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, 2000
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, 2000 was
51,416,691.
<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, 2000 (unaudited)
and March 31, 1999 (unaudited) 1
Condensed Consolidated Balance
Sheets, March 31, 2000 (unaudited)
and December 31, 1999 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows, Three Months
Ended March 31, 2000 (unaudited)
and March 31, 1999 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements 3-6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-10
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 12-14
PART I. FINANCIAL INFORMATION
(i)
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
<TABLE>
Wausau-Mosinee Paper Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended
March 31,
($ thousands, except per share data
- unaudited) 2000 1999
<S> <C> <C>
NET SALES $ 243,606 $226,441
Cost of products sold 214,765 187,778
Restructuring charge-inventory 599 0
Total cost of sales 215,364 187,778
GROSS PROFIT 28,242 38,663
Selling and administrative expenses 19,818 13,532
Restructuring charge-other 24,401 0
Total 44,219 13,532
OPERATING PROFIT (LOSS) (15,977) 25,131
Interest expense (3,705) (2,518)
Other income/expense, net 61 (9)
EARNINGS (LOSS) BEFORE INCOME TAXES (19,621) 22,604
Provision (credit) for income taxes (6,700) 8,500
NET EARNINGS (LOSS) ($ 12,921) $14,104
NET EARNINGS (LOSS) PER SHARE BASIC ($ 0.25) $ 0.27
NET EARNINGS (LOSS) PER SHARE
DILUTED ($ 0.25) $ 0.26
Weighted average shares
outstanding-basic 51,416,691 53,188,197
Weighted average shares
outstanding-diluted 51,464,389 53,325,864
</TABLE>
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<PAGE>
<TABLE>
Wausau-Mosinee Paper Corporation
CONSOLIDATED BALANCE SHEETS
<CAPTION>
($ thousands*) MARCH 31, December 31,
2000 1999
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,073 $ 5,397
Receivables, net 89,981 73,977
Refundable income taxes 2,059 1,638
Inventories 156,678 155,822
Deferred income taxes 23,094 14,747
Other current assets 2,018 730
Total current assets 284,903 252,311
Property, plant and equipment, net 651,001 653,823
Other assets 33,259 30,328
TOTAL ASSETS $969,163 $936,462
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt 232 230
Accounts payable 71,547 63,876
Accrued and other liabilities 70,015 47,383
Total current liabilities 141,794 111,489
Long-term debt 232,291 220,476
Deferred income taxes 105,183 103,386
Postretirement benefits 60,193 58,885
Pension 34,523 35,019
Other liabilities 14,341 13,447
Total liabilities 588,325 542,702
Stockholders' equity 380,838 393,760
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $969,163 $936,462
<FN>
*The consolidated balance sheet at March 31, 2000 is unaudited. The
December 31, 1999 consolidated balance sheet is derived from audited
financial statements.
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</TABLE>
<PAGE>
<TABLE>
Wausau-Mosinee Paper Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
March 31,
($ thousands - unaudited) 2000 1999
<S> <C> <C>
Net cash provided by operating activities $ 5,142 $ 11,011
Capital expenditures (7,195) (16,382)
Borrowings under credit agreements 11,874 28,955
Dividends paid (4,113) (3,753)
Purchase of company stock 0 (19,047)
Proceeds on sale of property, plant and
equipment 24 76
Other investing and financing activities (56) 432
Net increase in cash $ 5,676 $ 1,292
</TABLE>
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 December 31, 1999, for the
company's accounting policies which are pertinent to these
statements.
Note 2. The Company recorded a pretax restructuring charge of $25.0
million in the first quarter of 2000 in the Specialty Paper
Group segment to cover shutdown and asset disposition costs
associated with the closure of a paper manufacturing facility
in Middletown, Ohio. The shutdown includes $3.6 million in
hourly and salaried severance cost and the asset disposition
cost includes $21.4 million in related asset write-downs and
disposition costs.
-3-
Note 3. Net income includes expenses, or credits, 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
plans had been exercised on that day. For the three months
ended March 31, 2000, these plans resulted in after-tax expense
of $651,000 or $0.01 per share, compared to after-tax income of
$1,438,000 or $0.03 per share for the same period last year.
<PAGE>
<TABLE>
Note 4. Accounts receivable consisted of the following:
<CAPTION>
($ thousands) MARCH 31, December 31,
2000 1999
<S> <C> <C>
Customer Accounts $93,047 $82,592
Misc. Notes and Accounts Receivable 5,834 2,670
98,881 85,262
Less: Allowances for Discounts,
Doubtful Accounts and Pending Credits 8,900 11,285
Receivables, Net $89,981 $73,977
</TABLE>
<TABLE>
Note 5. The various components of inventories were as follows:
<CAPTION>
($ thousands) MARCH 31, December 31,
2000 1999
<S> <C> <C>
Raw Materials and Supplies $ 88,044 $ 87,551
Finished Goods and Work in Process 95,188 93,370
Subtotal 183,232 180,921
Less: LIFO Reserve ( 26,554) ( 25,099)
Net inventories $156,678 $155,822
</TABLE>
Note 6. The accumulated depreciation on fixed assets was $490,653,000
as of March 31, 2000 and $477,391,000 as of December 31, 1999.
The provision for depreciation, amortization and depletion for
the three months ended March 31, 2000 and March 31, 1999 was
$14,583,000 and $12,698,000, respectively.
Note 7. Certain legal proceedings are described under Part II, Item 1
of this report.
-4-
Note 8. Interim Segment Information
FACTORS USED TO IDENTIFY REPORTABLE SEGMENTS
The Company's operations are classified into three principal reportable
segments, the Specialty Paper Group, the Printing & Writing Group and
the Towel & Tissue Group, each providing different products. Separate
management of each segment is required because each business unit is
subject to different marketing, production and technology strategies.
