SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996 Commission file number 0-8320
MID-PLAINS, INC.
(Exact Name of Registrant as Specified in Its Charter)
WISCONSIN 39-0274450
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1912 Parmenter Street, P.O. Box 620070, Middleton, Wisconsin 53562-0070
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (608) 831-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class Registered
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock No Par Value
8% Subordinated Debentures, Due July 1, 2000
(Title of Class)
Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Indicate by checkmark 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 reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
As of February 28, 1997, there were 1,989,965 shares of Common Stock
outstanding. The aggregate market value (based upon unrelated party
non-broker transactions which the Company was familiar with) of Common Stock
held by nonaffiliates on that date was $83,578,530.
<PAGE>
MID-PLAINS, INC.
FORM 10-K
Part I.
Item 1. BUSINESS.
(a) Mid-Plains, Inc., (Mid-Plains), which was incorporated in 1901,
is a public utility providing telecommunications services
primarily in Middleton, Cross Plains and the west side of
Madison, Wisconsin.
Mid-Plains has a wholly-owned subsidiary, Mid-Plains
Communications Systems, Inc., (MPCS), which, in southern
Wisconsin and northern Illinois, markets and installs
deregulated communications systems and provides maintenance
services related to their continued use. In October 1994 MPCS
began providing long distance service. In October 1995 MPCS
began providing Internet service.
Mid-Plains also has a 75% interest in PCS Wisconsin, LLC (PCS-
WI). This limited liability company was established in 1996 to
build and operate a personal communication system (PCS) in south
central and southwestern Wisconsin. PCS-WI was the successful
bidder for a PCS license at an auction held by the FCC, and the
Company is currently in the planning and development stage of
operations.
As further discussed in Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations,
Mid-Plains and Pioneer Communications, Inc, (Pioneer) have
entered into an Agreement and Plan of Merger dated December
31, 1996, which, if approved by the requisite number of
shareholders of Mid-Plains and Pioneer, respectively, at
special meetings scheduled for May 1996, will result in the
combination of Mid-Plains and Pioneer into Chorus
Communications Group, Ltd., a holding company. This
combination is expected to better position the companies to
compete effectively in the rapid changing communications
industry.
There were no other material changes in the nature of the
business conducted by the Company during 1996.
Information regarding the recent development of the Company's
business in the number of access lines is shown below:
<TABLE>
Access
Year Lines in Service
<S> <C>
1996 31,034
1995 28,549
1994 26,281
</TABLE>
(b) Mid-Plains operates in two industry segments: a telecommunications
utility providing telephone and data services (telephone
operations) and system sales and service operations. The
financial information regarding Mid-Plains' industry segments
is provided in Item 8 - Mid-Plains, Inc. Consolidated
Financial Statements (Note 12) for the year ended December 31,
1996.
(c) Mid-Plains' principal line of business is providing
telecommunications services. Operating revenues fall into
four major classes: local network revenues, network access
and long distance services, system sales and services, and
other (billing and collection, directory, other nonregulated
and miscellaneous).
Revenues from each of these classes over the last three years
are as follows:
<TABLE>
Years Ended December 31,
1996 1995 1994
In Thousands
<S> <C> <C> <C>
Local Network Services $ 5,211 $ 4,265 $3,548
% of Total Revenues 19% 17% 17%
Network Access and
Long Distance Services $12,259 $11,530 $9,916
% of Total Revenues 45% 47% 46%
Other $ 2,391 $ 2,308 $2,096
% of Total Revenues 9% 9% 10%
System Sales and Services $ 7,226 $ 6,475 $5,900
% of Total Revenues 27% 27% 27%
</TABLE>
The business of Mid-Plains is not seasonal to any significant
extent.
Mid-Plains' telephone utility operations are subject to regulation
by the Public Service Commission of Wisconsin (PSCW). Mid-Plains
provides local exchange network service to customers within its 116
square mile service area located in Dane County, Wisconsin. The
customers have local extended area services (EAS) and access to the
nationwide direct dial toll service network. Although the
Company's customers have access to the nationwide direct toll
network, the Company does not have toll operators. The operator
service is provided primarily through Ameritech.
The communications industry is undergoing significant changes.
Regulatory, legislative and judicial decisions, new technologies,
heightened customer interest in advanced communications, and the
convergence of other industries with the telecommunications
industry are causes of increasing competition in the
telecommunications industry. The range of communications services,
the equipment available to provide and access such services and the
number of competitors offering such services continue to increase.
Federal and state regulators are encouraging changes that promote
competition in the industry in the belief that increased
competition will drive technological innovation, lower prices and
improve service levels.
In 1994, the Wisconsin Legislature enacted the Telecommunications
Act of 1993. This legislation resulted in open competition for
Ameritech and GTE and further relaxes regulation for other
telecommunications utilities in Wisconsin.
On February 8, 1996, the Telecommunications Act of 1996 was signed
into law. The bill breaks down regulatory barriers at both the
state and federal levels and is certain to accelerate the
convergence of local, long distance, wireless, video and data. The
Federal Communications Commission (FCC) and state regulators must
decide precisely how Congress' instructions will be carried out.
Due to Mid-Plains' size, it has limited exemption from several
provisions of the bill.
On August 27, 1996, Mid-Plains became the first independent local
exchange company in Wisconsin to receive approval on its
application for an Alternative Regulation Plan (Plan). Under this
five-year Plan, Mid-Plains is required to maintain certain basic
residential and business rates under a rate ceiling as well as
reduce access charges received from intrastate long distance
providers. In return, the Plan eliminated the tie between local
rates and rate-of-return regulation. As part of the Plan,
effective September 1, 1996, local rates on residential and
standard business lines were increased, while access rates paid by
long distance carriers to the Company for intrastate access were
lowered. While the changes noted above were designed to be revenue
neutral to Mid-Plains, they assisted in positioning Mid-Plains to
better meet the competition of the future.
In looking ahead, Mid-Plains' telephone operations face increased
competition with prices and technology under continual pressure.
The Company also expects to encounter substantial competition from
other companies in the sale and servicing of communication systems
and in the sale and provision of long distance and Internet
services. Specifically, TDS Datacom, Inc. and KMC Telecom, Inc., have
submitted applications with the PSCW seeking authority to construct
facilities in Mid-Plains' service area. Both companies have
expressed the desire to deploy a switch to provide local service as
an alternative telecommunications utility to business and residential
customers. Mid-Plains has begun preliminary discussions regarding
interconnection agreements with both of these companies. Along with
these challenges, Mid-Plains also anticipates growing opportunities to
expand beyond its traditional markets and continues to monitor and consider
the most favorable options.
Information regarding the Company's major customers is provided in
Item 8 - Mid-Plains, Inc. Consolidated Financial Statements (note
1) for the year ended December 31, 1996.
Order backlog is not a significant consideration in the Company's
business, and the Company has no contracts or subcontracts which
may be subject to renegotiation of profits or termination at the
election of the Federal government.
Information regarding the Company's working capital practice is
provided in Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.
The number of employees on the Company's payroll as of December 31,
1996, was 180.
Item 2. PROPERTIES.
Information regarding the Company's properties is provided in Item
8 - Mid-Plains, Inc. Consolidated Financial Statements (note 7) for
the year ended December 31, 1996. Substantially all of the
Company's properties are necessary to provide telecommunication
services in the Company's serving area. Between January 1, 1994
and December 31, 1996, the Company made property additions in the
amount of $17.3 million and retirements of $3.9 million. Virtually
all of this property is subject to liens securing long-term debt.
In the opinion of management, the Company's telecommunications
plant is substantially in good repair and suitably equipped.
Item 3. LEGAL PROCEEDINGS.
There are no material pending legal actions, either for or against
the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were none in the fourth quarter.
PART II.
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
There are no principal market makers for Mid-Plains' common stock.
The following table sets forth, for the periods indicated, prices
based only on unrelated party transactions for which the seller
and/or buyer have responded to a Company inquiry. Transactions
include both those handled privately (non-broker) and those handled
by stock brokers. Non-broker prices do not include retail markup,
markdown or commissions which are included in broker prices.
Average prices are the weighted average of the transactions
described above.
<TABLE>
TRANSACTIONS PRICE PER SHARE DIVIDENDS
Number Shares High Low Average Paid
<S> <C> <C> <C> <C> <C> <C>
1996
4th Quarter 17 6,763 $42.00 $35.00 $40.95 .27
3rd Quarter 9 3,570 42.00 40.00 41.87 .27
2nd Quarter 7 2,702 43.00 41.50 41.70 .27
1st Quarter 12 5,634 41.00 38.00 39.38 .25
1995
4th Quarter 1 1,350 $40.00 $40.00 $40.00 .25
Special Year-End .14
3rd Quarter 5 497 40.00 36.00 38.96 .25
2nd Quarter 16 17,157 41.00 35.00 38.91 .25
1st Quarter 14 3,818 38.14 35.00 36.34 .23
</TABLE>
There were 2,427 shareholders of record as of February 28, 1997 and
1,989,965 shares outstanding.
