretax) or $0.40 per share was
recorded in the three month period ended March 31, 1998 to cover
the cost of this work force reduction initiative as well as
smaller amounts for other merger related costs.
Note 4. Selling, administrative and research expenses include expenses
for stock-based incentive plans calculated by using the average
price of the company's stock at the close of the reporting period
as if all grants under such plans had been exercised on that day.
For the three months ended March 31, 1998, these plans resulted
in after-tax expense of $2,144,000 or $0.04 per share, compared
to an after-tax income of $261,000 or less than $0.01 per
share for the three months ended March 31, 1997.
<PAGE>
<TABLE>
Note 5. Accounts receivable consisted of the following:
<CAPTION>
($ thousands) March 31, December 31,
1998 1997
<S> <C> <C>
Customer Accounts $83,974 $74,482
Misc. Notes and Accounts Receivable 3,076 3,931
87,050 78,413
Less: Allowances for Discounts,
Doubtful Accounts and Pending Credits 9,136 8,739
Receivables, Net $77,914 $69,674
</TABLE>
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<TABLE>
<CAPTION>
Note 6. The various components of inventories were as follows:
($ thousands) March 31, December 31,
1998 1997
<S> <C> <C>
Raw Materials and Supplies $ 79,150 $ 87,504
Finished Goods and Work in Process 78,531 76,260
Subtotal 157,681 163,764
Less: LIFO Reserve (19,347) (20,154)
Net inventories $138,334 $143,610
</TABLE>
Note 7. The accumulated depreciation on fixed assets was $396,600,000
as of March 31, 1998 and $385,679,000 as of December 31, 1997.
Note 8. Earnings per share gives effect to applicable preferred stock
dividends. The Sorg Paper Company preferred stock dividends in
arrears for the three months ended March 31, 1998 and 1997 were
$17,196.
Earnings per share amounts prior to 1998 have been restated as
required to comply with Statement of Financial Accounting
Standards No. 128, Earnings Per Share. In addition, Statement
of Financial Accounting Standards No. 130, Reporting
Comprehensive Income has been adopted. For the periods
presented, comprehensive income (loss) is the same as net income
(loss).
<TABLE>
Note 9. A summary of long-term debt is as follows:
<CAPTION>
($ thousands) March 31, December 31,
1998 1997
<S> <C> <C>
Bonds, Mortgages and Similar Debt $133,114 $140,449
Capitalized Leases 26 51
Total Long-Term Debt $133,140 $140,500
</TABLE>
<PAGE>
<TABLE>
Note 10. Dividends declared per share were as follows:
<CAPTION>
THREE MONTHS ENDING
MARCH 31, MARCH 31,
1998* 1997
<S> <C>
$0.0000 $0.0625
<FN>
*Due to the change in fiscal year from an August 31 year-end to a
December 31 year-end, no dividend was declared in the first quarter
of 1998.
</TABLE>
Note 11. Certain legal proceedings are described under Part II, Item 1 of this
report.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS*
On December 17, 1997, Wausau Paper Mills Company ("Wausau") completed a merger
with Mosinee Paper Corporation ("Mosinee") in which Mosinee became a wholly-
owned subsidiary of Wausau. Simultaneous with the consummation of the merger,
Wausau changed its name to Wausau-Mosinee Paper Corporation (the "company").
The merger qualified as a tax-free exchange and was accounted for as a pooling
of interests. Prior to the merger, Wausau's fiscal year-end was August 31 and
Mosinee's was December 31. Subsequent to the merger, the company adopted a
calendar year-end. The company's 1997 financial statements have been recast to
a twelve-month period ending December 31, 1997. All financial statements
presented, Management's Discussion and Analysis of Financial Condition and
Results of Operations, and all other sections of this report on Form 10-Q are
presented for the combined operations of Wausau and Mosinee as if the merger
had occurred at the beginning of the 1997 period presented.
RESULTS OF OPERATIONS
Net Sales
For the three months ended March 31, 1998, net sales for the company were a
first quarter record $237.7 million, an increase of 12.2% over last year's
first quarter net sales of $211.9 million. Selling prices for the company's
products declined from a year ago, due to competitive pressures on several
products in the company's printing and writing, specialty and towel and tissue
grades. The company achieved record first quarter shipments of 206,000 tons,
which exceeded last year's shipment level by 17.5%. First quarter 1998
revenues and shipments benefited from the addition of B & J Supply and Otis
Specialty Papers, which were acquired in April and May of 1997, respectively.
Shipments at the company's Printing and Writing Group were a first quarter
record and were 10.1% ahead of last year's shipment level. The acquisition of
B & J Supply accounted for just over half of the shipment improvement. Selling
prices in the first quarter of 1998 were lower than a year ago, on average, as
a result of competitive market conditions. Order backlog at March 31, 1998 was
higher than a year ago, primarily as a result of the addition of B & J Supply.
The Specialty Paper Group's shipments increased 26.7% in the first quarter of
1998, compared to a year ago. The addition of the Otis mill contributed the
<PAGE>
majority of the volume gain. Competitive pressures on selling prices resulted
in lower average selling prices, compared to last year's first quarter. Order
backlog at the end of the first quarter was higher than a year ago, due to the
added backlog from the Otis mill. Excluding the backlog at Otis, March 31,
1998 backlog levels were lower than a year ago, primarily due to soft market
conditions for the company's pressure sensitive grades as well as more
moderate market conditions for decorative laminate grades, compared to strong
market demand a year ago.
Shipments at the Towel and Tissue Group increased 11.8% in the first
quarter, compared to the same 1997 period. Selling prices, on average, were
lower than a year ago due to competitive market conditions. Backlogs at
March 31, 1998 were higher than a year ago.
* Matters discussed in this report with respect to the company's expectations
are forward-looking statements that involve risks and uncertainties. Reference
Part II, Item 5. - Cautionary Statement Regarding Forward-Looking Information.
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Gross Profit
Gross profit for the three months ended March 31, 1998 was $46.3 million or
19.5% of net sales, compared to last year's first quarter gross profit of
$48.6 million or 22.9% of net sales. The decline in gross profit margin
from the first quarter of 1997 is due primarily to competitive pressures on
prices for the company's paper products as well as slightly higher pulp
costs compared to a year ago. In recent months, the company has experienced
steady declines in pulp prices. As the full impact of the lower pulp prices
is realized, and with the company entering into a strong seasonal period,
the company expects higher gross profit in the second quarter of 1998,
compared to first quarter results.
The company's paper mills operated at capacity in the first quarter of
1998. Total paper mill production was 7% higher than last year's first
quarter, primarily as a result of the addition of the Otis mill. Paper mill
paper inventories at March 31, 1998 were 4% lower than a year ago when
printing and writing paper inventories were high due to strong production
and soft demand.
Selling, Administrative and Research Expenses
Selling, administrative and research expenses, excluding the restructuring
charge discussed below, were $20.0 million in the first quarter of 1998,
compared to $14.7 million last year. Expense for incentive compensation
programs based on the market price of the company's stock was $3.5 million
in 1998, compared to income of $.4 million for the same period a year ago.
The increase in spending over the first quarter of 1997, excluding the
aforementioned incentive compensation programs, is primarily the result of
the additional expense due to the additions of B & J Supply and Otis
Specialty Papers.
Restructuring Charge
In March 1998, the company announced and began implementation of a
workforce reduction program, which is expected to reduce company-wide
employment by over 8%. The job reductions will take place throughout 1998
and 1999 primarily through early retirement incentives along with voluntary
separation arrangements and involuntary severance programs. Upon completion
<PAGE>
of the program, and several capital projects, the company expects to
realize $23 million annually in labor cost savings. As a result, the
company recorded a one-time pre-tax restructuring charge of $37.7 million
($23.4 million after-tax) in the first quarter of 1998 to cover the cost of
the workforce reduction program as well as other costs related to the
merger.
Merger related cost reduction activities are proceeding on track. Company-
wide cost savings from the workforce reduction program and other merger
related cost reduction activities are now projected to reach $30 million
annually, significantly greater than the $19 million in savings originally
estimated.
Interest Income and Expense
For the three months ended March 31, 1998, interest expense was $2.0
million, compared to $1.6 million a year ago. Capitalized interest was $.1
million in both first quarter periods. Interest expense was higher in the
first quarter of 1998, compared to a year ago, due to the acquisitions of B
& J Supply and Otis Specialty Papers, which were entirely debt financed.
Other income,
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including interest income, totaled $.1 million in the first quarter of
1998, compared to $.2 million for the same period a year ago.
Income Taxes
The income tax credit in the first quarter of 1998 was $5.1 million, for an
effective tax rate of 38.0%. In the first quarter of 1997, an income tax
provision of $12.5 million was recorded, for an effective tax rate of
38.5%.
Net Earnings
The results of operations for the first quarter of 1998, including the one-
time pre-tax restructuring charge of $37.7 million, was a net loss of $8.2
million or $.14 per share. Excluding the restructuring charge for the job
reductions and merger costs, the company recorded net income of $15.1
million or $.26 per share for the quarter, compared to $20.0 million or
$.34 per share for the same period a year ago.