PRODUCTS FROM WHICH REVENUE IS DERIVED
The Specialty Paper Group produces specialty papers at its
manufacturing facilities in Rhinelander, Wisconsin; Mosinee, Wisconsin;
Jay, Maine; and Middletown, Ohio (facility closing May 15, 2000). The
Printing & Writing Group produces a broad line of premium printing and
writing grades at manufacturing facilities in Brokaw, Wisconsin and
Groveton, New Hampshire. The Printing & Writing Group also includes
two converting facilities which produce wax-laminated roll wrap and
related specialty finishing and packaging products and a converting
facility which converts printing and writing grades. The Towel &
Tissue Group markets a complete line of towel, tissue, soap and
dispensing systems for the "away-from-home" market. The Towel &
Tissue Group operates a paper mill in Middletown, Ohio and a converting
facility in Harrodsburg, Kentucky.
<PAGE>
RECONCILIATIONS
<TABLE>
The following are reconciliations to corresponding totals in the
accompanying consolidated financial statements:
<CAPTION>
Three Months
Ended March 31,
($ in thousands-unaudited) 2000 1999
<S> <C> <C>
Net sales external customers
Specialty Paper $109,845 $100,242
Printing & Writing 94,913 91,236
Towel & Tissue 38,848 34,963
$243,606 $226,441
Net sales intersegment
Specialty Paper $ 885 $ 3,314
Printing & Writing 1,885 310
Towel & Tissue 2 15
$ 2,772 $ 3,639
Operating profit(loss)(unaudited)
Specialty Paper $ 3,682 $ 8,626
Specialty Paper-restructuring
charge(Note 1) (25,000) 0
Total Specialty Paper (21,318) 8,626
Printing & Writing 7,316 10,960
Towel & Tissue 3,985 5,433
Total reportable segment
Operating profit(loss) (10,017) 25,019
Corporate & eliminations (5,960) 112
Interest expense (3,705) (2,518)
Other income/expense 61 ( 9)
Earnings(Loss) before income taxes ($19,621) $ 22,604
</TABLE>
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<TABLE>
<CAPTION>
($ in thousands-unaudited) MARCH 31, December 31,
2000 1999
<S> <C> <C>
Segment Assets
Specialty Paper $408,748 $396,624
Printing & Writing 311,258 309,507
Towel & Tissue 185,252 183,103
Corporate & Unallocated* 63,905 47,228
$969,163 $936,462
<FN>
*Industry segment assets do not include intersegment accounts
receivable, cash, deferred tax assets and certain other assets
which are not identifiable with industry segments.
</TABLE>
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS*
RESULTS OF OPERATIONS
NET SALES
For the three months ended March 31, 2000, net sales for the company
were $243.6 million, an increase of 8% over last year's first quarter
net sales of $226.4 million. Selling prices were up for all Groups
with increases ranging from 4 to 6%. Total tons shipped were 207,000
tons and increased by 1% or 2,000 tons company-wide over the first
quarter of 1999.
The Specialty Paper Group's net sales increased 10% in the first
quarter of 2000 compared to the first quarter of 1999. This
increase was due to increased selling prices and tons shipped.
Total tons shipped were 93,500 tons in the first quarter of 2000
compared to 90,800 tons last year. The order backlogs in the Specialty
Paper Group were 26,000 tons as of March 31, 2000.
First quarter net sales in the Printing & Writing Group increased 4%
from the comparable quarter in 1999. Shipments were 84,300 tons and
were 3% lower than in 1999. Shipments were lower due mainly to the
sale of the school papers business on January 2, 2000. School papers
business shipments were approximately 3,600 ton in the first quarter of
1999. While shipments were lower, selling prices increased
approximately 5% over the first quarter of 1999. Improved selling
prices and product mix offset any losses due to volume and resulted
in overall increased sales.
Net sales for the first quarter of 2000 increased 11% over the first
quarter of 1999 for the Towel & Tissue Group. Shipments increased to
29,200 tons and represented a new record for first quarter sales.
Selling prices also increased by approximately 6% in the first quarter
of 2000 compared to the first quarter last year.
GROSS PROFIT
Gross profit for the three months ended March 31, 2000 was $28.2
million or 11.6% of net sales, compared to last year's gross profit
of $38.7 million or 17.1% of net sales. The decline in gross profit
margin quarter over quarter is principally due to raw material costs
increasing at a greater rate than product selling prices. Pulp costs
have increased by approximately $140 per ton while wastepaper prices
have more than doubled from quarter to quarter. While wastepaper
prices have recently stabilized, pulp costs increased by approximately
$40 per ton on April 1, 2000. Increasing raw material costs continue to
keep pressure on gross profit margins and will negatively impact the
Company's gross profit if the increased costs are not recovered through
higher selling prices.
The Specialty Paper Group's gross profit margin decreased from 13.4% of
net sales in 1999 to 8.1% this year. The Rhinelander mill experienced
a small amount of downtime in the first quarter of 2000 compared to no
downtime in the first quarter of 1999. Total Group production was
<PAGE>
94,000 tons in the first quarter of 2000 compared to 96,000 tons in
1999.
* Matters discussed in this report with respect to the Company's
expectations are forward-looking statements that involve risks
and uncertainties. See "Information Concerning Forward-Looking
Statements."
-7-
Paper mill paper inventories at March 31, 2000 were approximately
33,000 tons and had increased 3% over the level at March 31, 1999.
Customer order backlogs have remained stable quarter over quarter.
The Printing & Writing Group's gross profit for the first quarter of
2000 was 13.1% of net sales compared to 17.8% of net sales in the same
period last year. Total production for the paper mills was down 2,000
tons or 3% in the first quarter of 2000 compared to last year's first
quarter. Operational issues, which have since been corrected at both
mill sites, were the main cause for the production declines. The Group
also sold the school paper business on January 2, 2000 and is
renovating that site to a converting support facility for the fine
paper business. Inventory levels and customer backlogs have remained
similar quarter over quarter for the ongoing businesses.