Mid-Plains has regularly paid dividends to its shareholders and
expects it will continue to do so in the future. In connection
with a long-term financing agreement, Mid-Plains is subject to
restrictions on the amount of retained earnings available for cash
dividends. Under the agreement, at December 31, 1996, $3,542,000
of its retained earnings were not restricted and thus available for
the payment of dividends.
Mid-Plains' Bylaws limit the common stock any one shareholder may
hold to no more than five percent (5%) of the authorized and issued
capital stock of the Company provided however, the limitation
automatically terminates without any further action of the Board of
Directors upon the effective date of a Plan of Merger or share
exchange approved by the requisite number of shareholders which in
effect causes the issued capital stock of the Company to be
exchanged for the capital stock of a holding/parent company of the
Company.
Item 6. SELECTED FINANCIAL DATA.
The following selected consolidated financial data for each of the
five years in the period ended December 31, 1996 have been derived
from the audited consolidated Financial Statements of the Company
included herein. The selected consolidated financial data set
forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated Financial Statements and notes
thereto included elsewhere in this report.
<TABLE>
1996<F2> 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Access Lines 31,034 28,549 26,281 24,414 23,103
Total Assets $39,888 $40,714 $33,889 $33,676 $31,079
Shareholders'
Equity $19,497 $19,722 $18,232 $16,766 $15,158
Long-Term Debt,
Including
Current
Maturities $12,401 $ 8,570 $ 6,954 $ 7,756 $ 8,482
Short-Term
Notes Payable
to Banks - $ 4,440 $ 1,300 $ 2,400 $ 1,400
Ratio of
Earnings to
Interest
Expense<F1> 4.23 6.78 6.14 5.64 5.23
Revenue and
Sales $27,087 $24,578 $21,460 $19,041 $18,075
Net Income $ 1,660 $ 3,425 $ 2,889 $ 2,882 $ 2,680
Earnings Per
Share $ .84 $ 1.73 $ 1.47 $ 1.47 $ 1.38
Cash Dividends
Per Shar $ 1.06 $ 1.12 $ .86 $ .78 $ .86
Average Common
Shares
Outstanding 1,985,795 1,978,725 1,969,628 1,958,846 1,948,860
Shareholders
of Record 2,413 2,281 2,22 2,135 2,067
<FN>
<F1> For the purpose of this ratio, earnings have been calculated by
adding net income, interest expense and income taxes.
<F2> In 1996, as a result of the discontinuance of applying SFAS 71,
described in Item 8 - Mid-Plains, Inc. Consolidated Financial Statements
(note 3) for the year ended December 31, 1996, Mid-Plains recorded an
extraordinary charge of $1,782,000 or $.89 per share.
</FN>
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
As a result of actions taken in 1996, Mid-Plains has successfully
implemented several key initiatives that better position the
Company for competition and future growth in the communications
business. These initiatives, which are discussed below, include:
an alternative regulation plan, discontinuation of applying certain
accounting principles for regulated enterprises, entering into a
merger agreement, successfully bidding on a personal communication
license (PCS), and refinancing first mortgage notes.
Record revenues were once again reported in 1996. Consolidated
operating revenues increased $2.5 million, to $27.1 million, in
1996, and $3.1 million, to $24.6 million, in 1995. Consolidated
income before extraordinary item for 1996 remained constant at
1995's level of $3.4 million which was an increase of $0.5 million
over 1994. Due to an extraordinary charge against income relating
to the discontinuance of regulatory accounting principles (as
discussed below) net income decreased $1.8 million in 1996 as
compared to 1995.
Mid-Plains operates in two business segments: a telecommunications
utility providing telephone and data services (telephone
operations) and system sales and service operations.
TELEPHONE SERVICE OPERATING RESULTS
The Telephone segment contributed operating income of $6.0 million,
$6.1 million, and $5.0 million to the consolidated operating income
in 1996, 1995 and 1994, respectively.
OPERATING REVENUES
Telephone service revenues increased $1.8 million, to $19.9
million, in 1996, and $2.5 million, to $18.1 million, in 1995.
Local network services revenues increased $.9 million in 1996 as
compared to 1995. These revenues increased principally as a result
of higher demand for services, as evidenced by an 8.7% growth in
access lines in 1996. Additionally, effective September 1, 1996,
Mid-Plains implemented its Alternative Regulation Plan which had
the effect of increasing local network services revenues $.4
million for the year.
Local network service revenues for 1995 increased $.7 million as
compared to 1994. The growth was primarily due to an increase in
local network service rates in 1995 which increased revenues by
$1.1 million, and an 8.6% growth in the number of access lines
served which resulted in $.3 million increase in revenues. These
increases were offset in part by a credit of $.6 million in 1994 to
eliminate regulatory liabilities no longer considered payable.
Interstate network access and long distance network services
revenues increased $.5 million in 1996 as compared to 1995. These
revenues increased largely due to higher demand for access services
as evidenced by an increase in minutes of use of 10.3% in 1996.
This increase was offset, in part, by a net decrease in access
rates of approximately 2.3%.
Interstate network access and long distance network services
revenues increased $1 million in 1995 as compared to 1994. This
increase was due to 7.0% higher demand for services and the
provision of long distance service of $.5 million.
Intrastate network access and long distance network services
revenues increased $.2 million in 1996 as compared to 1995. The
increase in these revenues was primarily due to higher demand for
access services as evidenced by an increase in minutes of use of
8.3% in 1996. This increase was offset by $.3 million due to the
effects of rate reductions resulting from Mid-Plains'
implementation of their Alternative Regulation Plan on September 1,
1996.
Intrastate network access and long distance network services
revenues increased $.6 million in 1995 as compared to 1994. This
increase was due to higher demand of 3.1% for services and the
provision of long distance service of $.2 million.
OPERATING EXPENSES
Telephone operating expenses, which include plant, depreciation,
customer, corporate, and general taxes, increased by $1.9 million
to $13.8 million and $1.4 million to $12.0 million in 1996 and
1995, respectively.
The increases in plant, customer and corporate operations in 1996
as compared to 1995 were due primarily to growth in internal
operations. Additionally, plant operations increased $.3 million
in 1996 due to costs associated with providing Internet access.
The increases in plant, customer and corporate operations in 1995
as compared to 1994 were again due primarily to growth in internal
operations. Additionally, an increase of $.3 million was due to
the cost of providing long distance services.
Depreciation increased $.2 million in 1996 as compared to 1995 and
$.3 million in 1995 as compared to 1994 as a result of increased
depreciable property. Additionally, increases of $0.2 million in
1996 and $0.5 million in 1995 in depreciation expense were recorded
in connection with the change-out of central office equipment.
On December 17, 1996 the Company's Board of Directors voted to
terminate the pension plan effective April 15, 1997. It is
anticipated that the plan settlement will not have a material
effect on the Company. It is also anticipated that during 1997,
after giving effect to enhanced 401(k) benefits, the Company's
pension costs will decrease approximately $430,000 due to these
changes.
SYSTEM SALES AND SERVICES OPERATING RESULTS
The system sales and services segment contributed operating income
of $.7 million, $.3 million and $.5 million to the consolidated
operating income in 1996, 1995 and 1994, respectively.
OPERATING REVENUES
System sales and services revenues increased $.8 million in 1996,
to $7.2 million, as compared to 1995. The increase was due
primarily from the growth in new system sales. System sales and
services revenues for 1995 increased $.6 million, to $6.5 million,
over 1994, due primarily from new system sales as well as an
increase in maintenance sales.
OPERATING EXPENSES
As a percentage of system sales and services revenues, cost of
sales and services was 59% in 1996, 64% in 1995, and 58% in 1994.
The lower cost of sales and services percentage in 1996 was
primarily the result of the Company's higher equipment pricing.
The higher cost of sales and services percentage in 1995 in
relationship to 1994 was primarily due to reclassifying to cost of
sales, payroll overheads, which in 1994 were included in operating
expenses. If the reclassifications had been made in 1994, the cost
of sales percentage in 1994 would have increased 3% with a
corresponding reduction in operating expenses.
System sales and services operating expenses increased $.3 million
in 1996 primarily due to growth in internal operations and increase
in incentives.
OTHER ITEMS
Interest expense increased $.2 million in 1996 as compared to 1995
and $0.1 million in 1995 as compared to 1994, primarily due to the
increase in the amounts of short-term bank notes owed during the
year. Additionally, in July 1995 interest on debentures increased
as a result of an additional $2.5 million financing. This was
offset in part by a reduction in the debenture interest rates from
11% to 8%.
EXTRAORDINARY ITEM - DISCONTINUANCE OF REGULATORY ACCOUNTING
PRINCIPALS
Mid-Plains discontinued applying Statement of Financial Accounting
Standards No. 71 (SFAS 71), "Accounting for the Effects of Certain
Types of Regulation" in the second quarter of 1996. Mid-Plains
determined that it no longer met the criteria for following SFAS 71
due to changes in legislative, regulatory and competitive
environments. Future business transactions will be recorded
following their economic substances, and regulatory assets and
liabilities pursuant to SFAS 71 will no longer be recognized.