CAPITAL RESOURCES AND LIQUIDITY
Cash Provided by Operations
For the three months ended March 31, 1998, cash provided by operations was
$31.4 million, compared to $6.7 million for the first quarter of 1997. The
increase in cash provided by operations is primarily the result of a
reduction in inventory and a smaller increase in accounts receivable,
compared to a year ago.
Capital Expenditures
Capital expenditures totaled $17.6 million for the first quarter ended
March 31, 1998, compared to $15.5 million for the same period last year.
<PAGE>
During the first three months of 1998, the Groveton mill upgraded the stock
blending system for better efficiency, faster and continuous furnish, less
broke and a reduction in the usage of higher cost fiber.
Work is continuing on several other major capital projects throughout the
company. At the Bay West converting plant, a building and warehouse
expansion project is under construction, which will increase the operating
plant and warehouse space by 268,000 square feet. Also at Bay West, capital
investment continues for additional towel and tissue converting equipment
to keep pace with increasing sales volume. At the Mosinee mill, a wet lap
machine was installed to improve paper machine scheduling and flexibility.
At the April 1998 meeting, the Board of Directors approved $25 million in
capital improvements at the company's Otis mill to expand the production
capacity of both paper machines and add significant new manufacturing
capabilities for one of the machines which will give the Specialty Paper
Group improved profitability of their sales mix. This project is expected
to be completed in the first quarter of 1999.
Total capital expenditures are projected to be approximately $90 million in
1998.
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Financing
Long-term debt decreased $7.4 million in the three months ended March 31,
1998 to $133.1 million. Long-term debt at March 31, 1998 consisted of $56.5
million outstanding under the company's revolving credit facility, with
effective interest rates ranging from 5.88% to 5.96%. In addition, the
company had $9 million in notes to Prudential Insurance Company of America
and its subsidiaries, at a fixed rate of 6.03%, a $20 million loan
agreement with a bank, with a fixed rate of 7.83%, and $19 million in
variable rate development bonds, with an interest rate of 3.95% at the end
of March. There was also $28.6 million in commercial paper outstanding at
March 31, 1998, with effective interest rates ranging from 5.71% to 6.03%.
The company maintains a $105 million revolving credit facility with four
banks. Cash provided by operations and the revolving credit facility are
expected to meet current and anticipated working capital needs and dividend
requirements, as well as fund the company's planned capital expenditures.
The company believes additional financing is readily available, should it
be needed, to fund a major expansion or acquisition.
Common Stock Repurchase
On June 30, 1994, the company's Board of Directors authorized the
repurchase of up to 1,856,250 shares (adjusted for subsequent stock
dividends or splits) of the company's common stock from time to time in the
open market or through privately negotiated transactions at prevailing
market prices. This authorization was reduced by the Board in December 1997
to the extent required to satisfy stock repurchase authorization limits
applicable as a result of the recent merger with Mosinee, which was
accounted for as a pooling of interests. The company may repurchase
1,085,196 shares under this modified authorization. The company did not
repurchase any shares of the company's common stock during the three month
period ended March 31, 1998.
<PAGE>
Dividends
Since the company has changed from a fiscal year ending in August to a
calendar year reporting basis, no dividend declaration was made in the
first quarter. The dividend declared in December 1997, of $.0625 per share
was paid January 15, 1998 to shareholders of record as of January 5, 1998.
At the April 16, 1998 meeting the Board of Directors approved a 12%
increase in the cash dividend. The quarterly cash dividend of $.07 per
share is payable May 15, 1998 to stockholders of record as of May 1,
1998. Future quarterly dividends are expected to be paid in the months
of August, November and February.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On May 13, 1997, the Attorney General of the State of Florida filed a civil
complaint in the United States District Court for the Northern District of
Florida against ten manufacturers of commercial sanitary paper products,
including the company's wholly owned subsidiary, Bay West Paper
Corporation. The suit alleges a conspiracy to fix prices of commercial
sanitary paper products starting at least as early as 1993. Since the
filing of this suit, numerous class action suits have been filed by direct
purchasers of commercial sanitary paper products in various federal
district courts throughout the country. All of these federal cases have
been consolidated in a multi-district litigation proceeding in the United
States District Court for the Northern District of Florida in Gainesville.
In addition, class actions have been commenced by indirect purchasers of
sanitary commercial paper products in various state courts alleging a
conspiracy to fix prices under state and anti-trust laws. All of these
actions are in their early stages. The company does not believe that it
has violated any antitrust laws and it is vigorously defending these
claims.
ITEM 5. OTHER INFORMATION
NYSE LISTING
On March 26, 1998, the common stock of the company was listed on the New
York Stock Exchange under the symbol "WMO".
YEAR 2000
Wausau-Mosinee Paper Corporation, like most companies today, is heavily
dependent upon computer technology to effectively carry out its day-to-day
operations. Until recently, most purchased and custom designed software
was not year 2000 compliant, meaning the software wasn't designed to
properly handle dates beyond the year 1999. To ensure its computer systems
will be ready to handle dates of the year 2000 and beyond, the company is
executing a plan to upgrade its software to become year 2000 compliant.
This process is expected to be completed in 1999. No material costs or
effects on operations are expected from the upgrade process.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Form 10-Q, each of the company's annual reports to shareholders, Forms
10-K, 8-K, and 10-Q, proxy statements, prospectuses, and any other written
or oral statement made by or on behalf of the company subsequent to the
filing of this Form 10-Q may include one or more "forward-looking
statements" within the meaning of sections 27A of the Securities Act of
1933 and 21E of the Securities Exchange Act of 1934 as enacted in the
Private Securities Litigation Reform Act of 1995 (the "Reform Act").
Forward-looking statements of the company may be identified by, among other
things, expressions of the company's or company officers' beliefs or
expectations that certain events may occur or are anticipated, and
projections or statements of expectations with respect to (i) any aspects
of the company's business (including, but not limited to, net income, the
availability or price of raw materials, or customer demand for company
<PAGE>
products), (ii) the company's plans or intentions, (iii) the company's
stock performance, (iv) the industries within which the company operates,
(v) the economy, and (vi) any other expressions of similar import
or covering other matters relating to the company or its operations. In
making forward-looking statements within the meaning of the
-10-
Reform Act, the company undertakes no obligation to publicly update or
revise any such statement.
Forward-looking statements are not guarantees of performance. Forward-
looking statements of the company are based on information available to the
company as of the date of such statements and reflect the company's
expectations as of such date, but are subject to risks and uncertainties
that may cause actual results to vary materially. Many of the factors that
will determine these results are beyond the company's ability to control or
predict. Shareholders are cautioned not to put undue reliance on any
forward-looking statements. For those statements, the company claims the
protection of the safe harbor for forward-looking statements contained in
the Reform Act.
In addition to specific factors which may be described in connection with
any of the company's forward-looking statements, factors which could cause
actual results to differ materially include, but are not limited to, the
following:
<bullet> Increased competition from either domestic or foreign paper
producers or providers of alternatives to the company's
products, including increases in competitive production
capacity resulting in sales declines from reduced shipment
volume and /or lower net selling prices in order to
maintain shipment volume.
<bullet> Changes in customer demand for the company's products due to
overall economic activity affecting the rate of consumption of
the company's paper products, growth rates of the end markets
for the company's products, technological or consumer preference
changes or acceptance of the products by the markets served by
the company.
<bullet> Changes in the price of raw materials, principally pulp,
wastepaper and linerboard. A substantial portion of the
company's raw materials, including approximately two-thirds of
the company's pulp needs, are purchased on the open market and
price changes could have a significant impact on the company's
costs. Fiber represents a substantial portion of the cost of
making paper and significant price increases for fiber could
materially affect the company's financial condition. Raw
material prices will change based on supply and demand on a
worldwide spectrum. Pulp price changes can occur due to
worldwide consumption levels of pulp, pulp capacity additions,
expansions or curtailments of the supply of pulp, inventory
building or depletion at pulp consumer levels which affect
short-term demand, and pulp producer cost changes related to
wood availability, environmental issues, or other variables.
<bullet> Unforseen operational problems at any of the company's
facilities causing significant lost production and/or cost
increases.
<PAGE>
<bullet> Significant changes to the company's strategic plan such as a
major acquisition or expansion, or failure to successfully
execute major capital projects or other strategic plans or to
successfully integrate an acquisition.