The gross profit for the Towel & Tissue Group was 18.6% for the three
months ended March 31, 2000 compared to 24.7% last year's first
quarter. Shipments increased by 6% to an all time first quarter
record of 29,200 tons. Increased raw material costs, mainly
wastepaper, was the principal factor for the margin decline. The
increase in raw material costs far exceeded the increase gains in
volume and product selling prices. Inventory levels of finished
products increased by 2,000 tons and should be reduced during the
second and third quarters as business seasonally increases. Customer
order backlogs have remained relatively constant quarter over quarter.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses, excluding the first quarter 2000
restructuring charge discussed below, were $19.8 million in the first
quarter of 2000, compared to $13.5 million last year. Expense for
incentive compensation programs based on the market price of the
Company's stock was $1.0 million in 2000, compared to income of $2.3
million for the same period a year ago. In addition, an expense of
$2.7 million was recorded for the first quarter of 2000 for costs
associated with the resignation of the Company's President and Chief
Executive Officer. These two items accounted for $6.1 million of the
change in expenses quarter over quarter.
RESTRUCTURING CHARGE
In March of 2000, the Company announced the planned closure of its Sorg
facility on May 15, 2000. In accordance with the closure, the Company
recorded a pre-tax restructuring charge of $25.0 million in the first
quarter of 2000. This charge was classified as $24.4 million in
operating expenses and $0.6 million in cost of sales. The closure
costs include $3.6 million in hourly and salaried severance cost and
$21.4 million in related asset write-downs and disposition costs.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
CASH PROVIDED BY OPERATIONS
For the three months ended March 31, 2000, cash provided by operations
was $5.1 million compared to $11.0 million in the first quarter of the
last year. Reduced operational earnings offset by the change in the
non cash
-8-
charges principally account for the change in cash flow quarter over
quarter.
CAPITAL EXPENDITURES
Capital expenditures totaled $7.2 million for the first quarter ended
March 31, 2000, compared to $16.4 million for the same period last
year.
During the first three months of 2000, the Rhinelander mill spent $6.2
million on the High Performance Liner (HPL) project. The HPL project
is on schedule and is expected to be completed in September of 2000.
FINANCING
Total current and long-term debt increased for the three months ended
March 31, 2000 to $232.5 million. The increase in total debt from
December 1999 is due in part from capital expenditures and dividends
paid.
Interest expense was $3.7 million in the first quarter of 2000 compared
to $2.5 million in the same period of 1999. The increase in interest
expense is the result of higher funded debt levels in 2000 compared to
1999 and an increase in interest rates from last year.
Cash provided by operations and the borrowing capacity are expected to
meet capital needs and dividends. The company has approximately $125
million of borrowings available from existing bank facilities as of
March 31, 2000.
COMMON STOCK REPURCHASE
In April, 2000, the Board of Directors increased the number of shares
covered by its August, 1998 stock repurchase authorization by 2,571,000
shares. This brought the total remaining authority to 2,788,000 shares
as of April 20, 2000. There were no stock repurchases in the first
quarter of 2000 compared to 1,335,326 shares in the first quarter of
1999.
DIVIDENDS
A dividend declared in December, 1999, of $.08 per share was paid
February 14, 2000 to shareholders of record as of January 31, 2000.
At the April 20, 2000 meeting, the Board of Directors approved a 6%
increase in the cash dividend. The quarterly cash dividend of $.085
per share is payable May 17, 2000 to stockholders of record as of May
3, 2000.
<PAGE>
INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
This report contains certain of management's expectations and other
forward-looking information regarding the Company pursuant to the safe-
harbor provisions of the Private Securities Litigation Reform Act of
1995. While the Company believes that these forward-looking statements
are based on reasonable assumptions, such statements are not guarantees
of future performance and all such statements involve risk and
uncertainties that could cause actual results to differ materially from
those contemplated in this report. The assumptions, risks and
uncertainties relating to the
-9-
forward-looking statements in this report include general economic and
business conditions, changes in the prices of raw materials,
competitive pricing in the markets served by the Company as a result
of economic conditions or overcapacity in the industry, manufacturing
problems at Company facilities and various other matters. These and
other assumptions, risks and uncertainties are described under the
caption "Cautionary Statement Regarding Forward-Looking Information" in
Item 1 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, and, from time to time, in the Company's other
filings with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in the information provided in
response to Item 7A of the Company's Form 10-K for the year ended
December 31, 1999.
-10-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
RECENT DEVELOPMENTS CONCERNING ANTITRUST LITIGATION.
In March and April, 2000, the Company entered into settlement
agreements with the Attorneys General of the States of Florida,
New York, Maryland, and West Virginia concerning the litigation which
began in 1997, when the Attorney Generalof 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 lawsuit alleged a conspiracy to fix prices
of commercial sanitary paper products starting at least as early as
1993. The settlement agreements provide for the Company to make cash
payments and provide certain Bay West towel and tissue products. The
cost of the settlements is not material to the Company.
The federal lawsuit filed by the Attorney General of the State of
Kansas is proceeding as do numerous class action suits which were
filed by private direct purchasers of commercial sanitary paper
products in various federal district courts throughout the country.
In addition, other indirect purchasers of sanitary commercial paper
products have filed class action lawsuits in various state courts
alleging a conspiracy to fix prices under state antitrust laws. No
class has been certified in the state actions. In March, 2000, the
<PAGE>
plaintiff in the indirect purchaser suit filed in Wisconsin agreed to
dismiss its claims and class certification was denied to the plaintiff
in an indirect purchaser claim brought in Minnesota state court.
Proceedings in the remaining actions are in various stages. In the
opinion of management, the Company has not violated any antitrust laws.
The Company is vigorously defending these claims.