Although Mid-Plains' recorded assets and net equities were reduced
as a result of this discontinuance of application of SFAS 71, no
material impact on current and future cash flows is anticipated.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
Mid-Plains requires funds primarily for its construction program,
the maturity and retirement of long-term debt, dividend payments
and investments. The capital resources available to meet these
requirements are provided through internally generated funds and
external financing. Net cash provided from operations of the
Company and its subsidiary for the years 1994 - 1996 was $22.0
million. External financing for the same period totaled $8.2
million.
CAPITAL REQUIREMENTS AND RESOURCES
The primary capital requirement of the Company has historically
consisted of expenditures under its construction program. Total
construction expenditures for the years 1994 - 1996 were $17.3
million. Total capital expenditures for 1997 are estimated to be
$9 million.
In 1995, Mid-Plains contributed $2 million in a capital call to the
cellular partnership in which Mid-Plains has a limited interest.
Additionally, as discussed below, Mid-Plains anticipates a
significant investment in PCS Wisconsin, LLC, which will be
required in the next few years. This investment is discussed
further in "PCS WISCONSIN, LLC" below.
In 1995, Mid-Plains sold $5.0 million of five-year debentures, $2.5
million of which were used to retire debentures that were due on
that date. In addition, in January 1997 Mid-Plains entered into a
financing agreement that permits Mid-Plains to borrow up to $22
million of long-term debt and $7 million on revolving lines-of-credit.
It is expected that capital requirements for its construction
program, maturity and retirement of long-term debt, dividend
payments and investment in PCS Wisconsin, LLC will be provided for
with cash flow from operations, the issuance of debt and, if
necessary, equity financing.
After giving effect to the February 1997 refinancing, Mid-Plains
had available unused lines-of-credit of $7 million. The Company
has experienced no difficulty in obtaining funds for its
construction program or other purposes and anticipates none in the
future.
PCS WISCONSIN, LLC
PCS Wisconsin, LLC (PCS-WI), a 75% owned subsidiary of Mid-Plains,
was established in 1996 to build and operate a personal
communications system in south-central and southwestern Wisconsin.
On January 14, 1997, PCS-WI was the successful bidder for a
broadband Personal Communications Services (PCS) license at an
auction held by the FCC. This license will, when granted,
authorize PCS-WI to provide two-way voice and data services on a
new wireless, digital network. The license covers Dane County and
nine adjacent counties with a total population of 600,000. PCS-WI's
bid for the license was $3,248,000.
Under the terms of the license, PCS-WI will be required to
construct an operating system that will be capable of providing
service to at least 25% of the population in the license area
within five years of the grant of the license. PCS-WI anticipates
that construction, development and introduction of the PCS networks
and services will require substantial capital and operating
expenditures over the next several years.
In addition to the risks associated with startup operations of PCS-WI,
it is anticipated the Company will encounter stiff competition
from the two existing cellular providers as well as from five other
new PCS license holders.
EXTERNAL FINANCING
External financing for the years 1994 - 1996 was $8.2 million
consisting of $5.0 million raised through the sale of debentures,
$0.8 million from the sale of common stock under the employee stock
purchase plan, and a net increase in short-term bank notes of $2.4
million.
On January 31, 1997, Mid-Plains entered into a financing agreement
with the Rural Telephone Finance Cooperative (RTFC) that permits
Mid-Plains to borrow up to $22 million. The RTFC financing
agreements provide that $12 million of the loan is available for
refinancing existing debt, capital expenditures and to provide
working capital for telephone operations; $9 million is available
to invest in PCS-WI (see above) and $1 million is available to
purchase RTFC's Subordinate Capital Certificates, a condition of
obtaining RTFC financing. RTFC permits the interest on the loans
to be either fixed or variable, with the rates to be determined by
RTFC. The variable rate at February 7, 1997 was 6.3%.
In connection with its long-term debt, the Company is subject to
certain restrictions on its debt and the amount of retained
earnings available for cash dividends. Under the agreement, at
December 31, 1996, $3,542,000 of Mid-Plains' retained earnings were
available for the payment of dividends.
OTHER MATTERS
MERGER PROPOSAL
Mid-Plains and Pioneer Communications, Inc. (Pioneer) have entered
into an Agreement and Plan of Merger (Merger Agreement) dated
December 31, 1996, which upon approval by the requisite number of
shareholders of Mid-Plains and Pioneer will result in the mergers
of Mid-Plains and Pioneer into wholly-owned subsidiaries of a
holding company.
The new holding company will be named Chorus Communications Group,
Ltd. (Chorus). The proposed merger, which will be counted for as
a pooling of interests, has been approved by the respective
Board of Directors of each company. Approval by the shareholders
of each company is required to complete the merger. The companies
expect to receive shareholder approvals and complete the proposed
combination during the third quarter of 1997.
Under the terms of the proposed Merger Agreement, Mid-Plains'
issued and outstanding common stock will be exchanged for Chorus
common stock on a one-to-one basis and Pioneer common stock will be
exchanged for Chorus common stock on a four-to-one basis. It is
anticipated that Chorus will retain Mid-Plains' common share
dividend payment level as of the effective time of the mergers. On
January 9, 1997, the Board of Directors of Mid-Plains declared a
quarterly dividend of 27 cents per share. This represents an
annual rate of $1.08 per share.
The business of Chorus will consist of telecommunications
operations and it is expected that it will service more than 38,000
access lines in southern Wisconsin. The operating revenues, net
income from continuing operations and total assets of Mid-Plains
and Pioneer and the Pro Forma Combined of Chorus were as follows:
<TABLE>
Pro Forma
In Thousands Mid-Plains Pioneer Combined
(Audited) (Audited) (Unaudited)
<S> <C> <C> <C>
1996 Operating Revenues $27,087 $ 6,094 $33,181
1996 Net Income from
Continuing Operations $ 3,442 $ 1,299 $ 4,741
Assets at December 31, 1996 $39,888 $11,817 $51,705
</TABLE>
ALTERNATIVE REGULATION PLAN
On August 27, 1996, Mid-Plains became the first independent local
exchange company in Wisconsin to receive approval on its
application for an Alternative Regulation Plan (Plan). Under this
five-year Plan, Mid-Plains is required to maintain certain basic
residential and business rates under a rate ceiling as well as
reduce access charges received from intrastate long distance
providers. In return, the Plan eliminated the tie between local
rates and rate-of-return regulation. As part of the Plan,
effective September 1, 1996, local rates on residential and
standard business lines were increased, while access rates paid by
long distance carriers to the Company for intrastate access were
lowered. While the changes noted above were designed to be revenue
neutral to Mid-Plains, they assisted positioning Mid-Plains to
better meet the competition of the future.
COMPETITION
The communications industry is undergoing significant changes. The
industry is converging, forming alliances and positioning to
provide a variety of services. Market convergence has intensified.
Legislation and regulation changes, technological advances and
customer demand have expanded the types of services, products and
number of companies offering communication services and products.
On February 8, 1996, the President signed the Telecommunications
Act of 1996 into law. The bill broke down regulatory barriers at
both the state and federal level and is certain to accelerate the
convergence of local, long distance, wireless, video and data. The
FCC and state regulators must decide precisely how Congress's
instructions will be carried out. Due to Mid-Plains' size, it
currently has limited exception from several provisions of the
bill.
The breakdown of barriers at both the state and federal levels
allows new competitors to enter telecommunication service markets.
At the same time, telecommunications providers can enter new
markets in areas of increased competition. Specifically, TDS
Datacom, Inc. And KMC Telecom, Inc., have submitted applications
with the PSCW seeking authority to construct facilities in Mid-Plains'
service area. Both companies have expressed the desire to
deploy a switch to provide local service as an alternative
telecommunications utility to business and residential customers.
Mid-Plains has begun preliminary discussions regarding interconnection
agreements with both of these companies.
In looking ahead, Mid-Plains faces stiff competition with prices
and technology under continued pressure. Along with this, Mid-Plains also
anticipates growing opportunities in a market-driven
information highway.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants 16
Consolidated Balance Sheets - December 31, 1996 and 1995 17-18
Consolidated Financial Statements for the three years
ended December 31, 1996:
Statements of Income 19
Statements of Shareholder's Equity 20
Statements of Cash Flows 21
Notes to Consolidated Financial Statements 22-35
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors,
Mid-Plains, Inc.:
We have audited the accompanying consolidated balance sheets of
Mid-Plains, Inc. (a Wisconsin Corporation) and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements
of income, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996. These Financial
Statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these Financial
Statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
Financial Statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the Financial Statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the Financial Statements referred to above present
fairly, in all material respects, the financial position of Mid-Plains, Inc.
and subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
As discussed in Note 3 to the consolidated Financial Statements,
the company discontinued applying the provisions of Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects
of Certain Types of Regulation," in 1996.