<bullet> Changes in laws or regulations which affect the company. The
paper industry is subject to stringent environmental laws and
regulations and any changes required to comply with such laws
or regulations may increase the company's capital expenditures
and operating costs.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
The following exhibits are filed with the Securities and Exchange
Commission as part of this report:
-12-
<PAGE>
Incorporated
EXHIBIT <dagger>
3.1 Restated Articles of Incorporation, as amended
December 17, 1997 ................................. 4.1{(2)}
3.2 Restated Bylaws, as amended December 17, 1997...... 4.2{(2)}
4.1 Articles and Bylaws (see Exhibits 3.1 and 3.2)
10.1 Wausau-Mosinee Supplemental Retirement Plan
as amended April 16, 1998
10.2 Incentive Compensation Plans, as amended
September 17, 1997 (Printing and Writing Division
and Technical Specialty Division)* ............... 10.2{(3)}
10.3 Corporate Management Incentive Plan, as amended
September 18, 1996* .............................. 10(c){(4)}
10.4 1988 Stock Appreciation Rights Plan, as amended
April 17, 1991* .................................. 10(d){(4)}
10.5 1988 Management Incentive Plan, as amended
April 17, 1991* .................................. 10(e){(4)}
10.6 1990 Stock Appreciation Rights Plan, as amended
April 17, 1991* .................................. 10(f){(4)}
10.7 Deferred Compensation Agreement dated March 2, 1990,
as amended July 1, 1994* ......................... 10(h){(5)}
10.8 1991 Employee Stock Option Plan* ................. 10.8{(6)}
10.9 1991 Dividend Equivalent Plan* ................... 10(i){(7)}
10.10 Supplemental Retirement Benefit Plan dated
January 16, 1992, as amended November 13,
1995* ............................................ 10{(8)}
10.11 Directors' Deferred Compensation Plan, as amended
February 19, 1998*
10.12 Directors Retirement Benefit Policy, as amended
April 16, 1998*
10.13 Transition Benefit Agreement with President and
CEO* ............................................ 10.13{(6)}
10.14 Mosinee Paper Corporation 1985 Executive Stock Option
Plan, as amended August 24, 1997* .............. 10.14{(10)}
-13-
10.15 Mosinee Paper Corporation 1988 Stock
Appreciation Rights Plan, as amended 4/18/91* .. 10.15{(10)}
10.16 Mosinee Paper Corporation 1996 and 1997
Incentive Compensation Plan for Corporate
Executive Officers* ............................ 10.16{(10)}
<PAGE>
10.17 Mosinee Paper Corporation Supplemental
Retirement Benefit Plan dated October 17, 1991,
as amended August 24, 1997* .................... 10.17{(10)}
10.18 Mosinee Paper Corporation Supplemental
Retirement Benefit Agreement
dated November 15, 1991* ....................... 10.18{(10)}
10.19 Mosinee Paper Corporation
1994 Executive Stock Option Plan,
as amended August 24, 1997* .................... 10.19{(10)}
10.20 Incentive Compensation Plan
for Executive Officers (1998) *
27.1 Financial Data Schedule
99.1 Subsidiaries as of December 31, 1997 ............. 99.1(10)
*Executive compensation plans or arrangements.
<dagger> Where exhibit has been previously filed and incorporated
herein by reference, exhibit numbers set forth herein
correspond to the exhibit number of such exhibit in the
following reports of the registrant (Commission File
No. 0-7574) filed with the Securities and Exchange
Commission.
(1) Current report on Form 8-K dated August 24, 1997.
(2) Registration Statement on Form S-8 dated December 17, 1997.
(3) Quarterly report Form 10-Q for the quarterly period ended
November 30, 1997.
(4) Annual report on Form 10-K for the fiscal year ended August 31,
1996.
(5) Annual report on Form 10-K for the fiscal year ended August 31,
1994.
(6) Annual report on Form 10-K for the fiscal year ended August 31,
1997.
(7) Quarterly report on Form 10-Q for the quarterly period ended
November 30, 1996.
(8) Quarterly report on Form 10-Q for the quarterly period ended
November 30, 1995.
(9) Annual report on Form 10-K for the fiscal year ended August 31,
1993.
(10) Transition report on Form 10-Q for the transition period ended
December 31, 1997.
(b) Reports on Form 8-K:
Pro forma financial information relating to the merger of Wausau
and Mosinee was filed on February 4, 1998 on Form 8-K dated
December 17, 1997.
-14-
<PAGE>
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 14, 1998 GARY P. PETERSON
Gary P. Peterson
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
-15-
<PAGE>
EXHIBIT INDEX
TO
FORM 10-Q
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section>232.102(d))
EXHIBIT 10.1 WAUSAU-MOSINEE SUPPLEMENTAL RETIREMENT PLAN, AS AMENDED
APRIL 16, 1998
EXHIBIT 10.11 DIRECTORS' DEFERRED COMPENSATION PLAN, AS AMENDED
FEBRUARY 19, 1998
EXHIBIT 10.12 DIRECTORS RETIREMENT BENEFIT POLICY, AS AMENDED
APRIL 16, 1998
EXHIBIT 10.20 INCENTIVE COMPENSATION PLANS FOR EXECUTIVE OFFICERS (1998)
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE
-16-
EXHIBIT 10.1
WAUSAU-MOSINEE SUPPLEMENTAL
RETIREMENT PLAN
(AS AMENDED APRIL 16, 1998)
<PAGE>
WAUSAU-MOSINEE SUPPLEMENTAL
RETIREMENT PLAN
PAGE
ARTICLE I
PURPOSE AND ADMINISTRATION OF THE PLAN ....................2
1.1 Purpose ..............................................2
1.2 Administration .......................................2
1.3 Effective Date .......................................2
ARTICLE II
DEFINITIONS ...............................................3
2.1 Definitions ..........................................3
2.2 Definitions Incorporated by Reference ................4
ARTICLE III
PARTICIPATION .............................................5
3.1 Participation ........................................5
3.2 Service ..............................................5
3.3 Termination of Participation and Reemployment ........5
ARTICLE IV
BENEFITS ..................................................6
4.1 Normal Retirement Benefits of Corporate Officers .....6
4.2 Normal Benefits of Other Executive Officers ..........6
4.3 Minimum Retirement Benefits of Executive Officers ....7
4.4 Early Retirement Benefits of Executive Officers ......7
4.5 Surviving Spouse Benefits ............................7
4.6 Form, Commencement and Duration of Payments ..........8
4.7 Change of Control ....................................9
4.8 Forfeiture of Benefits ..............................11
4.9 Inalienability of Benefits ..........................12
4.10 Facility of Payments ...............................12
4.11 Claims Procedure ...................................12
ARTICLE V
PROVISION FOR BENEFITS ...................................14
5.1 Assets of the Company ...............................14
ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN ....................15
6.1 Amendment ...........................................15
6.2 Termination .........................................15
-i-
ARTICLE VII
MISCELLANEOUS ............................................16
7.1 Nonguarantee of Employment ..........................16
7.2 Action by the Company ...............................16
7.3 Agreement Binding on Successors .....................16
7.4 Construction ........................................16
7.5 Titles ..............................................16
7.6 Governing Law .......................................16
-ii-
<PAGE>
WAUSAU-MOSINEE SUPPLEMENTAL RETIREMENT PLAN
Wausau-Mosinee Paper Corporation, a Wisconsin corporation, hereby
establishes the Wausau-Mosinee Supplemental Retirement Plan in accordance
with the terms and conditions herein contained.
-1-
<PAGE>
ARTICLE I
PURPOSE AND ADMINISTRATION OF THE PLAN
1.1 PURPOSE. The Company hereby establishes the Plan for the purpose
of providing deferred compensation (within the meaning of Section 201(2)
of the Employee Retirement Income Security Act of 1974) for executive
officers of the Company.
1.2 ADMINISTRATION. The Plan shall be administered by the Company.
1.3 EFFECTIVE DATE. The effective date of the Plan shall be December
17, 1997.
-2-
<PAGE>
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. The following terms shall have the meanings set
forth below:
(a) "Average Compensation" means (1) an aggregate amount determined
by the sum of (A) the Participant's salary for a calendar year
and earned bonus attributable to such calendar year and (B) any
compensation deferred under a plan qualified under Section 401(k)
of the Code or under a plan which satisfies the requirements of
Section 125 of the Code during such calendar year, for the 5
calendar years of the Executive Officer's most recent 10 years of
Continuous Service as an Executive Officer in which the largest
aggregate amount of such compensation was earned and/or deferred
for him for service as an Executive Officer for all or any
portion of each of such calendar years, divided by (2) 12;
provided, however, that if a Participant did not perform services
for 5 calendar years as an Executive Officer, such determinations
shall be based on such earned and/or deferred compensation for
each complete calendar year in which the Participant was an
Executive Officer. For purposes of determining a Participant's
Average Compensation, compensation from Wausau Paper Mills
Company and Mosinee Paper Corporation earned prior to the
Effective Date for performance of services as an Executive
Officer shall be included.
(b) "Company" means Wausau-Mosinee Paper Corporation, a Wisconsin
corporation.
(c) "Early Retirement Age" means the date on which an Executive
Officer has attained age 55 and completed 10 years of Continuous
Service as an Executive Officer.
(d) "Executive Officer" means any person employed by the Company as
its President or a Vice President but shall not include any
officer of any division or subsidiary of the Company.
Notwithstanding the foregoing, any person employed by the Company
on the Effective Date who was a participant in the Mosinee
Supplemental Retirement Plan or the Wausau Paper Mills Company
Executive Officers' Deferred Compensation Retirement Plan on the
date immediately preceding the Effective Date shall be deemed to
be an "Executive Officer" for purposes of this Plan, regardless
of whether such individual would otherwise meeting the definition
of Executive Officer set forth in the preceding sentence, and any
service with the Company after the Effective Date by such
individual shall be considered service as an Executive Officer of
the Company.