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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:
Exhibit
NUMBER DESCRIPTION
3.1 Restated Articles of Incorporation, as amended
October 21, 1998 (incorporated by reference to
Exhibit 3.1 to the Company's Current Report on
Form 8-K dated October 21, 1998)
3.2 Restated Bylaws, as amended December 17, 1997
(incorporated by reference to Exhibit 4.2 to
the Company's Registration Statement on Form S-8
dated December 17, 1997)
4.1 Rights Agreement, dated as of October 21,
1998, between the Company and Harris Trust and
Savings Bank, including the Form of Restated
Articles of Incorporation as Exhibit A and the
Form of Rights Certificate as Exhibit B
(incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K dated
October 21, 1998)
4.2 Summary of Rights to Purchase Preferred Shares,
Exhibit C to Rights Agreement filed as Exhibit
4.1 hereto (incorporated by reference to
Exhibit 4.2 to the Company's Registration
Statement on Form 8-A, filed on October 29,
1998)
4.3 $138,500,000 Note Purchase Agreement dated
August 31, 1999 (incorporated by reference to
Exhibit 4.3 to the Company's Quarterly
Report on Form 10-Q for the quarterly period
ended September 30, 1999)
4.4 $200,000,000 Revolving Credit Agreement dated
December 10, 1999 among Registrant and Bank of
America, N.A., Bank One, NA, M&I Marshall &
Ilsley Bank, and Harris Trust and Savings Bank
(incorporated by reference to Exhibit 4.4 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999)
<PAGE>
10.1 Supplemental Retirement Plan, as last amended
March 4, 1999 (incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December
31, 1998)*
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10.2 1988 Stock Appreciation Rights Plan, as last
amended March 4, 1999 (incorporated by
reference to Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1998)*
10.3 1988 Management Incentive Plan, as last
amended March 4, 1999 (incorporated by
reference to Exhibit 10.5 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1998)*
10.4 1990 Stock Appreciation Rights Plan, as last
amended March 4, 1999 (incorporated by
reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1998)*
10.5 Deferred Compensation Agreement dated July 1,
1994, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.7 to
the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998)*
10.6 1991 Employee Stock Option Plan, as last amended
March 4, 1999 (incorporated by reference to Exhibit
10.8 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998)*
10.7 1991 Dividend Equivalent Plan, as last amended March
4, 1999 (incorporated by reference to Exhibit 10.9
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998)*
10.8 Supplemental Retirement Benefit Plan dated January
16, 1992, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998)*
10.9 Directors' Deferred Compensation Plan, as last
amended March 4, 1999 (incorporated by reference to
Exhibit 10.11 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31,
1998)*
10.10 Directors Retirement Benefit Policy, as amended
April 16, 1998 (incorporated by reference to Exhibit
10.12 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1998)*
<PAGE>
10.11 Mosinee Paper Corporation 1985 Executive Stock
Option Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998)*
10.12 Mosinee Paper Corporation 1988 Stock Appreciation
Rights Plan, as last amended March 4, 1999
(incorporated by reference to
-13-
Exhibit 10.15 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998)*
10.13 Mosinee Paper Corporation Supplemental Retirement
Benefit Agreement dated November 15, 1991, as last
amended March 4, 1999 (incorporated by reference to
Exhibit 10.18 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998)*
10.14 Mosinee Paper Corporation 1994 Executive Stock
Option Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998)*
10.15 Incentive Compensation Plan for Executive Officers
(1998) (incorporated by reference to Exhibit 10.20
to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1998)*
10.16 1999 Incentive Compensation Plan for Executive
Officers (incorporated by reference to Exhibit 10.21
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998)*
10.17 2000 Incentive Compensation Plan for Executive
Officers (incorporated by reference to Exhibit 10.17
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999)
10.22 Former President and CEO Severance Agreement
21.1 Subsidiaries (incorporated by reference to Exhibit
21.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998)
27.1 Financial Data Schedule (filed electronically only)
*Executive compensation plans or arrangements. All plans are sponsored
or maintained by the Company unless otherwise noted.
(b) Reports on Form 8-K:
None
-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 12, 2000 GARY P. PETERSON
Gary P. Peterson
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
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EXHIBIT INDEX
TO
FORM 10-Q
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. '232.102(d))
Exhibit 10.22 Former President and CEO Severance Agreement
Exhibit 27.1 Financial Data Schedule
SEVERANCE AGREEMENT
AND
GENERAL RELEASE OF CLAIMS
This Severance Agreement and General Release of Claims (the
"Agreement") is made and entered into this 3rd day of March, 2000 by
and between Daniel R. Olvey ("Mr. Olvey") and Wausau-Mosinee Paper
Corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Mr. Olvey has served as an officer and a director of the
Company; and
WHEREAS, Mr. Olvey's resignation as an officer and a director of
the Company and each of its subsidiaries was effective on February 24,
2000; and
WHEREAS, the Company is desirous of offering Mr. Olvey certain
severance pay and benefits over and above what he is entitled to under
the Company's employment policies and/or applicable laws in exchange
for a complete and full release of claims;
NOW, THEREFORE, in consideration of the premises and mutual
promises herein contained, it is agreed as follows:
1. NO LIABILITY. The Company and Mr. Olvey agree that neither the
negotiation or signing of this Agreement shall constitute an admission
by the Company that it has acted wrongfully with respect to Mr. Olvey
or any other person or that Mr. Olvey has any rights whatsoever against
the Company. The Company specifically disclaims any liability to, or
wrongful acts against, Mr. Olvey or any other person, on the part of
itself, its directors, officers, employees, and agents, and Mr. Olvey
disclaims any liability to, or wrongful or unlawful conduct against,
the Company.
2. EMPLOYMENT. Mr. Olvey understands and agrees that he shall be
considered an employee of the Company until the first to occur of (a)
December 30, 2000, or (b) the date on which he has exercised in full
each option to purchase common stock and each stock appreciation right
which was outstanding on February 24, 2000, but that his rights and
benefits as an employee of the Company shall be limited to those rights
and benefits specifically provided under the terms of this Agreement.
Mr. Olvey understands that he will not be reemployed by the Company
following the termination of the employment period provided for herein,
-1-
and agrees that he will not apply for or otherwise seek employment with
the Company at any time in the future.
3. SEVERANCE BENEFIT. As a severance benefit and as consideration to
Mr. Olvey for entering into this Agreement, the Company shall provide
the following to Mr. Olvey:
<PAGE>
(a) SEVERANCE PAY. Mr. Olvey shall be entitled to receive
severance pay in the amount of $619,163. Such amount shall be
paid in equal biweekly installments in a manner consistent with
the Company's normal payroll practices, beginning on the first
payday which occurs after the expiration of seven days from the
execution of this Agreement and continuing through the last payday
which occurs on or prior to December 30, 2000.