KIESLING ASSOCIATES LLP
Madison, Wisconsin
February 10, 1997
<PAGE>
MID-PLAINS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
December 31, December 31,
1996 1995
In Thousands
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,058 $ 560
Accounts receivable
Due from subscribers 1,069 818
Customer sales and service 941 704
Other, principally connecting
companies 1,313 2,073
Refundable income taxes 138 215
Inventories
Plant materials and supplies 459 376
Communication systems and parts 858 903
Other 413 271
6,249 5,920
PROPERTY, PLANT AND EQUIPMENT
Telephone, in service and under
construction 50,552 46,198
Less accumulated depreciation (21,730) (16,663)
28,822 29,535
INVESTMENTS AND OTHER ASSETS
Cellular limited partnership interest 4,101 4,374
Personal Communication Services deposit 360 -0-
Other 356 885
4,817 5,259
TOTAL ASSETS $ 39,888 $ 40,714
</TABLE>
<PAGE>
MID-PLAINS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
December 31, December 31,
1996 1995
In Thousands
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 216 $ 973
Notes payable to banks -0- 4,440
Accounts payable 3,093 2,949
Other 1,089 636
4,398 8,998
LONG-TERM DEBT 12,185 7,597
DEFERRED CREDITS
Deferred income taxes 2,568 3,230
Unamortized investment tax credits 177 236
Other 1,063 931
3,808 4,397
COMMITMENTS AND CONTINGENCIES (See Notes)
SHAREHOLDERS' EQUITY
Common stock 11,889 6,610
Additional paid-in capital -0- 5,059
Retained earnings 7,608 8,053
19,497 19,722
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $39,888 $ 40,714
</TABLE>
The accompanying notes are an integral part of the consolidated Financial
Statements.<PAGE>
MID-PLAINS, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
Year Ended December 31,
1996 1995 1994
In Thousands Except For Per Share Data
<S> <C> <C> <C>
OPERATING REVENUES
Telephone operations -
Local network services $ 5,211 $ 4,265 $ 3,548
Network access and long
distance services 12,259 11,530 9,916
Other 2,391 2,308 2,096
System sales and services 7,226 6,475 5,900
27,087 24,578 21,460
OPERATING EXPENSES
Telephone operations -
Plant operations 3,397 2,818 2,567
Depreciation 3,428 3,073 2,307
Customer operations 2,809 2,524 2,411
Corporate operations 3,037 2,531 2,381
General taxes 1,175 1,027 868
System sales and services -
Cost of sales and services 4,230 4,118 3,429
Operating expenses 2,295 2,023 2,015
20,371 18,114 15,978
OPERATING INCOME 6,716 6,464 5,482
Other income 42 27 18
Interest expense (1,177) (957) (896)
INCOME BEFORE INCOME TAX EXPENSE
AND EXTRAORDINARY ITEM 5,581 5,534 4,604
Income tax expense 2,139 2,109 1,715
INCOME BEFORE EXTRAORDINARY ITEM 3,442 3,425 2,889
EXTRAORDINARY ITEM 1,782 -0- -0-
NET INCOME $1,660 $ 3,425 $ 2,889
EARNINGS PER SHARE
Income before Extraordinary Item $ 1.73 $ 1.73 $ 1.47
Extraordinary Item (.89) -0- -0-
Net Income $ .84 $ 1.73 $ 1.47
</TABLE>
The accompanying notes are an integral part of the consolidated Financial
Statements.
<PAGE>
MID-PLAINS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
Common Stock Additional Total
Paid-in Retained Shareholders'
Shares Amount Capital Earnings Equity
In Thousands
<S> <C> <C> <C> <C> <C>
Balances,
December 31, 1993 1,965 $6,549 $4,568 $5,649 $16,766
Net income 2,889 2,889
Cash dividend -
$.86 a share (1,693) (1,693)
Stock purchase plan 9 32 238 270
Balances,
December 31, 1994 1,974 6,581 4,806 6,845 18,232
Net income 3,425 3,425
Cash dividend -
$ 1.12 a share (2,217) (2,217)
Stock purchase plan 9 29 253 282
Balances,
December 31, 1995 1,983 6,610 5,059 8,053 19,722
Net income 1,660 1,660
Cash dividend -
$1.06 a share (2,105) (2,105)
Stock purchase plan 6 178 42 220
Conversion to
no par common stock 5,101 (5,101) -0-
Balances,
December 31, 1996 1,989 $11,889 $ -0- $ 7,608 $19,497
</TABLE>
The accompanying notes are an integral part of the consolidated Financial
Statements.<PAGE>
MID-PLAINS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
Year Ended December 31,
1996 1995 1994
In Thousands
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $1,660 $3,425 $2,889
Add (Deduct) adjustments to
reconcile net income to net
cash from operations:
Extraordinary Item 1,782 -0- -0-
Depreciation 3,528 3,173 2,390
Deferred income taxes 431 390 485
Change in accounts and other
receivables 272 (211) (369)
Change in inventories (38) (134) 51
Change in accounts payable 144 150 809
Change in other assets and
liabilities 1,151 130 (139)
Net cash from operating activities 8,930 6,923 6,116
FINANCING ACTIVITIES
Long-term borrowings -0- 5,000 -0-
Repay long-term debt (969) (3,384) (802)
Short-term bank notes:
Borrowings 16,816 9,230 400
Repayments (16,456) (6,090) (1,500)
Dividends paid (2,105) (2,217) (1,693)
Stock purchase plan 220 282 270
Net cash from (used in)
financing activities (2,494) 2,821 (3,325)
INVESTING ACTIVITIES
Additions to property, plant
and equipment (5,901) (7,146) (4,233)
Investment in cellular partnership 273 (1,995) -0-
Personal Communication
Services deposit (360) -0- -0-
Other, net 50 (229) 22
Net cash used in
investing activities (5,938) (9,370) (4,211)
CASH AND CASH EQUIVALENTS
Net increase (decrease)
during year 498 374 (1,420)
Beginning of year 560 186 1,606
End of year $1,058 $ 560 $ 186
</TABLE>
The accompanying notes are an integral part of the consolidated Financial
Statements.
<PAGE>
MID-PLAINS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Name Change - On April 29, 1996, the shareholders approved amendments to
the company's Articles of Incorporation which included changing the name
from Mid-Plains Telephone, Inc. to Mid-Plains, Inc.
Business and Consolidation - Mid-Plain's consolidated financial statements
include the accounts of Mid-Plains, its wholly-owned subsidiary,
Mid-Plains Communications Systems, Inc. and its 75% interest in PCS
Wisconsin, LLC. All significant inter-company items have been eliminated
in consolidation. The preparation of consolidated Financial Statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the Financial Statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Mid-Plains, Inc.'s main business is a telecommunications provider which
provides telephone and data services to customers within its 116 square
mile service area located in Dane County, Wisconsin. Mid-Plains
Communications Systems, Inc.'s operations provide business systems,
installation and service to a base of customers throughout southern
Wisconsin and northern Illinois. PCS Wisconsin, LLC was established in
1996 to build and operate a personal communication system in south
central and southwestern Wisconsin.
Regulation - The accounting policies of Mid-Plains, Inc. and its
subsidiaries (Mid-Plains) conform to generally accepted accounting
principles, and where applicable, the accounting principles prescribed
by the Public Service Commission of Wisconsin (PSCW).
Prior to the second quarter of 1996, Mid-Plains had followed the
accounting for regulated enterprises as prescribed by Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation" (SFAS 71). This accounting requires the
deferral of certain costs and obligations based upon recovery of such
amounts in future years. SFAS 71 also requires companies to depreciate
plant and equipment over lives acceptable to the regulator. In the
second quarter of 1996, Mid-Plains concluded that generally accepted
accounting principles prescribed by SFAS 71 were no longer appropriate.
As a result, Mid-Plains recorded a second quarter extraordinary non-cash
after-tax charge of $1,782,000 (See note 3). Additionally, Mid-Plains
has adjusted its estimated depreciated lives of its plant and equipment
to give effect to shorter, more economical realistic lives.
In 1994, the Wisconsin Legislature enacted the Telecommunications Act of
1993. As a result of this and other regulatory and legislative
activities, management concluded that the recovery of certain regulatory
assets and payment of certain regulatory liabilities related to employee
and retiree benefits would not be realized. The elimination of these
regulatory assets of $360,000 and regulatory liabilities of $574,000
were reflected as increases in the 1994 operating expenses and revenues,
respectively. These changes in estimates increased 1994 net income by
$130,000.
Property, Plant and Equipment - Telephone property is stated at original
cost of construction. Beginning in September 1995, regulators modified
accounting principles for the allowance for funds used during
construction (AFUDC) to conform with Statement of Financial Accounting
Standards No. 34 "Capitalization of Interest Cost". During 1996,
interest capitalized relating to plant construction was $38,000. No
AFUDC was taken in 1995 or in 1994.
Normal retirements of telephone property are charged against accumulated
depreciation along with the costs of removal less salvage, with no gain
or loss recognition. Renewals and betterments of plant and equipment
are capitalized while repairs, as well as renewals of minor items, are
charged to operating expenses.