(e) "Normal Retirement Age" means the date on which (1) an Executive
Officer has attained age 62 and completed 10 years of Continuous
Service as an Executive Officer or (2) an Executive Officer has
attained age 62 and had terminated employment with the Company
because of Disability.
-3-
(f) "Participant" means an Executive Officer of the Company who has
qualified to be a participant in the Plan in accordance with
Section 3.1.
<PAGE>
(g) "Plan" means the Wausau-Mosinee Supplemental Retirement Plan as
herein set forth.
(h) "Retirement Plan" shall mean the principal defined benefit
retirement plan as now in effect or hereafter amended, or any
successor plan which is qualified under Section 401(a) of the
Code, and maintained for salaried employees of the Company.
2.2 DEFINITIONS INCORPORATED BY REFERENCE. Each of the following
terms shall have the meaning set forth in the Retirement Plan and the
definition of each such term by the Retirement Plan is hereby incorporated
by this reference to the extent not inconsistent with the provisions of
this Plan:
(a) "Actuarial Equivalent"
(b) "Affiliated Employer"
(c) "Code"
(d) "Continuous Service"
(e) "Disability"
(f) "Retirement Benefit"
(g) "Surviving Spouse"
-4-
<PAGE>
ARTICLE III
PARTICIPATION
3.1 PARTICIPATION. Each Executive Officer shall become a Participant
as of the later of the Effective Date or the first day of his employment
by the Company in the capacity of an Executive Officer.
3.2 SERVICE.
(a) All Continuous Service as an Executive Officer shall be
recognized for purposes of this Plan, whether or not such
Continuous Service was performed prior to the Effective Date
hereof.
(b) Continuous Service by an individual for the Company in any
capacity other than as an Executive Officer shall not be
recognized for any purpose under this Plan.
(c) In the event a Participant or former Participant is reemployed by
the Company as an Executive Officer, all periods of Continuous
Service with the Company as an Executive Officer shall be
aggregated for purposes of this Plan.
(d) Notwithstanding anything herein to the contrary, if a Participant
was a participant in the Wausau Paper Mills Company Executive
Officers' Deferred Compensation Retirement Plan or the Mosinee
Supplemental Retirement Plan on December 16, 1997, all Continuous
Service recognized under such plans as of such date shall be
recognized for purposes of this Plan.
3.3 TERMINATION OF PARTICIPATION AND REEMPLOYMENT. A Participant
shall cease participation in the Plan on the later of (a) the earlier of
(1) the date his termination of employment with the Company and all
Affiliated Employers occurs or (2) the date he is no longer employed as an
Executive Officer by the Company or an Affiliated Employer, or (b) the
date the final benefit payment to which the Participant may be entitled
pursuant to this Plan is made.
-5-
<PAGE>
ARTICLE IV
BENEFITS
4.1 NORMAL RETIREMENT BENEFITS OF CORPORATE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Normal Retirement Age and who was the President or
a corporate Vice President of the Company either (x) on the Effective Date
or (y) as of the most recent date on which he performed service as an
Executive Officer shall be entitled to a normal retirement benefit payable
in the form of a single life annuity equal to the excess of:
(a) an amount equal to 50% of the Participant's Average Compensation,
over
(b) the amount of the Participant's accrued Retirement Benefit under
the Retirement Plan which would then be payable in the form of a
single life annuity;
provided, however, that (1) the normal retirement benefit payable in the
form of a single life annuity, as so calculated, of any Participant who
was a participant in the Mosinee Supplemental Retirement Plan on the
Effective Date shall be increased by an amount equal to such participant's
accrued normal retirement benefit under the Wausau Paper Retirement Plan
as of the Effective Date which would then be payable in the form of a
single life annuity and (2) the normal retirement benefit payable in the
form of a single life annuity, as so calculated, of any Participant who
was eligible for and elected to receive the increased benefits provided
under either Section 4.23 of the Mosinee Retirement Plan ("Section 4.23")
or Section 3.20 of the Wausau Paper Retirement Plan (Section "3.20") shall
be increased by an amount equal to the excess of (A) the amount of the
Participant's accrued Retirement Benefit under the Retirement Plan,
determined in accordance with the increased benefits provided for in
Section 4.23 or Section 3.20, as applicable, which would then be payable
in the form of a single life annuity over (B) the amount of the
Participant's accrued Retirement Benefit under the Retirement Plan,
determined without regard to the increased benefits provided for in
Section 4.23 or Section 3.20, as applicable, which would then be payable
in the form of a single life annuity.
4.2 NORMAL BENEFITS OF OTHER EXECUTIVE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Normal Retirement Age and who was not the President
or a corporate Vice President of the Company either (x) on the Effective
Date or (y) as of the most recent date on which he performed service as an
Executive Officer, shall be entitled to a retirement benefit payable in
the form of a single life annuity determined in accordance with the
formula set forth in Section 4.1; provided, however, that in making such
determination, the term "40% of the Participant's Average Compensation"
shall be substituted for the term "50% of the Participant's Average
Compensation" in Section 4.1(a).
-6-
<PAGE>
4.3 MINIMUM RETIREMENT BENEFITS OF EXECUTIVE OFFICERS.
Notwithstanding anything herein to the contrary, the normal retirement
benefit determined under Section 4.1 or 4.2, as applicable, shall not be
less than the Participant's accrued normal retirement benefit determined
under (a) Section 4.1 or 4.2, as applicable, under the Mosinee
Supplemental Retirement Plan or (b) Section 4.1 or 4.2, as applicable,
under the Wausau Paper Mills Company Executive Officers' Deferred
Compensation Retirement Plan, determined under the terms of such plans on
December 16, 1997.
4.4 EARLY RETIREMENT BENEFITS OF EXECUTIVE OFFICERS. Subject to the
limitations elsewhere contained in this Plan, an Executive Officer who
terminates his employment with the Company and each Affiliated Employer on
or after attaining his Early Retirement Age, but prior to attaining his
Normal Retirement Age, shall be entitled to an early retirement benefit in
the form of a single life annuity equal to the amount to which he would
have been entitled to under Section 4.1 or Section 4.2, as applicable,
taking into consideration the provisions of Section 4.3, if applicable, if
he had then attained his Normal Retirement Age; provided, however, that
such benefit shall be reduced by .4166% for each full calendar month, from
and including the month in which the Participant's 55th birthday occurs to
the month in which his 62nd birthday occurs, by which the calendar month
in which payment of the early retirement benefit provided for in this
Section 4.4 precedes the date on which such Participant would have
attained his Normal Retirement Age.
4.5 SURVIVING SPOUSE BENEFITS. Subject to the limitations elsewhere
contained in this Plan, the Surviving Spouse of a Participant who dies
prior to commencement of any other benefit hereunder, including the
Surviving Spouse of a former Participant who terminated employment because
of Disability, shall be eligible for a Surviving Spouse benefit commencing
as of the last to occur of (1) the first day of the first month following
the month in which the Participant's death occurs or (2) the date on which
the Participant would have been eligible to receive payment of a benefit
under Section 4.4, or in the case of a Participant who terminated
employment because of Disability, commencing as of the date on which the
former Participant would have attained age 55, and such Surviving Spouse
benefit shall be equal to 50% of the monthly benefit which would have been
payable to the deceased Participant under this Plan if he had retired the
day before his death and payment of his benefit had commenced on such date
assuming, in the case of a former Participant who terminated employment
because of a Disability, that the benefit payable to such former
Participant at Normal Retirement Age under Section 4.1 or 4.2, as
applicable, would have been payable in reduced form at age 55 pursuant to
Section 4.4, and, assuming further, that in the case of a Participant or
former Participant who died prior to attaining age 55 or prior to the date
on which the Participant or former Participant had completed 10 years of
Continuous Service, that a benefit would have been payable to such
deceased Participant or former Participant as of the later of the dates
described in (1) and (2), above; provided, however, that the benefit
payable to the Surviving Spouse of a Participant or former Participant who
died prior to the completion of 5 years of Continuous Service shall be
reduced by 20% for each year of Continuous Service less than 5 accrued by
such deceased Participant or former Participant.
-7-
<PAGE>
4.6 FORM, COMMENCEMENT AND DURATION OF PAYMENTS.
(a) A Participant may elect, subject to the approval of the Board of
Directors, (1) to receive the Actuarial Equivalent of the benefit
accrued by a Participant pursuant to Section 4.1, 4.2 or 4.4 in
any form of annuity payment option then available under the
Retirement Plan or (2) to receive the value of the benefit
accrued by a Participant pursuant to Section 4.1, 4.2 or 4.4 in
the form of a lump sum distribution. In the event a Participant
elects, with the approval of the Board of Directors, to receive a
lump sum distribution of the value of the benefit otherwise
provided for in Section 4.1, 4.2, or 4.4, the value of the lump
sum distribution under this Plan shall be determined in
accordance with the provisions for determining the value of a
lump sum distribution of the Participant's Retirement Benefit
under the terms of the Retirement Plan.