(b) UNUSED VACATION PAY. Mr. Olvey shall be paid the sum of
$45,230.72 representing 20.5 days of unused 1999 vacation days and
4.0 days of accrued vacation days on March 15, 2000. Mr. Olvey
agrees that payment of such amount shall terminate the Company's
liability to him under the Company's vacation pay policies.
(c) HEALTH AND DENTAL INSURANCE. Mr. Olvey shall be entitled to
coverage under the Company's health and dental insurance plans on
the same basis as such plans are from time to time maintained for
executive officers of the Company for the period which ends on the
first to occur of (i) December 30, 2000, or (ii) the date on which
Mr. Olvey is employed by an employer other than the Company.
(d) SUPPLEMENTAL RETIREMENT PLAN BENEFITS. Mr. Olvey agrees and
understands that he is not entitled to receive a benefit under the
terms of the Wausau-Mosinee Supplemental Retirement Plan and all
claims for an accrued benefit under such plan are hereby waived by
him. As a part of the consideration and severance benefit provided
to Mr. Olvey under this Agreement, the Company shall make a lump
payment to Mr. Olvey of $1,564,165.47 on or before April 15, 2000.
(e) OUTPLACEMENT ASSISTANCE. Mr. Olvey shall be entitled, at
Company expense, to individual executive level outplacement
services from the firm of Challenger, Gray & Christmas for a period
which ends on the first to occur of (i) Mr. Olvey's employment, or
(ii) August 24, 2001.
(f) OPTIONS AND SARS. Mr. Olvey shall be entitled to exercise
each stock option and stock appreciation right ("SAR") outstanding
on February 24, 2000 in accordance with its terms and until the
-2-
first to occur of (i)the date of expiration provided in the terms
of grant of the option or SAR, or (ii) March 30, 2001.
(g) CHANGE IN CONTROL. Notwithstanding any other provision of
this Agreement, not more than ten business days following a Change
in Control, all amounts which are or will become payable to Mr.
Olvey under this Agreement shall be paid in a lump sum. For
purposes of this Agreement, the term "Change in Control" shall have
the meaning set forth in Section 15.1 of the Company's 1991
Employee Stock Option Plan, a copy of which is attached hereto
as Appendix I.
All payments made under the terms of this Agreement shall be reduced by
applicable state, federal, and local income and employment taxes which
the Company is required to withhold. Mr. Olvey agrees and understands
that the severance payments provided in this paragraph 3 are in lieu of
<PAGE>
and discharge any obligations of the Company to Mr. Olvey for
compensation, unused accrued and/or earned vacation, bonuses, or any
other expectation of compensation or benefit on the part of Mr. Olvey
as a result of his employment with the Company or the termination of
that employment.
4. EMPLOYEE BENEFITS. Mr. Olvey agrees that the amounts paid to him
pursuant to this Agreement shall not constitute covered compensation
for purposes of the Company's tax-qualified retirement plans and,
except as otherwise provided in paragraph 3, that from and after
February 25, 2000 he was not eligible for, nor shall he be a
participant in, any life or disability insurance plan, flexible benefit
plan, or any other employee benefit plan now or hereafter maintained by
the Company.
5. NONCOMPETE AGREEMENT. In consideration of the benefits provided
him under the terms of this Agreement, Mr. Olvey agrees that from and
after December 31, 2000 and until December 30, 2001 that he will not
directly or indirectly, own, manage, operate, control, serve as a
director or be employed by, or otherwise be associated with or
represent in any capacity, any of the following companies, or any
parent, subsidiary, or affiliate of any of such companies,
(collectively, the "Restricted Companies"):
<TABLE>
<CAPTION>
<S> <C>
International Paper Corporation Domtar, Inc.
Champion Paper Corporation Kimberly Clark Corporation, Neenah Paper
Longview Fibre Corporation Fox River Paper Corporation
Fraser Paper, Inc. Mead Corporation, Gilbert Division
Plainwell Paper Company Crown Vantage Corporation
Georgia-Pacific Corporation Mohawk Industries, Inc.
-3-
Rolland Paper Sales Corporation Monadnock Paper Mills
SAPPI French Paper Company
Boise Cascade Corp., Office Products Avery Dennison Corp., Fasson Division
</TABLE>
Notwithstanding the foregoing, ownership of the stock of any such
Restricted Companies shall not be in violation of this Agreement if
such stock had been acquired prior to the date hereof or the stock of
such Restricted Company is then listed for trading on a national or
regional securities exchange or traded on a bona fide over-the-counter
market. Mr. Olvey acknowledges and agrees that the entities listed in
this paragraph 5 are competitors of the Company and that the
restrictions set forth in this Agreement are reasonably necessary to
protect the reasonable interests of the Company. The Company agrees
that if Mr. Olvey is employed by a competitor not listed in this
paragraph 5 and such employer is subsequently acquired, by purchase,
merger, or otherwise, by a competitor listed in this paragraph 5, Mr.
Olvey shall not be in violation of this Agreement if he remains
employed in the same capacity, but Mr. Olvey shall otherwise be
required to comply with all obligations of this Agreement.
6. NO CLAIMS BY MR. OLVEY. Mr. Olvey warrants and represents that he
has not filed any complaints, charges or lawsuits against the Company
or any of its directors, officers, employees or agents with any
<PAGE>
governmental agency or any court, that no other person has filed any
claim on his behalf, and that he will not do so at any time hereafter
or permit any other claim to be made on his behalf; provided, however,
that nothing in this sentence shall (i) limit Mr. Olvey from filing a
claim for the sole purpose of enforcing Mr. Olvey's rights under this
Agreement or enforcing Mr. Olvey's post-employment rights as of
February 24, 2000 under any tax qualified employee pension plan then
maintained by the Company, or (ii) Mr. Olvey's right to indemnification
while a director or officer of the Company under applicable Wisconsin
law, the bylaws of the Company, or under any director and officer
errors and omissions insurance policy maintained by the Company.