As a result of the discontinuation of applying SFAS 71, beginning
July 1, 1996, depreciation of telephone plant is provided for primarily
on the straight-line method over estimated service lives. Prior to that
date, depreciation of telephone plant was provided for primarily on the
straight-line method using class rates acceptable to the PSCW. The
composite rates are 7.3%, 7.3%, and 6.1%, for the years 1996, 1995,
and 1994, respectively.
When non-telephone property is sold or retired, a gain or loss is
recognized. Depreciation is provided on the straight-line method over
estimated service lives.
Inventories - Inventories are stated at the lower of cost or market.
The cost of materials and supplies inventory, which is used primarily
for the construction of telephone plant, is determined principally by
the average cost method.
The cost of communications systems and parts inventory, held primarily
for sale and servicing of telephone systems, is determined principally
by the First-In, First-Out (FIFO) method.
Income Taxes - Mid-Plains files a consolidated federal income tax return.
Income tax expense is based on reported earnings before income taxes.
Refundable income taxes reflect the difference between the amount of
estimated income taxes prepaid and the amount currently owed. Deferred
income taxes have been established to reflect the impact of temporary
differences between the amount of assets and liabilities recognized for
financial reporting purposes and such amounts recognized for tax
purposes. In addition, deferred tax balances are adjusted to reflect
tax rates, based on currently enacted tax laws, that are anticipated to
be in effect in the years in which the temporary differences are
expected to reverse.
Investment tax credits which were deferred prior to 1986 are being
amortized over the service life of the related property.
Revenue Recognition - Mid-Plains recognizes revenues when earned,
regardless of the period in which they are billed.
Telephone Revenues - Mid-Plains is required to provide service (and
grant credit) to subscribers within its defined service territory.
Revenues from long-distance services are derived from charges for
access to Mid-Plains' local exchange network, subscriber line
charges and contractual arrangements for billing and collection and
other services. Interstate access revenues are based on an average
schedule company settlement formula administered by the National
Exchange Carrier Association (NECA) as regulated by the FCC.
Intrastate access revenues are based on an individual company
tariff access charge structure regulated by the PSCW.
The percentage of revenues for long-distance services provided to
carriers which exceeded 10% of telephone revenues were: AT&T
Communications, Inc. 21% in 1996, 23% in 1995, and 30% in 1994;
Ameritech 12% in 1996, 15% in 1995, and 16% in 1994; and MCI 11%
in 1996, 10% in 1995, and 11% in 1994. No other customer accounted
for more than 10% of total revenues.
System Sales and Services Revenues - Revenues from system sales and
services are derived from the sale, installation and servicing of
deregulated communications systems. Mid-Plains grants credit to
customers, substantially all of whom are located in southern
Wisconsin.
Customer contracts for sales and installations are accounted for
using the completed-contract method which recognizes income only if
the contract is completed, or substantially so. This resulted in
net deferred revenues of $273,000 and $185,000 at December 31, 1996
and 1995, respectively, which are included in other current
liabilities.
Cash and Cash Equivalents - Cash and cash equivalents include cash and
certificates of deposit with original maturities of three months or
less. Cash and cash equivalents are stated at cost which approximates
market value. At December 31, 1996 and 1995, Mid-Plains had bank
deposits in excess of federally insured limits of approximately
$682,000 and $510,000, respectively.
Supplemental Cash Flow Disclosures - Mid-Plains, during 1996, 1995,
and 1994, paid interest in the amount of approximately $1,068,000,
$960,000, and $888,000, respectively, and income taxes in the amount of
approximately $1,658,000, $1,902,000, and $1,137,000, respectively.
Earnings Per Share - Earnings per share are computed by dividing net
income by the weighted average number of shares of common stock
outstanding. The number of shares used in this calculation were:
1996 - 1,985,795; 1995 - 1,978,725; and 1994 - 1,969,628.
2. PROPOSED MERGER
Mid-Plains, Inc. (Mid-Plains) and Pioneer Communications, Inc.(Pioneer)
have entered into an Agreement and Plan of Merger (Merger Agreement)
dated December 31, 1996, which will result in the combination of
Mid-Plains and Pioneer into a holding company. The proposed merger,
which will be accounted for as a pooling of interests, has been approved
by the respective Board of Directors. It is still subject to approval
by the shareholders of each company. The companies expect to receive
shareholder approvals and complete the proposed combination during the
second quarter of 1997. Under the terms of the proposed Merger
Agreement, Mid-Plains' shareholders will become shareholders of the
holding company's common stock on a share-for-share basis and Pioneers'
shareholders will become shareholders of the holding company's common
stock on a four-for-one basis.
3. EXTRAORDINARY ITEM - SFAS 71
On a regular basis, management has evaluated the continued applicability of
accounting for its telecommunications operations under SFAS 71. In the
second quarter of 1996, Mid-Plains concluded that generally accepted
accounting principles (GAAP) prescribed by SFAS 71 were no longer
appropriate due to a number of factors including: The Federal
Telecommunications Act of 1996; Mid-Plains' application pending before
the Public Service Commission of Wisconsin (PSCW) for authority to
implement an alternative plan to traditional rate-of-return regulation;
and recognition of potential increased competition.
As a result of the discontinuation of applying SFAS 71, Mid-Plains
recorded a second-quarter extraordinary noncash after-tax charge of
$1,782,000. The following table is a summary of the extraordinary
charge:
<TABLE>
In Thousands
Pretax After tax
<S> <C> <C>
Increase in the accumulated
depreciation balance $ 3,036 $ 1,845
Non-plant assets and liabilities (121) (63)
$ 2,915 $ 1,782
</TABLE>
The adjustment of $3,036,000 to net telecommunications plant was
necessary as the estimated useful lives historically acceptable to the
PSCW did not keep up with the rapid pace of technological changes in the
industry and differed significantly from those used by unregulated
enterprises. Plant balances were adjusted by increasing the accumulated
depreciation balance. The increase was supported by a depreciation
analysis that identified inadequate accumulated depreciation levels
which Mid-Plains believes developed over the years primarily as a result
of the systematic under-depreciation of assets resulting from the
regulatory process. An impairment analysis was performed that did not
identify any additional amounts not recoverable from future operations.
When adjusting its net telecommunications plant, Mid-Plains gave effect to
shorter, more economic realistic lives. The following is a summary of
average lives of the affected telephone plant before and after the
discontinuance of SFAS 71.
Asset Category Before After
Digital Switching Equipment 13 10
Underground Metallic Cable 28 20
Buried Metallic Cable 23 19
4. COMMON STOCK
On April 29, 1996, the shareholders of Mid-Plains approved amendments to
the Company's Articles of Incorporation changing the Company's common
stock from $3.33 1/3 par value to no par value and increasing the number
of authorized shares of common stock from 3,000,000 to 25,000,000. The
number of shares issued and outstanding as of December 31, 1996 and 1995
were 1,989,041 and 1,982,960, respectively.
5. LONG-TERM DEBT
The following table sets forth interest rates and other information on
long-term debt outstanding at December 31, after giving effect to
February 1997 refinancing of $2,601,000 Wisconsin Investment Board (WIB)
First Mortgage Notes and $4,800,000 notes payable to banks.
<TABLE>
Interest December 31,
Rates Maturities 1996 1995
In Thousands
<S> <C> <C> <C> <C>
Registered Subordinate Debentures 8% 2000 $5,000 $5,000
Wisconsin Investment Board First
Mortgage Notes: 8-1/2% 1974-1998 - 414
9-3/4% 1987-1997 - 653
10-1/2% 1991-2000 - 2,503
RTFC First Mortgage Note 6.3%* 1997-2012 7,401 -
12,401 8,570
Less current portion 216 973
Long-term debt $12,185 $7,597
* Variable rate based on RTFC's cost
</TABLE>
On January 31, 1997, Mid-Plains entered into a financing agreement with
the Rural Telephone Finance Cooperative (RTFC) that permits the Company
to borrow up to $22,105,000 within four years at the RTFC's variable or
fixed rates of interest as determined by RTFC. Mid-Plains is required
to purchase Subordinated Capital Certificates (SCC's) equal to 5% of
the advanced amount. SCC's are noninterest-bearing and are returned as
the loan is repaid. The RTFC financing agreements provide that:
$12,000,000 of the loan is available for refinancing existing debt, for
capital expenditures and to provide working capital for telephone
operations; $9,000,000 is available to invest in PCS Wisconsin (See
note 10) and $1,105,000 is available to purchase SCC's.
Substantially all of the assets of Mid-Plains are pledged under the
RTFC mortgage note.
In connection with the RTFC financing agreement, Mid-Plains is subject
to restrictions on debt and the amount of retained earnings available
for cash dividends. Under the agreement, at December 31, 1996,
$3,542,000 of its retained earnings were not restricted and thus
available for the payment of dividends.
Long-term debt maturing within each of the next five years is as
follows: 1997 - $216,000; 1998 - $305,000; 1999 - $ 327,000; 2000 -
$5,351,000 and 2001 - $ 376,000.