(b) Monthly benefit payments to the Participant (and, if applicable,
his Surviving Spouse) under Section 4.1, 4.2, 4.4 or 4.5, or a
lump sum payment provided for under Section 4.5(a) with respect
to a benefit accrued under Section 4.1, 4.2 or 4.4, shall
commence on the first day of the month following the
Participant's termination of employment or, if applicable, the
date specified in Section 4.5 as the date on which the
Participant's Surviving Spouse became eligible for a Surviving
Spouse benefit, and shall continue, subject to the provisions of
Section 4.8, until the month in which the death of the
Participant (or, if applicable, his Surviving Spouse) occurs;
provided, however, that a Participant or Surviving Spouse may
elect to defer receipt of an early retirement benefit or
Surviving Spouse benefit, as applicable, for any period of time
not in excess of the date on which the Participant would have
attained his Normal Retirement Age. Despite any other provision
of this Plan, a Participant who receives a benefit in the form of
a lump sum distribution shall not be entitled to any monthly
benefit otherwise provided for in this Plan.
(c) A Participant (or, if applicable, his Surviving Spouse) who has
begun to receive his accrued benefit in the form of an annuity
pursuant to Section 4.6(a), may, subject to the consent of the
Board of Directors, elect to receive the unpaid value of his
annuity in the form of a lump sum distribution. The value of
such lump sum distribution shall be determined in accordance with
the same actuarial assumptions and interest rate then being used
to determine the value of a lump sum distribution of a
participant's Retirement Benefit under the terms of the
Retirement Plan. The payment of such lump sum distribution shall
be made in accordance with the terms of the consent of the Board
of Directors to such payment.
-8-
4.7 CHANGE OF CONTROL.
(a) In the event a Change of Control of the Company occurs, the
Company shall pay to each Participant a lump sum amount equal to
the present value of the Participant's accrued normal retirement
benefit, as determined under Section 4.1, as of the first day of
the first month following such Change of Control of the Company
<PAGE>
on which such Participant is not an employee of the Company,
whether or not such Change of Control of the Company occurred
prior to the date on which such Participant shall have ceased to
be an employee of the Company. Upon payment of the lump sum
amount provided for in this Section 4.7(a), the Company shall
have no further obligation to pay any benefits under this Plan.
Notwithstanding the foregoing, if a Participant has less than
five years of Continuous Service as of the date of the Change of
Control, the amount paid to such Participant under this Section
4.7(a) shall equal (i) the amount described in the first sentence
of this Section 4.7(a) times (ii) a fraction, the numerator of
which is the number of years and fractions thereof of the
Participant's Continuous Service as of the date of the Change of
Control and the denominator of which is five.
(b) In the event a Change of Control of the Company occurs after the
Participant's death and whether or not a benefit shall have then
become payable to the Participant's Surviving Spouse, the Company
shall pay to such Participant's Surviving Spouse, if then living,
the present value of the unpaid Surviving Spouse benefit. Upon
payment of the lump sum amount provided for in this
Section 4.7(b), the Company shall have no further obligation to
pay any benefits under this Plan. Notwithstanding the foregoing,
if a Participant had less than five years of Continuous Service
as of the date of his or her death before the Change of Control,
the amount paid to such Participant Surviving Spouse under this
Section 4.7(b) shall equal (i) the amount described in the first
sentence of this Section 4.7(a) times (ii) a fraction, the
numerator of which is the number of years and fractions thereof
of the Participant's Continuous Service as of the date of death
and the denominator of which is five.
(c) For purposes of this Plan, a "Change of Control of the Company"
shall mean:
(1) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (A) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of
-9-
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (1),
the following acquisitions shall not constitute a Change of
Control: (I) any acquisition directly from the Company,
(II) any acquisition by the Company, (III) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (IV) any acquisition pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (3) of this Section 2; or
<PAGE>
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(3) Consummation by the Company of a reorganization,
merger, share exchange or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation
(a "Business Combination"), in each case, unless, following
such Business Combination, (A) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or
-10-
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed with respect to the Company prior to the Business
Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business
Combination; or
<PAGE>
(4) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
(d) For purposes of this Plan, the term "Interested Shareholder"
shall mean any person (other than the Company or any of its
subsidiaries or any member of the Board of Directors as of the
effective date of this Plan or any affiliate of such person) who
first became the beneficial owner of 10% or more of the combined
voting power of the Company's then outstanding securities after
the effective date of this Plan.
(e) For purposes of this Plan, the present value of a Participant's
retirement benefit or the Surviving Spouse benefit shall be
determined by reference to the 1983 Individual Annuity Mortality
Table with an assumed interest rate equal to the "immediate
annuity rate" as then in effect as determined by the Pension
Benefit Guaranty Corporation and promulgated in Appendix B to 29
C.F.R. <section>2619.65 or any successor regulation adopted for
the same or substantially similar purpose.
4.8 FORFEITURE OF BENEFITS. Despite any other provision of this
Plan, a Participant's or Surviving Spouse's, as applicable, eligibility
for benefit payments under the Plan is expressly subject to the following
terms and conditions:
(a) The Company is and shall be entitled to the sole benefit and
exclusive ownership of any inventions or improvements in plant,
machinery and processes, and all patents for the same, and all
customer or price lists, trade secrets and other things of
similar type or nature used in the business of the Company that
may be made or discovered by a Participant while he is employed
by the Company, or, after the termination of his employment
period if arising out of his activities, knowledge or experience
gained while in the employment of the Company. In the event that
a Participant, during or after the termination of his employment,
discloses all or any portion of the list of the Company's
customers or the Company's pricing structure or all or any
portion of the Company's manufacturing process or any other trade
secrets or confidential information to any person, firm,
corporation, associations or other entity for any reason or
purpose whatsoever, no payment of any benefit
-11-
otherwise due the Participant or his Surviving Spouse pursuant
to this Plan shall be made by the Company.
(b) In the event a Participant, without the prior written consent of
the Company and within a period of two years beginning on the
first day following the Participant's termination of employment
with the Company, directly or indirectly owns, manages, operates,
joins, controls, is employed by or participates in the ownership,
management, operation or control of, or is connected in any
manner with, any business of a type and character which, in the
opinion of the Company, results in the Participant then being
engaged in the field of activities in which he was engaged by the
Company at the time of termination (and within one year prior to
said termination) and such business is, in the opinion of the
Company, in direct or indirect competition in any market area
<PAGE>
served by the Company with any business then conducted by the
Company in such market area, no payment of any benefit otherwise
due the Participant or his Surviving Spouse pursuant to this Plan
shall be made by the Company if the Participant fails to cease
such activity within fifteen days of the mailing to him by the
Company of the Company's opinion that he is in violation of the
restrictions contained in this Section 4.8(b).
(c) The Company shall have sole discretion to stop payment of any
benefit or refuse to make payments otherwise due the Participant
or his Surviving Spouse pursuant to this Plan if the
Participant's termination of employment with the Company or his
appointment to a position with the Company as other than an
Executive Officer was by reason of or because of the
Participant's fraud, embezzlement, misappropriation or similar
offense against the Company or any other state or federal felony
offense.
(d) Subject to the provisions of Section 6.2, no benefit shall be
payable under this Plan to any Participant or Surviving Spouse
who, for any reason, is not eligible for and does not receive a
benefit under the provisions of the Retirement Plan.
4.9 INALIENABILITY OF BENEFITS. A Participant's right to a benefit
under the Plan shall not be subject to voluntary or involuntary sale,
pledge, hypothecation, transfer or assignment by the Participant or by his
personal representatives or heirs, or any other person or persons or
organization or organizations succeeding to any of the Participant's
rights and benefits hereunder.
4.10 FACILITY OF PAYMENTS. Any benefit payable hereunder to any
person who is legally incapacitated may be paid to a court appointed legal
representative of such person.
4.11 CLAIMS PROCEDURE. Each Participant or Surviving Spouse whose
claim for benefits is denied, in whole or in part, shall be provided with
a notice, written in a manner calculated to be understood by such person,
setting forth the specific reasons for such denial and outlining the
-12-
review procedure of the Company. Each such Participant or Surviving
Spouse shall be given a reasonable opportunity for a full and fair review
by the Company of the decision by which the claim was denied.
-13-
<PAGE>
ARTICLE V
PROVISION FOR BENEFITS
5.1 ASSETS OF THE COMPANY. Benefits which become payable under the
provisions of the Plan shall be paid directly by the Company out of its
assets. No assets of the Company shall be set aside or segregated for the
provision of such benefit payments. No Participant or Surviving Spouse,
nor any other potential or actual recipient of benefits under the
provisions of this Plan shall acquire any right, title or interest in the
assets of the Company by reason of the Plan and, to the extent that the
Participant, Surviving Spouse or such other recipient shall acquire a
right to receive payments from the Company pursuant to the Plan, such
right shall be no greater than the right of any unsecured general creditor
of the Company.