7. CONFIDENTIAL AND PROPRIETARY INFORMATION. Mr. Olvey acknowledges
that during the course of his employment he has acquired knowledge of,
and has had access to, (i) confidential information belonging to the
Company, (ii) proprietary information belonging to the Company, (iii)
trade secrets of the Company, (iv) other information which has been
disclosed to the Company on a confidential basis, and (v) material
nonpublic information concerning the Company's business and financial
condition (collectively, the "Company Information"). Mr. Olvey agrees,
that for a period of five years following the date of this Agreement,
he will not, directly or indirectly, make use of or disclose any
Company Information to any individual who is not then either employed
by or retained by the Company
-4-
without the consent of the Company. Notwithstanding the preceding
sentence, Mr. Olvey may disclose Company Information in response to a
demand for disclosure contained in a subpoena or in discovery
proceedings concerning a matter before an administrative or judicial
proceeding if (i) such disclosure is, in the reasonable opinion of
legal counsel for Mr. Olvey, required by applicable law, and (ii) if
Mr. Olvey has given the Company notice of such demand within three
business days of actual receipt by Mr. Olvey of such demand and has
cooperated with any effort of the Company to seek appropriate
injunctive or other relief barring such disclosure.
8. RETURN OF COMPANY PROPERTY. Mr. Olvey warrants and represents that
he has returned to the Company all Company Information and all other
Company property, including without limitation, reports, files,
memoranda, records, software, credit cards, door and file keys,
computer access codes, disks, and instructional manuals, and other
physical or personal property which Mr. Olvey received, prepared or
helped prepare in connection with his employment with the Company and
that he has not retained and will not retain any copies, duplicates,
reproductions, or excerpts thereof.
9. RELEASE OF CLAIMS. As a material inducement to the Company to
enter into this Agreement, Mr. Olvey on behalf of himself, his heirs,
his estate and his successors and assigns, hereby irrevocably and
unconditionally releases, acquits and forever discharges the Company
and each of the Company's stockholders, predecessors, successors,
assigns, agents, directors, officers, employees, representatives,
attorneys, subsidiaries, affiliates (and agents, directors, officers,
employees, representatives and attorneys thereof), and all persons
acting by, through, under or in concert with any of them (collectively
<PAGE>
"Releasees"), and each of them, from any and all charges, complaints,
claims, liabilities, obligations, promises, agreements, controversies,
damages, actions, causes of action, suits, rights, demands, costs,
losses, debts and expenses (including attorneys' fees and costs
actually incurred) of any nature whatsoever, known or unknown,
suspected or unsuspected arising out of or in any way connected with
his employment by the Company, including, but not limited to, any
rights or claims arising under the Age Discrimination in Employment
Act, the Wisconsin Fair Employment Act, and Title VII of the 1964 Civil
Rights Act as amended, breach of contract, impairment of economic
opportunity, infliction of emotional harm or distress, or other
tort, wrongful discharge or claims under any other state or federal
law, which Mr. Olvey now has, owns or holds, or claims to have, own or
hold, or which Mr. Olvey at any time heretofore had, owned or held, or
claimed to have, own or hold, or which Mr. Olvey at any time
hereinafter may have, own or hold, or claim to have, own or hold
against each or any of the Releasees.
-5-
Mr. Olvey is not releasing or waiving (i) any rights or claims
which may arise after this Agreement is executed, (ii) any claim for
the sole purpose of enforcing Mr. Olvey's rights under this Agreement,
(iii) any claim to enforce Mr. Olvey's post-employment rights as of
February 24, 2000 under any tax qualified employee pension plan then
maintained by the Company, or (iv) Mr. Olvey's right to indemnification
while a director or officer of the Company under applicable Wisconsin
law, the bylaws of the Company, or under any director and officer
errors and omissions insurance policy maintained by the Company.
10. RELEASE BY THE COMPANY. The Company warrants and represents that
it has no knowledge, at the time of the signing of this Agreement, that
Mr. Olvey has participated or engaged in any type of misconduct,
malfeasance, violation of the Company's policies or illegal acts. Mr.
Olvey warrants and represents to the Company that he has not
participated or engaged in any type of misconduct, malfeasance,
violation of the Company's policies or illegal acts. In reliance on
these warranties and representations by Mr. Olvey, the Company agrees
to, by the signing of this Agreement and its acceptance of Mr. Olvey's
representations, covenants, releases, and waivers provided by Mr. Olvey
hereunder, irrevocably and unconditionally release Mr. Olvey from all
damages, actions, lawsuits or claims the Company may have, whether
based on contract, tort, statute, or common law, arising from his
employment with the Company and/or the conclusion of that employment,
or from his service as a director and officer of the Company and each
subsidiary thereof, including, but not limited to, a release of any
rights or claims the Company may have under applicable law, or any
other charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, suits, rights, demands,
losses, debts and/or expenses (including attorneys' fees and costs
actually incurred) of any nature, known or unknown, suspected or
unsuspected which the Company may have under any federal, state or
local law, and of any other known or unknown claims in contract, tort
or common law, including, but not limited to, actions for libel,
slander, defamation or small claims accruing through the date of its
signing of this Agreement; provided, however, that this waiver does not
apply to claims or rights that accrue after the date the Company signs
<PAGE>
this Agreement or claims to enforce the terms of this Agreement brought
by the Company.
11. NONDISPARAGEMENT. The Company agrees that it will not
intentionally disparage Mr. Olvey, and Mr. Olvey agrees that he will
not intentionally disparage the Company or any of its directors,
officers, employees, or agents with anyone who is presently doing
business with or employed by the Company, or with anyone that could
reasonably be expected to do business with or be employed by the
Company.
-6-
12. REFERENCES. Mr. Olvey agrees to direct all reference checks and
business-related communications to Michael L. McDonald, Senior Vice
President of Administration, or his successor. The Company agrees to
provide Mr. Olvey with an executed original of a mutually acceptable
letter of reference and the Company agrees to respond to any reference
requests only by providing such letter.
13. OFFSET OF BENEFITS IF AGREEMENT VIOLATED. The benefits of this
Agreement to Mr. Olvey are subject to termination, offset and
recoupment in the event that Mr. Olvey takes any action or engages in
any conduct which is in violation of this Agreement. The Company shall
give Mr. Olvey written notice at least 10 days prior to taking any
action to terminate, offset, or recoup any payment made under the terms
of this Agreement. With respect to any violations by Mr. Olvey of this
Agreement, in addition to the Company's termination, offset and
recoupment of the benefits provided for herein, the Company shall be
limited to the recovery of actual damages suffered by the Company or
its directors, officers, agents or employees.