6. SHORT-TERM FINANCING
The table below contains information related to short-term financing:
<TABLE>
Year Ended December 31,
1996 1995 1994
In Thousands
<S> <C> <C> <C>
Balance of notes payable to
banks at end of year $ * $4,440 $1,300
Weighted average interest rate
at end of year 8.10% 8.30% 8.50%
Maximum amount outstanding
during year $5,682 $4,440 $2,400
Average amount outstanding
during year $3,864 $1,619 $1,392
Weighted average interest
rate during the year 8.10% 8.80% 6.91%
* Balance of notes payable to banks at December 31, 1996 was included
in long-term debt due to refinancing (See note 5). After giving effect
to the refinancing, Mid-Plains has available unused lines-of-credit of
$7,000,000 for general corporate purposes.
</TABLE>
7. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment were as follows:
<TABLE>
December 31,
1996 1995
In Thousands
<S> <C> <C>
Land $ 318 $ 318
Buildings 3,434 3,431
Digital switching equipment 17,166 15,668
Cable, wiring and conduit 24,283 21,813
Other 5,257 4,879
50,458 46,109
Under construction 94 89
50,552 46,198
Less accumulated depreciation (21,730) (16,663)
$28,822 $29,535
</TABLE>
The 1996 increase in accumulated deprecation includes $3,036,000 due to the
discontinuation of applying SFAS 71.
8. INCOME TAXES
The components of income tax expense were as follows:
<TABLE>
Year Ended December 31,
1996 1995 1994
In Thousands
<S> <C> <C> <C>
Current:
Federal $1,377 $1,479 $1,018
State 357 373 263
Total current 1,734 1,852 1,281
Deferred:
Federal 363 247 395
State 91 74 110
Total deferred 454 321 505
Investment tax credits (49) (64) (71)
Total income tax expense $2,139 $2,109 $1,715
</TABLE>
The following is a reconciliation of the statutory federal income tax
rate of 34% to Mid-Plains' effective income tax rate.
<TABLE>
Year Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Statutory federal income tax
rate 34.0% 34.0% 34.0%
State income taxes, net of
federal benefit 5.3 5.4 5.3
Amortization of investment tax
credits (.9) (1.2) (1.6)
Amortization of excess deferred
federal taxes (.4) (.6) (.7)
Other differences .3 .5 .3
Effective income tax rate 38.3% 38.1% 37.3%
</TABLE>
<TABLE>
The components of Mid-Plains' deferred tax asset (liability) were as follows:
December 31,
1996 1995
In Thousands
<S> <C> <C>
Deferred tax asset:
Unamortized investment tax credit $ 60 $ 112
Compensated absences 242 196
Deferred compensation 115 106
Deferred income 102 91
Other 178 143
Deferred tax asset 697 648
Deferred tax liability:
Property, plant and equipment
depreciation (2,044) (2,636)
Cellular interest (954) (920)
Other (61) (118)
Deferred tax liabilities (3,059) (3,674)
Net deferred tax liability (2,362) (3,026)
Less: Current deferred tax asset (206) (204)
Long-term deferred tax liability $(2,568) $(3,230)
</TABLE>
9. BENEFIT PLANS
Pension Plan - Mid-Plains has a pension plan covering most of the
employees of its telephone operations. The plan is non-contributory and
provides for benefits to be paid to eligible employees at retirement
based primarily upon years of service with Mid-Plains and compensation
rates near retirement. Mid-Plains' funding policy has been to
contribute annually an amount up to the maximum amount that can be
deducted for federal income tax purposes. Plan assets consist of fixed
income securities.
Mid-Plains applies the Financial Accounting Standards Board's SFAS 87,
"Employers' Accounting for Pensions", using a measurement date of
September 30 for financial reporting purposes.
The funded status of the plan at October 1 for the year ended
December 31 was as follows:
<TABLE>
1996 1995
<S> <C> <C>
In Thousands
Vested benefit obligation $ 5,717 $ 4,889
Non-vested benefit obligation 119 89
Total actuarial present value of
accumulated benefit obligation $ 5,836 $ 4,978
Projected benefit obligation for
service rendered to date $(9,124) $ (7,557)
Plan assets at fair value as of
October 1 6,748 6,101
Plan assets less than
projected benefit obligation (2,376) (1,456)
Unrecognized loss on assets 2,135 1,425
Unrecognized net asset at transition (94) (115)
Unrecognized prior service cost 333 243
Amount contributed to plan for fourth
quarter 155
Prepaid pension (accrued) cost
at December 31 $ (2) $ 252
</TABLE>
On December 17, 1996, the Company's Board of Directors voted to
terminate the pension plan effective April 15, 1997. It is anticipated
that plan settlement will not have a material effect on the Company.
<TABLE>
The net periodic pension cost consists of the following:
1996 1995 1994
In Thousands
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 506 $ 494 $ 548
Interest cost on projected benefit
obligation 488 454 449
Actual return on plan assets (228) (719) 230
Net amortization and deferral (201) 403 (584)
Net pension cost $ 565 $ 632 $ 643
Rates used for calculations -
Discount Rate - interest rate used to
adjust for the time value of money 6.50% 6.50% 6.50%
Assumed rate of increase in
compensation levels 5.26% 5.30% 5.33%
Expected long-term rate of return
on pension assets 7.75% 7.75% 7.75%
401(k) Benefit Plan - Mid-Plains offers a defined contribution 401(k)
benefit plan to substantially all employees. The cost of the 401(k)
plan was as follows: 1996 - $189,000, 1995 - $179,000, and
1994 - $178,000.
Retiree Health Insurance Plan - Mid-Plains has a retiree health
insurance plan for telephone operations employees retiring after 1992.
The plan, which is unfunded, provides for limited coverage to retirees
between the age of 60 and 65, based on accumulated sick leave in
excess of 720 hours. The cost of the plan was $67,000 in 1996, $48,000
in 1995, and $26,000 in 1994.
Stock Purchase Plan - Mid-Plains has a stock purchase plan which allows
employees and directors to purchase limited quantities of Mid-Plains,
Inc. stock. Mid-Plains has a pricing policy under which employees,
other than officers, may purchase shares at a discounted market price
and officers and directors may buy shares at full market price.
Deferred Compensation Plan - Mid-Plains has an unfunded deferred
compensation plan whereby an officer or director can defer a portion of
current officers' salaries or director fees. For income tax purposes, a
deduction is allowed at the time compensation is paid to the
participants.
10. COMMITMENTS AND CONTINGENCIES
Capital expenditures for 1997 are estimated at $9 million, and substantial
commitments have been made in connection with such expectations.
On January 14, 1997, PCS Wisconsin LLC (PCS-WI), a subsidiary of
Mid-Plains in which it has a 75% interest, was the successful bidder for
a broadband Personal Communications Services (PCS) F-block license at an
auction of the FCC. This 10MHz PCS license will, when granted,
authorize the Company to provide two-way voice and data services on a
new wireless digital network. The license covers Dane County and nine
adjacent counties with a total population of approximately 600,000.
PCS-WI's bid for the license was $3,248,000. Pursuant to the FCC's
auction procedures, on January 23, 1997, PCS-WI applied $325,000 of its
bid deposits as a 10% down payment and will pay another 10% within five
days of grant of license with the remaining 80% to be financed by the
federal government over the next 10 years.
PCS-WI will be required by the FCC to construct an operating system that
will be capable of providing service to at least 25% of the population
in the license area within five years of the grant of the license.
PCS-WI anticipates that construction, development and introduction of
PCS networks and services will require substantial capital and operating
expenditures over the next several years.
11. INVESTMENT, LIMITED PARTNERSHIP
Mid-Plains has an 18% share in a cellular partnership with Ameritech which
provides cellular telephone service in Madison, Janesville/Beloit and
bordering areas. The investment is accounted for using the cost method.
From time to time, the general partner may request additional capital
contributions from the limited partners to fund expansion or operation of
cellular service. In the event that additional capital is requested,
Mid-Plains may either contribute an amount equal to its then current
percentage interest or have its percentage interest reduced. During
1995, Mid-Plains participated in a capital call and contributed
$1,995,000 to the partnership. During 1996, Mid-Plains received
distributions from the partnership of $273,000. No distributions were
received from the partnership during 1995 and 1994.
12. SEGMENT INFORMATION
Mid-Plains operates in two industry segments: telephone services and the
sales and service of communications systems.
</TABLE>
<TABLE>
Year Ended December 31,
1996 1995 1994
In Thousands
<S> <C> <C> <C>
Operating Revenues
Telephone operations $19,861 $18,103 $15,560
System sales and services 7,226 6,475 5,900
$27,087 $24,578 $21,460
Operating Income
Telephone operations $ 6,015 $ 6,130 $ 5,026
System sales and services 701 334 456
$ 6,716 $ 6,464 $ 5,482
Identifiable assets
Telephone operations $37,259 $38,441 $31,508
System sales and services 2,629 2,273 2,381
$39,888 $40,714 $33,889
Depreciation
Telephone operations $ 3,428 $ 3,073 $ 2,307
System sales and services 100 100 83
$ 3,528 $ 3,173 $ 2,390
Capital expenditures
Telephone operations $ 5,799 $ 7,016 $ 4,089
System sales and services 102 130 144
$ 5,901 $ 7,146 $ 4,233
</TABLE>
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents and short-term debt
are based on face amounts which approximate fair value.