-14-
<PAGE>
ARTICLE VI
AMENDMENT AND TERMINATION OF THE PLAN
6.1 AMENDMENT. The Company reserves the right to amend the Plan from
time to time and at any time, effective as of any specified current, prior
or future date; provided, however, that no such amendment shall modify or
reduce a Participant's accrued benefit as of the date such amendment is
adopted.
6.2 TERMINATION. The Company reserves the right to terminate the
Plan at any time and for any reason; provided, however, that upon
termination, each Participant's accrued benefit shall be fully vested
subject only to the provisions of Section 4.8. A Participant's "accrued
benefit" shall mean the benefit which would be paid or payable pursuant to
this Plan following the Participant's termination of employment if the
Retirement Plan had terminated as of the same date on which the
termination of the Plan occurs (and provided for payment of accrued
Retirement Plan benefits upon the Participant's termination of employment)
multiplied by a fraction, the numerator of which is a Participant's years
of Continuous Service recognized under Section 3.2 and the denominator of
which is ten.
-15-
<PAGE>
ARTICLE VII
MISCELLANEOUS
7.1 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall
be construed as a contract of employment between the Company and any
employee, as a right of any employee to be continued in the employment of
the Company as an Executive Officer or in any other capacity, or as a
limitation of the right of the Company to discharge any of its employees,
with or without cause.
7.2 ACTION BY THE COMPANY. Any action by the Company under this Plan
may be by resolution of its Board of Directors, or by any officer or
officers duly authorized by resolution of said Board to act with respect
to the Plan.
7.3 AGREEMENT BINDING ON SUCCESSORS. This agreement shall be binding
upon all persons entitled to benefits hereunder, and upon their respective
heirs and legal representatives and upon the Company, its successors and
assigns.
7.4 CONSTRUCTION. Except when otherwise indicated by the context,
any masculine terminology herein shall also include feminine, and the
definition of any term herein in singular shall also include the plural.
7.5 TITLES. Article and section titles are included for reference
purposes only and in the event of a conflict between a title and its
respective text the text shall control.
7.6 GOVERNING LAW. This Plan shall, to the extent not superseded by
the Employee Retirement Income Security Act of 1974, be governed by the
laws of the State of Wisconsin.
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EXHIBIT 10.11
WAUSAU-MOSINEE PAPER CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
As amended February 19, 1998
<PAGE>
WAUSAU-MOSINEE PAPER CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
1. ESTABLISHMENT OF PLAN. Wausau-Mosinee Paper Corporation (the
"Company") hereby amends and restates the Company's Directors' Deferred
Compensation Plan previously in effect and renames such plan, as herein
amended and restated, the Wausau-Mosinee Paper Corporation Directors'
Deferred Compensation Plan, all effective as of December 17, 1997 (the
"Plan").
2. PURPOSE. The purpose of the Plan is to provide an alternative
method of compensating members (the "Directors") of the Board of Directors
of the Company (the "Board"), whether or not they otherwise receive
compensation as employees of the Company, in order to aid the Company in
attracting and retaining as Directors persons whose abilities, experience,
and judgment can contribute to the continued progress of the Company and
to provide a mechanism by which the interests of the Directors and the
shareholders can be more closely aligned.
3. DEFINITIONS. As used in this Plan, the following terms shall
have the meaning set forth in this paragraph 3:
(a) "BENEFICIARY" shall mean such person or persons, or organization
or organizations, as the Participant from time to time may designate
by a written designation filed with the Company during the
Participant's life. Any amounts payable hereunder to a Participant's
Beneficiary shall be paid in such proportions and subject to such
trusts, powers, and conditions as the Participant may provide in such
designation. Each such designation,
-1-
unless otherwise expressly provided therein, may be revoked by the
Participant by a written revocation filed with the Company during the
Participant's life. If more than one such designation shall be filed
by a Participant with the Company, the last designation so filed shall
control over any revocable designation filed prior to such filing.
To the extent that any amounts payable under this Plan to a
Participant's Beneficiary are not effectively disposed of pursuant to
the above provisions of this paragraph 3(a), either because no
designation was in effect at the Participant's death or because a
designation in effect at the Participant's death failed to dispose of
such amounts in their entirety, then for purposes of this Plan, the
Participant's "Beneficiary" as to such undisposed of amounts shall be
the Participant's estate.
(b) A "CHANGE OF CONTROL OF THE COMPANY" shall mean:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities
<PAGE>
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subparagraph (1),
the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any
-2-
employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or
(iv) any acquisition pursuant to a transaction which complies
with clauses (A), (B), and (C) of subparagraph (b)(3) of this
paragraph 3; or
(2) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(3) Consummation by the Company of a reorganization, merger,
share exchange or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the
acquisition of assets of another corporation (a "Business
Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business
-3-
Combination beneficially own, directly or indirectly, more than
60% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding any employee benefit
plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then
<PAGE>
outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of
the then outstanding voting securities of such corporation except
to the extent that such ownership existed with respect to the
Company prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the
corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
-4-
(4) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(c) "COMMON STOCK" shall mean the common stock, no par value, of the
Company.
(d) "DIRECTORS' FEES" shall mean all of the compensation
to which a Director would otherwise become entitled for services to be
rendered as a Director.
(e) "FAIR MARKET VALUE" of the Common Stock on any day shall be
deemed to be the mean between the published high and low sale prices
at which the Common Stock is traded on a bona fide over-the-counter
market or, if such stock is not so traded on such day, on the next
preceding day on which the Common Stock was so traded.
(f) "PARTICIPANT" shall mean a Director who has made an election to
defer Directors' Fees in accordance with paragraph 4.
(g) "TERMINATION OF SERVICE" shall mean the BONA FIDE termination of
a Participant's services as a member of the Board.
4. RIGHT TO DEFER DIRECTORS' FEES.
(a) Each Director may elect before January 1 of any fiscal year of the
Company to become a Participant and to defer the payment of all or any
portion of the Directors' Fees to which the Participant would otherwise
become entitled for services to be rendered during each fiscal year
subsequent to the date on which such election is effective. An election
by a Director to defer Directors' Fees pursuant to this subparagraph (a)
shall be effective with respect to Directors' Fees earned during the first
fiscal year beginning after the date such election is made and during each
subsequent fiscal year until revoked or amended, provided that any such
-5-
revocation or amendment shall only be effective with respect to fiscal
years beginning after the date written notice of such revocation or
amendment is first received by the Company.
(b) Despite any other provision of subparagraph (a), if a person
becomes a Director during a fiscal year, such Director may elect to become
a Participant with respect to all or any portion of the Directors' Fees
earned and payable (1) from and after the date on which he is elected a
Director if an election is filed on or before the date of such election or
(2), if no election is filed pursuant to clause (1), on the first day of
<PAGE>
the first month immediately following the month in such fiscal year in
which such election is made. An election by a Director to defer
Directors' Fees pursuant to this subparagraph (b) shall remain in effect
until the last day of the fiscal year in which such election is made and
during each subsequent fiscal year until revoked or amended, provided that
any such revocation or amendment shall only be effective with respect to
fiscal years beginning after the date written notice of such revocation or
amendment is first received by the Company.
(c) Directors' Fees deferred by a Participant shall be distributable
in accordance with paragraph 9 hereof and only after such Participant's
Termination of Service. Any Directors' Fees not subject to an election
made in accordance with this paragraph 4 shall be paid to the Director in
cash.
5. ACCOUNTING AND ELECTIONS.
(a) The Company shall establish a Deferred Cash Account and a
Deferred Stock Account in the name of each Participant.
(b) Each Participant shall make an initial election at the time his
deferral election is filed pursuant to paragraph 4 to have his deferred
Directors' Fees allocated to his Deferred Cash
-6-
Account or his Deferred Stock Account. Each fiscal year, a Participant
may file a new election with the Company specifying (1) the Account to
which all Directors' Fees deferred subsequent to the last day of such
fiscal year (and prior to the effective date of any subsequent election)
shall be allocated and/or (2) the Account to which all or any portion of
the balance of his Accounts as of the last day of such fiscal year shall
be allocated. The transfer of a Participant's Account balance shall be
made in accordance with the following:
(1) in the case of a transfer from a Deferred Cash Account into a
Deferred Stock Account, that portion of the balance in the
Participant's Deferred Cash Account as of the last day of the fiscal
year in which the Participant has made an election to transfer his
Deferred Cash Balance shall be determined after giving effect to all
other adjustments required by this Plan and such portion shall be
debited from the Participant's Deferred Cash Account and credited to
his Deferred Stock Account effective as of the first day of the next
subsequent fiscal year.
(2) in the case of a transfer from a Deferred Stock Account into a
Deferred Cash Account, the number of Stock Equivalent Units in the
Participant's Deferred Stock Account as of the last day of the fiscal
year to which the Participant has made an election to transfer his
Deferred Stock Account shall be determined after giving effect to all
other adjustments required by this Plan and such Stock Equivalent
Units shall be converted into cash equivalent by multiplying the
number of such units by an amount equal to the per share Fair Market
Value of the Common Stock on the last day of the fiscal year.