14. SUBMISSION TO JURISDICTION. Each of the parties submits to the
jurisdiction of any state or federal court sitting in the State of
Wisconsin in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each party
also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the parties
waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect
thereto. Either party may make service on the other party by sending
or delivering a copy of the process to the party to be served at the
address and in the manner provided for the giving of notices in
subparagraph 18(e). Nothing in this paragraph 14, however, shall
affect the right of any party to serve legal process in any other
manner permitted by law or in equity. Each party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and
may be enforced by suit on the judgment or in any other manner provided
by law or in equity. For purposes of this paragraph 14, the term
"final judgment" means a judgment from which no further appeal can be
made by the party against whom the judgment is sought to be enforced.
15. COSTS OF ENFORCEMENT. Each party will indemnify and hold harmless
the other party from and against all losses, costs, fees (including,
but not limited to, reasonable attorney fees), and damages incurred by
each party as a result of any breach of this Agreement by the other
<PAGE>
party.
-7-
16 MR. OLVEY'S RIGHT TO REVIEW AND RESCIND THIS AGREEMENT. CONSISTENT
WITH FEDERAL LAW, MR. OLVEY HAS TWENTY-ONE (21) CALENDAR DAYS FROM THE
RECEIPT OF THIS AGREEMENT, TO REVIEW AND CONSIDER THIS AGREEMENT BEFORE
SIGNING IT. MR. OLVEY UNDERSTANDS THAT HE MAY USE AS MUCH OF THIS
TWENTY- ONE (21) CALENDAR DAY PERIOD AS HE WISHES PRIOR TO SIGNING.
FEDERAL LAW FURTHER PROVIDES THAT MR. OLVEY MAY REVOKE THIS AGREEMENT
WITHIN SEVEN (7) CALENDAR DAYS OF MR. OLVEY SIGNING IT. REVOCATION
MUST BE MADE BY DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE
COMPANY IN CARE OF MICHAEL L. MCDONALD, SENIOR VICE PRESIDENT OF
ADMINISTRATION, AT THE COMPANY'S PRINCIPAL BUSINESS OFFICE IN MOSINEE,
WISCONSIN. FOR THIS REVOCATION TO BE EFFECTIVE, THE WRITTEN NOTICE
MUST BE RECEIVED BY THE COMPANY NOT LATER THAN 5:00 P.M. ON THE SEVENTH
(7TH) CALENDAR DAY AFTER MR. OLVEY SIGNS THIS AGREEMENT. IF MR. OLVEY
REVOKES THIS AGREEMENT, IT SHALL NOT BE EFFECTIVE OR ENFORCEABLE AND
MR. OLVEY WILL NOT RECEIVE PAYMENTS SPECIFIED HEREIN. CONSISTENT WITH
FEDERAL LAW, THE COMPANY HEREBY ALSO ADVISES MR. OLVEY TO CONSULT WITH
AN ATTORNEY BEFORE SIGNING THIS AGREEMENT.
17. NO RELIANCE BY MR. OLVEY ON THE COMPANY. Mr. Olvey represents and
acknowledges that in executing this Agreement he does not rely and has
not relied upon any representations or statements not set forth herein
made by any of the Releasees or by any of the Releasees' agents,
representatives, or attorneys with regard to the subject matter, basis
or effect of this Agreement, or otherwise. MR. OLVEY REPRESENTS AND
AGREES THAT HE FULLY UNDERSTANDS HIS RIGHT TO DISCUSS ALL ASPECTS OF
THIS AGREEMENT WITH HIS PRIVATE ATTORNEY, THAT TO THE EXTENT, IF ANY,
THAT HE DESIRED, HE HAS AVAILED HIMSELF OF THIS RIGHT, THAT HE HAS
CAREFULLY READ AND FULLY UNDERSTANDS ALL OF THE PROVISIONS OF THIS
AGREEMENT, THAT HE UNDERSTANDS THAT THIS AGREEMENT CONSTITUTES A FULL
AND FINAL SETTLEMENT OF ALL MATTERS BETWEEN THE COMPANY AND HIM, AND
THAT HE IS VOLUNTARILY ENTERING INTO THIS AGREEMENT.
18. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement (including the appendices
referred to herein) constitutes the entire agreement between the
parties and supersedes any prior understandings, agreements, or
representations by or between the parties, written or oral, to the
extent they related in any way to the subject matter hereof.
(b) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their
respective successors and permitted assigns.
-8-
(c) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(d) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(e) NOTICES. All notices, requests, demands, claims, and other
<PAGE>
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Company:
Mr. Michael L. McDonald
Senior Vice President, Administration
Wausau-Mosinee Paper Corporation
1244 Kronenwetter Drive
Mosinee, Wisconsin 54455
If to Mr. Olvey:
Mr. Daniel R. Olvey
3002 Mountain Court
Wausau, Wisconsin 54401
Any party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, facsimile transmission, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set
forth.
-9-
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
Wisconsin without giving effect to any choice or conflict of law
provision or rule (whether of the State of Wisconsin or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Wisconsin.
(g) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed
by the parties. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of
any prior or subsequent such occurrence.