After giving effect to refinancing (see Note 5), the fair value of
long-term debt, estimated using discounted cash flow analysis based on
Mid-Plains' estimated current incremental borrowing rates for debt with
similar terms, was as follows:
1996 1995
In Thousands
Carrying amount $12,401 $8,570
Fair market value $12,901 $9,058
It was not practicable to estimate the fair value of Mid-Plains'
investment in the cellular limited partnership interest because of lack
of quoted market prices. The carrying amount at December 31, 1996 is
based upon the cost method of accounting. Management believes this
amount is not impaired.
14. QUARTERLY FINANCIAL INFORMATION (Unaudited):
<TABLE>
Quarter Ended
March 31 June 30 Sept. 30 Dec.31
In Thousands Except
For Per Share Data
<S> <C> <C> <C> <C>
1996
Operating Revenues $6,609 $6,379 $7,309 $6,790
Operating Income $1,706 $1,663 $1,840 $1,507
Income before Extraordinary Item $ 887 $ 899 $ 954 $ 702
Net Income (loss) $ 887 $ (883) $ 954 $ 702
Earnings per Share $ .45 $ (.45) $ .48 $ .36
1995
Operating Revenues $5,746 $6,019 $6,710 $6,103
Operating Income $1,535 $1,706 $1,856 $1,367
Net Income $ 825 $ 946 $ 976 $ 678
Earnings per Share $ .42 $ .46 $ .49 $ .36
</TABLE>
The second quarter of 1996 includes a $1,782,000 ($.89 per share) after
tax charge related to the discontinuance of applying SFAS 71, as
discussed in Note 3 above.<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
Part III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers and directors of Mid-Plains are as follows:
<TABLE>
Name Age Position
<S> <C> <C>
Dean W. Voeks 54 President and Director: 1997*
Howard G. Hopeman 53 Vice President and Chief
Financial Officer
Daniel J. Stein 42 Executive Vice President and
General Manager of subsidiary,
Mid-Plains Communications Systems, Inc.
Fredrick E. Urben 55 Vice President, Administration
& Human Relations, Secretary &
Treasurer, and Director: 1998*
Floyd A. Brynelson<F1><F2> 82 Director: 1997*
S.C. Ehlers<F1> 90 Director: 1997*
Charles Maulbetsch<F1><F2> 62 Director: 1998*
Eugene A. Johnson<F1><F2> 68 Director: 1999*
Harold L. (Lee) Swanson<F1> 59 Director: 1999*
<FN>
<F1>Member of Compensation Committee
<F2>Member of Audit Committee
</FN>
* Annual Meeting at which current director time expires
</TABLE>
Dean W. Voeks, an officer of Mid-Plains since 1987, joined the Board in
1991. Mr. Voeks is also President and a director of Mid-Plains
Communications Systems, Inc. (MPCS), a subsidiary of Mid-Plains, since
1991. Currently, Mr. Voeks is a director of First Business Bank of
Madison and the Wisconsin State Telephone Association.
Howard G. Hopeman has served as Vice-President and Chief Financial
Officer since 1989. He is Secretary & Treasurer and a director of
MPCS.
Daniel J. Stein has served as Executive Vice President and General
Manager of MPCS for the past 10 years. He became a director of MPCS in
1987.
Fredrick E. Urben has been an officer of Mid-Plains since 1972 and
joined the board in 1977.
Floyd A. Brynelson joined the Board in 1970. Mr. Brynelson is a
retired partner and Of Council to Axley Brynelson, Attorneys and
Counselors. Mr. Brynelson was General Counsel of the Company from 1981
to 1993. He served as President of the Company from 1981 to 1990. He
was also President of MPCS from 1985 to 1991, and a director from 1980
to 1991.
S.C. Ehlers joined the Board in 1969. Mr. Ehlers, a retired printer
and publisher, also serves on the Board of MPCS since 1980.
Charles Maulbetsch joined the Board in 1981. Mr. Maulbetsch was a
Vice-President of Middleton Community Bank from January 1, 1995 until
his retirement on December 31, 1995. Prior to that he was a Bank
Consultant. He is a director of Middleton Community Bank.
Eugene A. Johnson joined the Board in 1974. Mr. Johnson is a semi-retired
Certified Public Accountant, Independent Realtor, and President
of Johnson Hardware Stores.
Harold L.(Lee) Swanson joined the Board in 1981. Mr. Swanson is
President and a director of State Bank of Cross Plains. Mr. Swanson
has served on the board of MPCS since 1981 and is also a director of
Madison Gas & Electric Company.
Item 11. EXECUTIVE COMPENSATION.
Compensation of Directors
In 1996, each non-employee director received an annual fee of $14,000
for serving on the Company's Board of Directors. No additional fees
were paid for attending meetings. Employee directors received no
directors' fees.
Compensation of Executive Officers
The following table summarizes the compensation for the fiscal years,
1994, 1995 and 1996 of the President (the chief executive officer) and
one other executive officer whose compensation exceeded $100,000 for
fiscal year 1996.
<TABLE>
Summary Compensation Table
Name and Principal Annual Compensation All Other
Position Year Salary Bonus Compensation<F1>
<S> <C> <C> <C> <C>
Dean W. Voeks: 1996 $145,000 $35,000 $5,700
President 1995 140,000 25,000 5,544
1994 125,000 7,500 5,590
Howard G. Hopeman: 1996 $ 97,000 $15,000 $4,704
Vice President & 1995 93,500 11,000 4,389
Chief Financial 1994 90,100 2,700 3,898
Officer
<FN>
<F1>Company matching contribution to defined contribution 401(k) benefit plan.
</FN>
</TABLE>
Report of the Compensation Committee
The Company's principal executive compensation objective is to
compensate executive officers in a manner that will attract and retain
the services of an outstanding management team and provide incentives
to motivate superior performance by key employees. To accomplish this,
the non-employee directors have developed a three component
compensation policy: (1) annual base salary adjustments designed to
recognize Company performance, professional growth and to adjust for
inflationary pressures: (2) annual incentive bonus based on Company
performance and individual achievement for the year; and (3)
promotional increases related to significant increases in
responsibility and/or disparities with comparable positions. Specific
targets for professional growth and Company performance are not set for
an executive, but are evaluated on a subjective basis.
The compensation for Mr. Voeks, President (the chief executive
officer), reports for 1996 reflect the applications of the policies
described above. In 1996, Mr. Voeks' compensation was adjusted to
reflect a base salary adjustment for inflation. Mr. Voeks' 1996 bonus
reflects his ability to anticipate and respond successfully to changes
in the business environment in which the Company operates, and Company
performance factors such as earnings.
Mid-Plains' 1996 earnings per share before extraordinary item was
$1.73, the same as 1995 record earnings per share. Mid-Plains' total
shareholder return for the five years ended December 31, 1996 was
slightly less than the S&P 500 Index but exceeded the S&P Telephone
Index.
Based on the policies described above, Mr. Voeks informs the Committee
of his proposed compensation for the Company's other executive
officers.
COMPENSATION COMMITTEE
Floyd A. Brynelson S.C. Ehlers
Eugene A. Johnson Charles Maulbetsch
Harold L. (Lee) Swanson
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
SEC rules require that the Company show a graphical comparison of the
total return on its common stock for the last five fiscal years with
the total returns of a broad market index and a more narrowly focused
industry or group index. (Total return is defined as the return on
common stock including dividends and stock price appreciation, assuming
reinvestment of dividends.) The Company has selected the Standards &
Poors (S&P) 500 Index for the broad market index, and a S&P Telephone
Index as the industry index. These indices were selected because of
their broad availability and recognition. The following chart compares
the total return of an investment of $100 in Company common stock on
December 31, 1991, with like returns for the S&P 500 and S&P Telephone
Indices.
(HERE IS A CHART COMPARING THE TOTAL RETURN OF AN INVESTMENT OF $100 IN
COMPANY COMMON STOCK ON DECEMBER 31, 1991, WITH LIKE RETURNS FOR THE
S&P 500 AND S&P TELEPHONE INDICES)
<TABLE>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
Mid-Plains, Inc. $100.00 $107.75 $136.97 $158.45 $186.16 $200.40
S&P 500 Index 100.00 107.62 118.46 120.03 165.13 203.05
S&P Telephone Index 100.00 109.73 126.73 121.49 183.02 184.85
</TABLE>
Pension Plan and Supplemental Retirement Plan
Mid-Plains, Inc. has a defined benefit pension plan covering the
employees of its telephone operations. Retirement benefits are based
upon years of service with the Company and final five-year average
annual salary. The retirement benefits are not subject to any
reduction for Social Security benefits paid to the employees or any
other offset amounts. For purposes of the plan, compensation means
payment for services rendered, including vacation and sick pay, and is
virtually equivalent to the annual compensation amounts reported in the
foregoing Summary Compensation Table. Messrs. Voeks and Hopeman
currently have 10 and 8 credited years of service, respectively.