Effective as of the first day of the next subsequent fiscal year the
Participant's Deferred Stock Account shall be debited by the number of
Stock Equivalent Units so transferred
-7-
<PAGE>
and the Participant's Deferred Cash Account credited by the amount of
cash equivalent so determined.
Any election made by a Participant in accordance with this paragraph 5
shall remain in effect until a new election filed by the Participant
becomes effective. A Participant's initial election shall be effective as
of the date the Director becomes a Participant. Notwithstanding any other
provision of this Plan, no election pursuant to this paragraph 5 which
changes the Account to which Directors' Fees deferred in a subsequent
fiscal year are to be allocated or changes the Account to which any
balance in such Participant's Accounts shall be allocated shall be
effective (1) until such election has been approved by the Board or (2) if
it is made by a Participant within six months of the immediately preceding
election filed by such Participant and any such election which shall not
have been approved by the Board or which occurs within the period
described in clause (2) shall be null and void.
(c) As of each date on which the Company shall make a payment of
Director's Fees and a Participant has a deferral election then in effect,
there shall be credited to such Participant's Deferred Cash Account or
Deferred Stock Account, as the case may be in accordance with such
Participant's most recent effective election, the Directors' Fees
otherwise payable to such Participant in cash as of such date.
(d) Despite any other provision of this Plan, the most recent
election in effect on December 17, 1997 made by a Participant with respect
to the crediting of his Director's Fees to such Participant's Deferred
Cash Account or Deferred Stock Account shall remain in effect as of
December 17, 1997 until changed by such Director for a future fiscal year
in accordance with the terms of the Plan.
-8-
(e) Within 90 days of the end of each fiscal year in which this Plan
is in effect, the Company shall furnish each Participant a statement of
the year-end balance in such Participant's Deferred Cash Account and
Deferred Stock Account.
(f) Effective as of March 31, 1998, each participant in the Mosinee
Paper Corporation Deferred Compensation Plan for Directors as in effect on
March 31, 1998 (the "Mosinee Plan") shall become a Participant in the Plan
(a "Mosinee Participant") and (1) the Deferred Cash Account created in the
name of each such Mosinee Participant pursuant to paragraph 5(a) shall be
credited with the balance, if any, of such Mosinee Participant's Deferred
Cash Account in the Mosinee Plan as of March 31, 1998 and such Mosinee
Participant's Deferred Cash Account in the Mosinee Plan shall thereafter
be represented by the Deferred Cash Account established hereunder and
shall be subject to all terms and conditions of this Plan and (2) the
Deferred Stock Account created in the name of each such Mosinee
Participant pursuant to paragraph 5(a) shall be credited with the balance,
if any, of such Mosinee Participant's Deferred Stock Account in the
Mosinee Plan as of March 31, 1998 and such Mosinee Participant's Deferred
Stock Account in the Mosinee Plan shall thereafter be represented by the
Deferred Stock Account established hereunder and shall be subject to all
terms and conditions of this Plan. The Deferred Cash Account and the
Deferred Stock Account of any Mosinee Participant who is, on March 31,
1998, or who thereafter becomes, a Participant by virtue of being a
<PAGE>
Director shall be combined with and maintained as one account with,
respectively, the Deferred Cash Account and the Deferred Stock Account
maintained for such Director with respect to his Directors' Fees.
-9-
6. FORM FOR ELECTIONS. The Secretary of the Company shall provide
election forms for use by Directors in making an initial election to
become a Participant and for making all other elections or designations
permitted or required by the Plan.
7. DEFERRED CASH ACCOUNT. As of the last day of each fiscal
quarter, there shall be computed, with respect to each Deferred Cash
Account which is then in existence, an amount equal to interest on the
average daily balance in such Account during such quarter, computed at a
rate per annum equal to the prime rate of interest then in effect at The
Chase Manhattan Bank of New York. The amount so determined shall be
credited to and become part of the balance of such Account as of the first
day of the next fiscal quarter.
8. DEFERRED STOCK ACCOUNT.
(a) As of each date on which the Company shall make a payment of
Director's Fees and a Participant has a deferral election then in effect
which provides for the deferral of payment of such fees to the
Participant's Deferred Stock Account, the Directors' Fees otherwise
payable to such Participant in cash as of such date shall be converted
into that number of "Stock Equivalent Units" (rounded to the nearest
one-ten thousandth of a unit) determined by dividing the amount of such
Directors' Fees by an amount equal to the per share Fair Market Value of
the Common Stock on such date.
(b) On each date on which a dividend payable in cash or property is
paid on the Common Stock, there shall be credited to each Deferred Stock
Account such number of additional Stock Equivalent Units as are determined
by dividing (1) the amount of the cash or other dividend which would have
then been payable on the number of shares of Common Stock equal to the
number of Stock Equivalent Units (including fractional shares) then
represented in such Account
-10-
by (2) an amount equal to the per share Fair Market Value of the Common
Stock on such date. If the date on which a dividend is paid on the Common
Stock is the same date as of which Directors' Fees are to be converted
into Stock Equivalent Units, the dividend equivalent to be credited to
such Account under this paragraph 8 shall be determined after giving
effect to the conversion of the credit balance in such Account into Stock
Equivalent Units.
(c) The number of Stock Equivalent Units credited to a Participant's
Deferred Stock Account shall be adjusted (to the nearest one-ten
thousandth of a unit) to reflect any change in the Common Stock resulting
from a stock dividend, stock split-up, combination, recapitalization or
exchange of shares, or the like.
<PAGE>
9. DISTRIBUTION OF DEFERRED AMOUNTS.
(a) Distribution of amounts represented in a Participant's Deferred
Cash Account or a Deferred Stock Account shall be made in accordance with
the following:
(1) Payment of the balance of the Deferred Cash Account and Deferred
Stock Account of a Participant whose Termination of Service occurs for
a reason other than death and prior to a Change of Control of the
Company shall be made in a lump sum as of the last day of the fiscal
quarter coincident with or immediately subsequent to the Participant's
Termination of Service unless the Participant elects otherwise in
accordance with the provisions of paragraph 9(b).
(2) In the event a Participant ceases to be a Director because of his
death or in connection with a Change of Control of the Company,
payment of the balance of his Deferred Cash Account and Deferred Stock
Account shall be made in a lump sum as of
-11-
the last day of the fiscal quarter coincident with or immediately
subsequent to the Participant's Termination of Service.
(b) A Participant may elect, (1) before the first day of each fiscal
year, (2) subject to the automatic distribution provisions of paragraph
9(a)(2), which shall govern the distribution of benefits in the event of
Termination of Service which occurs because of death or a Change of
Control of the Company, and (3) prior to his Termination of Service that
payment of the balance of his Deferred Cash Account and Deferred Stock
Account shall be made in installments and the:
(A) fiscal quarter in which distribution of the Participant's
Accounts shall begin (but in no event (i) earlier than the Director's
Termination of Service or (ii) later than the earlier of (a) the
Director's 70th birthday or (b) the date five years after the date of
the Director's Termination of Service; and
(B) number of fiscal quarters over which such Accounts shall be
distributed to the Participant, which period shall not extend beyond
the end of the 40th fiscal quarter following the fiscal quarter in
which such distribution begins.
Any election filed pursuant to this paragraph 9(b) shall be effective as
of the first day of the first fiscal year which begins next subsequent to
the fiscal year in which (1) such election has been made and (2) such
election has been approved by the Board.
(c) If installment payments were elected by the Participant pursuant
to paragraph 9(b), distributions shall be made in quarterly installments
beginning on the first day of the first fiscal quarter following the date
on which such Participant's Termination of Service occurs or each other
later fiscal quarter as the Participant may have specified.
-12-
(1) In the case of a Deferred Cash Account with respect to which
installment payments were elected, the amount of each quarterly
installment shall be determined by dividing the credit balance in such
<PAGE>
Account as of the distribution date by the number of installments then
remaining unpaid. The credit balance in such Account shall then be
reduced by the amount of each distribution out of such Account.
(2) In the case of a Deferred Stock Account with respect to which
installment payments were elected, the amount to be distributed as
each quarterly installment shall be determined as follows: (A)
multiply the number of Stock Equivalent Units (including any fraction
thereof) then reflected in such Account by the Fair Market Value of
the Common Stock on such date; (B) add to the product so determined
the amount (if any) which has been credited to such Account but which
has not been converted into Stock Equivalent Units; and (C) divide the
total so obtained by the number of installments then remaining unpaid.
The number of Stock Equivalent Units represented in a Deferred Stock
Account shall be reduced forthwith by that number (rounded to the
nearest one-ten thousandth of a unit) determined by dividing the
amount of the distribution by the Fair Market Value of the Common
Stock taken into account for purposes of clause (A) of the preceding
sentence.
In the event that a Participant dies after receiving payment of some, but
less than all, of the entire amount to which such Participant is entitled
under this Plan, the unpaid balance shall be paid in a lump sum to the
Participant's Beneficiary.