(h) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
PLEASE READ CAREFULLY. THIS SEVERANCE AGREEMENT AND GENERAL
RELEASE OF CLAIMS INCLUDES RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
<PAGE>
WAUSAU-MOSINEE PAPER CORPORATION
By: MICHAEL L. MCDONALD (Seal)
Michael L. McDonald
Senior Vice President, Administration
DANIEL R. OVLEY (Seal)
Daniel R. Olvey
-10-
APPENDIX I
15.1 DEFINITION OF "CHANGE IN CONTROL." For purposes of the Plan,
a "Change in Control" means the happening of any of the following
events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of 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 (i) the then outstanding Shares (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to
vote generally in the election of directors (the "Outstanding
Company Voting Securities"); excluding, however, the following:
(A) any acquisition directly from the Company other than an
acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself acquired
directly from the Company, (B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity
controlled by the Company, (D) any acquisition pursuant to a
transaction which complies with clauses (i), (ii), and (iii) of
paragraph (c) of this Section 15.1, (E) except as provided in
paragraphs (d) and (e), any acquisition by any of the Woodson
Entities or any of the Smith Entities, or (F) any increase in
the proportionate number of shares of Outstanding Company
Common Stock or Outstanding Company Voting Securities
beneficially owned by a Person to 20% or more of the shares of
either of such classes of stock if such increase was solely the
result of the acquisition of Outstanding Company Common Stock
or Outstanding Company Voting Securities by the Company;
provided, however, that this clause (F) shall not apply to any
acquisition of Outstanding Company Common Stock or Outstanding
Company Voting Securities not described in clauses (A), (B),
(C), (D), or (E) of this paragraph (a) by the Person acquiring
such shares which occurs after such Person had become the
beneficial owner of 20% or more of either the Outstanding
Company Common Stock or Outstanding Company Voting Securities
by reason of share purchases by the Company; or
(b) A change in the composition of the Board such that the
individuals who, as of March 4, 1999, constitute the Board
<PAGE>
(such Board shall be hereinafter referred to as the "Incumbent
Board") cease for any reason to constitute at least a majority
of the Board; provided, however, for purposes of the Plan, that
any individual who becomes a member of the Board subsequent to
the Effective Date whose election, or nomination for
I-1
election by the Company's shareholders, was approved by a vote
of at least a majority of those individuals who are members of
the Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be deemed to
be and shall be considered as though such individual were a
member of the Incumbent Board, but provided, further, that any
such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board shall not be so deemed or
considered as a member of the Incumbent Board; or
(c) Consummation of a reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of the assets or
securities of any other entity (a "Corporate Transaction");
excluding, however, such a Corporate Transaction pursuant to
which (i) all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of,
respectively, the 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 Corporate
Transaction (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) (the "Resulting Corporation")
in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (other than the
Company, any employee benefit plan (or related trust) of the
Company, any Woodson Entity, any Smith Entity, or such
Resulting Corporation) will beneficially own, directly or
indirectly, 20% or more of, respectively, the outstanding
shares of common stock of the Resulting Corporation or the
combined voting power of the then outstanding voting securities
of such Resulting Corporation entitled to vote generally in the
election of directors except to the extent that such ownership
existed with respect to the Company prior to the Corporate
Transaction, and (iii) individuals who were members of the
Incumbent Board will constitute at least a majority of the
members
I-2
<PAGE>
of the board of directors of the Resulting Corporation; or
(d) The Woodson Entities acquire beneficial ownership of more than
35% of the Outstanding Company Common Stock or Outstanding
Company Voting Securities or of the outstanding shares of
common stock or 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 Resulting
Corporation; or
(e) The Smith Entities acquire beneficial ownership of more than
35% of the Outstanding Company Common Stock or Outstanding
Company Voting Securities or of the outstanding shares of
common stock or 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 Resulting
Corporation; or
(f) The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
For purposes of this Section 15.1, the term "Woodson Entities"
shall mean Aytchmonde P. Woodson, Leigh Yawkey Woodson and Alice
Richardson Yawkey, members of their respective families and their
respective descendants (the "Woodson Family"), heirs or legatees of
any of the Woodson Family members, transferees by will, laws of
descent or distribution or by operation of law of any of the
foregoing (including of any such transferees) (including any
executor or administrator of any estate of any of the foregoing),
any
I-3
trust established by any of Aytchmonde P. Woodson, Leigh Yawkey
Woodson, or Alice Richardson Yawkey, whether pursuant to last will
or otherwise, any partnership, trust or other entity established
primarily for the benefit of, or any other Person the beneficial
owners of which consist primarily of, any of the foregoing or any
Affiliates or Associates of any of the foregoing or any charitable
trust or foundation to which any of the foregoing transfers or may
transfer securities of the Company (including any beneficiary or
trustee, partner, manager or director of any of the foregoing or
any other Person serving any such entity in a similar capacity).
For purposes of this Section 15.1, the term "Smith Entities" shall
mean David B. Smith and Katherine S. Smith, members of their
respective families and their respective descendants (the "Smith
Family"), heirs or legatees of any of the Smith Family members,
transferees by will, laws of descent or distribution or by
operation of law of any of the foregoing (including of any such
transferees) (including any executor or administrator of any estate
of any of the foregoing), any trust established by either of David
B. Smith or Katherine S. Smith, whether pursuant to last will or
otherwise, any partnership, trust or other entity established
primarily for the benefit of, or any other Person the beneficial
owners of which consist primarily of, any of the foregoing or any
Affiliates or Associates of any of the foregoing or any charitable
<PAGE>
trust or foundation to which any of the foregoing transfers or may
transfer securities of the Company (including any beneficiary or
trustee, partner, manager or director of any of the foregoing or
any other Person serving any such entity in a similar capacity).
For purposes of this Section 15.1, the terms "Affiliate" and
"Associate" shall have the meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Exchange Act
as in effect on the date of this Plan.
I-4
<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
2000 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 11,073
<SECURITIES> 0
<RECEIVABLES> 98,881
<ALLOWANCES> 8,900
<INVENTORY> 156,678
<CURRENT-ASSETS> 284,903
<PP&E> 1,141,654
<DEPRECIATION> 490,653
<TOTAL-ASSETS> 969,163
<CURRENT-LIABILITIES> 141,794
<BONDS> 232,291
<COMMON> 170,682
0
0
<OTHER-SE> 210,156
<TOTAL-LIABILITY-AND-EQUITY> 969,163
<SALES> 243,606
<TOTAL-REVENUES> 243,606
<CGS> 215,364
<TOTAL-COSTS> 259,583
<OTHER-EXPENSES> 61
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,705
<INCOME-PRETAX> (19,621)
<INCOME-TAX> (6,700)
<INCOME-CONTINUING> (12,921)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,921)
<EPS-BASIC> (.25)
<EPS-DILUTED> (.25)
</TABLE>