(d) In the case of a Deferred Cash Account or a Deferred Stock
Account with respect to which payment is to be made in a lump sum, the
amount of such payment shall be determined
-13-
as if installment payments had been elected and the lump sum was the last
(but only) such payment.
(e) After a Participant's Termination of Service occurs, neither such
Participant or his Beneficiary shall have any right to modify in any way
the schedule for the distribution of amounts credited to such Participant
under this Plan as specified in the last election filed by the
Participant. However, upon a written request submitted to the Secretary
of the Company by the person then entitled to receive payments under this
Plan (who may be the Participant, or a Beneficiary), the Board may in its
sole discretion, accelerate the time for payment of any one or more
installments remaining unpaid.
10. INCOMPETENCY. If, in the opinion of the Board, a Participant
shall at any time be mentally incompetent, any payment to which such
Participant would be entitled under this Plan may, with the approval of
the Board, be paid to the Participant's legal representative, or to any
other person for his benefit and in such case, the Board may in its sole
discretion, accelerate the time for payment of any one or more
installments remaining unpaid.
11. MISCELLANEOUS.
(a) This Plan shall be effective upon adoption by the Board.
(b) Amounts payable hereunder may not be voluntarily or involuntarily
sold or assigned, and shall not be subject to any attachment, levy or
garnishment.
<PAGE>
(c) Participation in this Plan by any person shall not confer upon
such person any right to be nominated for re-election to the Board, or to
be re-elected to the Board.
(d) The Company shall not be obligated to reserve or otherwise set
aside funds for the payment of its obligations hereunder, and the rights
of any Participant under the Plan shall be an
-14-
unsecured claim against the general assets of the Company. All amounts
due Participants or Beneficiaries under this Plan shall be paid out of
the general assets of the Company.
(e) The Board shall have all powers necessary to administer this
Plan, including all powers of Plan interpretation, of determining
eligibility, and the effectiveness of elections, and of deciding all other
matters relating to the Plan; provided, however, that no Participant shall
take part in any discussion of, or vote with respect to, a matter of Plan
administration which is personal to him, and not of general applicability
to all Participants. All decisions of the Board shall be final as to any
Participant under this Plan.
(f) The Board may amend this Plan in any, and all respects at any
time, or from time to time, or may terminate this Plan at any time, but
any such amendment or termination shall be without prejudice to any
Participant's right to receive amounts previously credited to such
Participant under this Plan.
-15-
EXHIBIT 10.12
WAUSAU-MOSINEE PAPER CORPORATION
DIRECTORS RETIREMENT BENEFIT POLICY
Each person whose service as a member of the Board of Directors (a
"Director") terminates on or after February 17, 1993 and after he has
served as a Director for not less than five full calendar years (a
"Retired Director") shall be entitled to receive a Director's Retirement
Benefit in accordance with the following terms and conditions:
(a) During the Benefit Period (as defined in paragraph (c)), on each
date on which the Corporation pays Directors' fees consisting of the
Directors' monthly retainer or a Board of Directors meeting fee to
serving Directors, a Retired Director shall be paid a Director's
Retirement Benefit. Payment of such Director's Retirement Benefit
shall not be conditioned upon the attendance of the Retired Director
at any meeting of the Board of Directors or the performance by the
Retired Director of any services on behalf of the Corporation.
(b) For purposes of this policy, a "Director's Retirement Benefit"
shall be an amount equal to the monthly retainer or Board of Directors
meeting fee, as applicable, to which a Director was entitled under the
standard Directors' fee policy of the Corporation as of the date of
the Retired Director's termination of service as a Director (the
Retired Director's "Termination Date"); provided, however, that the
number of payments of the Director's Retirement Benefit which is
attributable to the payment of Board of Director meeting fees in any
fiscal year of the Corporation shall not exceed the number of
regularly scheduled meetings of the Board in the fiscal year in which
the retired Director's Termination Date occurred. The Director's
Retirement Benefit shall not include fees paid for attendance at
Committee Meetings or any compensation paid to Directors other than
the monthly retainer or Board of Directors meeting fee as herein
described.
(c) The "Benefit Period" shall mean the period which begins on the
day next following the Retired Director's Termination Date and which
ends on the first to occur of (1) the date which is (A) the same
number of months subsequent to the Retired Director's Termination Date
as is equal to (B) the number of whole or partial months during which
the Retired Director served as a Director prior to his Termination
Date and (2) the Retired Director's death. For purposes of
determining the number of whole or partial months during which the
retired Director served as a Director prior to his Termination Date,
service as a director of Mosinee Paper Corporation (a "Mosinee
Director") (1) prior to December 17, 1997 and (2) during any period in
which such Mosinee Director was not also a director of the
Corporation, shall be deemed to be service as a Director.
-1-
(d) As of the date of Change of Control of the Corporation, as
defined in the Directors' Deferred Compensation Plan as from time to
time in effect, the Corporation shall pay the present value of all
unpaid Director's Retirement Benefit payments to the Retired Director
in a lump sum. The present value of such payments shall be based on
<PAGE>
the assumption that the Retired Director shall serve as a Retired
Director through the period described in paragraph (c)(1) and it shall
be computed by reference to the 1983 Individual Annuity Mortality
Table with an assumed interest rate equal to the "immediate annuity
rate" as then in effect as determined by the Pension Benefit Guaranty
Corporation and promulgated in Appendix B to 29 C.F.R. <section>
2619.65 or any successor regulation adopted for the same or
substantially similar purpose.
(e) Director's Retirement Benefits payable hereunder may not be
voluntarily or involuntarily sold or assigned, and shall not be
subject to any attachment, levy or garnishment. The Corporation shall
not be obligated to reserve or otherwise set aside funds for the
payment of retirement benefits under this policy and the rights of a
Retired Director shall be only those with respect to an unsecured
claim against the general assets of the Corporation. All amounts due
a Retired Director shall be paid out of the general assets of the
Corporation.
(f) This policy may be terminated or amended at any time by
resolution of the Board of Directors; provided, however, that neither
an amendment nor the termination of this policy shall reduce the
retirement benefits accrued by a Retired Director as of the date of
such amendment or termination.
-2-
EXHIBIT 10.20
WAUSAU-MOSINEE PAPER CORPORATION
INCENTIVE COMPENSATION PLANS
FOR
EXECUTIVE OFFICERS
(1998)
Mr. Olvey's bonus opportunity for 1998 ranges from 0% of base salary
if 1998 earnings per share are at or below $1.02 to 100% if the 1998
earnings per share are at least $1.51 per share. Earnings per share will
be adjusted for accruals on SARs, bonus expense and extraordinary items.
Messrs. Peterson and Baker each have a bonus opportunity equal to 75%
of their base salary based upon the same $1.02 to $1.51 range of earnings
per share and will also be entitled to a maximum bonus of 25% of base
salary upon satisfaction of individual performance objectives established
at the beginning of the year by the President and CEO. Messrs. Urbanek
and McDonald each have a bonus opportunity equal to 60% of their base
salary based upon the same $1.02 to $1.51 range of earnings per share and
will also be entitled to a maximum bonus of 20% of base salary upon
satisfaction of individual performance objectives established at the
beginning of the year by the President and CEO. Mr. Schmidt has a bonus
opportunity equal to 50% of his base salary based upon the same $1.02 to
$1.51 range of earnings per share and will also be entitled to a maximum
bonus of 17% of base salary upon satisfaction of individual performance
objectives established at the beginning of the year by the President and
CEO.
Mr. Carlson will participate in an incentive compensation plan under
which 75% of his bonus will be based on the operating profits of the
Specialty Papers Group, 25% on satisfaction of individual performance
objectives established at the beginning of the year by the President and
CEO.
Mr. Howatt will participate in an incentive compensation plan under
which 75% of his bonus will be based on the operating profits of the
Printing and Writing Group, 25% on satisfaction of individual performance
objectives established at the beginning of the year by the President and
CEO.
Mr. Canavara will participate in an incentive compensation plan under
which 75% of his bonus will be based on operating profits at the Towel and
Tissue Group, 25% on satisfaction of individual performance objectives
established at the beginning of the year by the President and CEO.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31,
1998 OF WAUSAU-MOSINEE PAPER CORPORATION AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,580
<SECURITIES> 0
<RECEIVABLES> 87,050
<ALLOWANCES> 9,136
<INVENTORY> 138,334
<CURRENT-ASSETS> 245,839
<PP&E> 1,004,673
<DEPRECIATION> 396,600
<TOTAL-ASSETS> 886,123
<CURRENT-LIABILITIES> 136,053
<BONDS> 133,140
<COMMON> 168,652
0
0
<OTHER-SE> 263,422
<TOTAL-LIABILITY-AND-EQUITY> 886,123
<SALES> 237,660
<TOTAL-REVENUES> 237,660
<CGS> 191,351
<TOTAL-COSTS> 249,038
<OTHER-EXPENSES> (136)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,046
<INCOME-PRETAX> (13,288)
<INCOME-TAX> (5,050)
<INCOME-CONTINUING> (8,238)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,238)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