Annual retirement benefits under the retirement plan at the normal
retirement age of 60 for specified levels of compensation and specified
years of service are illustrated in the following table:
<TABLE>
Annual Pension at Normal
Final Five-Year Retirement Age of 60
Average Annual Salary After Years of Service Indicated<F1>
15 Years 20 Years 25 Years
<S> <C> <C> <C>
$100,000 $34,200 $45,600 $ 57,000
$125,000 $42,800 $57,000 $ 71,300
$150,000 $51,300 $68,400 $ 85,500
$175,000 $59,900 $79,800 $ 99,800
$200,000 $68,400 $91,200 $114,000
<FN>
<F1>Based upon a single-life, 120-month guarantee annuity.
</FN>
</TABLE>
On December 17, 1996, Mid-Plains' Board of Directors voted to terminate
the pension plan effective April 15, 1997.
Mid-Plains provides Mr. Voeks and Mr. Hopeman with a nonqualified
supplemental retirement plan, which provides supplemental retirement
benefits based on fixed annual contribution to the plan from 1995 until
they reach age 60. The cost of the plan was $79,000 in 1996 and
$76,000 in 1995.
Management Continuity Plan
The Company has severance pay agreements (Agreements) with Mr. Voeks,
Mr. Hopeman and two other executive officers. The purpose of the
Agreements is to encourage the executive officers to continue to carry
out their duties in the event of the possibility of a change in control
of the Company.
Benefits are payable under the Agreement only if a change in control
has occurred and within three years after such change the executive's
employment is terminated:(a) by the Company or its successor for
reasons other than "cause"; or (b) voluntarily by the executive for
"good reason", in each case as defined in the Agreements. The
principal benefit under the Agreement is a lump-sum payment equal to
2.99 times the executive's annual compensation. Each agreement is
automatically extended on an annual basis, unless either the Company or
the employee gives a written notice of cancellation of such automatic
extension.
Directors Compensation Committee Interlocks and Insider Participation
Mr. Brynelson, a member of the Compensation Committee, was formerly
president of the Company. He is a retired partner and Of Counsel to
Axley Brynelson, the primary law firm retained by the Company. Mr.
Johnson, a member of the Compensation Committee, was formerly president
of a Company subsidiary.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) Security ownership of certain beneficial owners.
Pursuant to restrictions in Mid-Plains' By-Laws, as further
described in Item 5, no person, including any "group" as that term
is used in Section 13(d)(3) of the Securities Exchange Act of
1934, may be, nor is any person in fact the beneficial owner of
more than five percent of any class of the Company's voting
securities.
(b) Security ownership of management.
At February 28, 1997, each director and each executive officer
named in the Summary Compensation Table and all directors and
executive officers of the Company as a group beneficially owned
common stock of the Company as listed in the following table. To
our knowledge, no shareholder owned 5 percent or more of the
Company's outstanding common stock as of February 28, 1997.
<TABLE>
Shares Percent
Name of Beneficial Owner Beneficially Owned of Class
<S> <C> <C>
Floyd A. Brynelson 8,848<F1> 0.4%
S.C. Ehlers 57,700 2.9%
Howard G. Hopeman 7,659<F1> 0.4%
Eugene A. Johnson 34,350<F1> 1.7%
Charles Maulbetsch 21,707<F1> 1.1%
Harold L. (Lee) Swanson 9,325<F1><F2> 0.5%
Fredrick E. Urben 21,924<F1><F3> 1.1%
Dean W. Voeks 2,154<F1> 0.1%
All directors and
executive officers as
a group (9 persons) 165,682 8.3%
<FN>
<F1>Includes 2,252, 5,244, 1,770, 500, 4,515, 3,500, and 1,037 shares of
Company common stock, in self-directed Individual Retirement Accounts,
to which Messrs. Brynelson, Hopeman, Johnson, Maulbetsch, Swanson,
Urben, and Voeks, respectively, have voting and investment power.
<F2>Includes 2,325 shares of Company common stock held by the State Bank
of Cross Plains Profit Sharing Plan and Money Purchase Pension Plan
which Mr. Swanson serves as a member of its Qualified Plan Committee
and thereby has shared voting and investment power.
<F3>Includes 3,400 shares of Common stock in a family trust in which Mr.
Urben has a pecuniary interest, voting and investment power and 4,004
shares of Company common stock in a trust in which Mr. Urben has no
pecuniary interest but has voting and investment power.
</FN>
</TABLE>
(c) Changes in control.
As further described in Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations, Mid-Plains
and Pioneer Communications, Inc. (Pioneer) have entered
into an Agreement and Plan of Merger dated December 31, 1996,
which will result in the combination of Mid-Plains and Pioneer
into a holding Company to be named Chorus Communications Group,
Ltd.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In 1996, Floyd A. Brynelson, a director, was Of Counsel with Axley
Brynelson, the primary law firm retained by the Company. The Company
has also retained their law firm in 1997.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors to file reports of ownership and
changes in ownership with the Securities and Exchange Commission.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 ("Annual Statement
of Changes in Beneficial Ownership") were required, the Company
believes that during 1996 all required filings were made in a timely
fashion except for the following: one Form 4 ("Statement of Changes in
Beneficial Ownership") covering one transaction for Mr. Swanson, was
not filed but the transaction was subsequently reported on a year-end
Form 5 Report.
Part IV.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
(a) 1. Financial Statements Schedules. See Index to Consolidated
Financial Statements under Item 8 of this Form 10k.
2. Financial Statements Schedule.
All schedules are omitted because of the absence of
conditions under which they are required.
3. Exhibits. Exhibits filed (or to be filed) as a part of this
Form 10-K Annual Report are as follows:
Exhibit Number Description
3(ii) Restated Bylaws
12 Computation of Ratio of
Earnings to Fixed Charges
21 Subsidiaries of the Registrant
27 Financial Data Schedule
Exhibits Incorporated By Reference
2. Agreement and Plan of Merger dated as of December 31, 1996 by
Mid-Plains, Inc. and Pioneer Communications, Inc. (See Form
8-K dated January 7, 1997).
3(ii) Restated Articles of Incorporation (See Exhibit 3.01, Form
10-Q for the quarter ending June 30, 1996).
4. Mid-Plains, Inc., Series 1995 Registered Subordinated
Debenture to M&I First National Bank, West Bend,
Wisconsin, Trustee, (See Exhibit 4, Form 8-K dated July
6, 1995).
99. Mid-Plains, Inc. Employee Stock Purchase Plan (See Exhibit
99, Form 10-Q for the quarter ended September 30, 1995).
(b) Reports on Form 8-K. There were no reports on Form 8-K filed with
the Securities and Exchange Commission during the fourth quarter
of the year ended December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MID-PLAINS, INC.
(Registrant)
Date: March 28, 1997 By /s/Dean W. Voeks
Dean W. Voeks, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated.
/s/Dean W. Voeks President and Director March 28, 1997
Dean W. Voeks (Principal Executive
Officer)
/s/Howard G. Hopeman Vice-President and March 28, 1997
Howard G. Hopeman Chief Financial Officer
(Principal Financial
and Accounting Officer)
/s/Fredrick E. Urben Vice-President, March 28, 1997
Fredrick E. Urben Administration & Human
Relations, Secretary &
Treasurer and Director
/s/Charles Maulbetsch Director March 28, 1997
Charles Maulbetsch
/s/Harold L. (Lee) Swanson Director March 28, 1997
Harold L. (Lee) Swanson
The above signatures include a majority of the signatures of the Board
of Directors.
Exhibit 3 (ii)
RESTATED BYLAWS OF
MID-PLAINS, INC.
(Adopted by the Board of Directors on February 18, 1997)
<PAGE>
TABLE OF CONTENTS
ARTICLE I. OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. Principal Office . . . . . . . . . . . . . . . . . . .1
Section 2. Registered Office . . . . . . . . . . . . . . . . . .1
ARTICLE II. SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. Annual Meeting . . . . . . . . . . . . . . . . . . . .1
Section 2. Special Meetings . . . . . . . . . . . . . . . . . . .1
Section 3. Nominations for the Board of Directors . . . . . . . .1
Section 4. Shareholder Proposals . . . . . . . . . . . . . . . .2
Section 5. Place of Meeting . . . . . . . . . . . . . . . . . . .2
Section 6. Notice of Meeting . . . . . . . . . . . . . . . . . .2
Section 7. Quorum . . . . . . . . . . . . . . . . . . . . . . . 3
Section 8. Proxies . . . . . . . . . . . . . . . . . . . . . . .3
Section 9. Voting . . . . . . . . . . . . . . . . . . . . . . . .3
Section 10. Acceptance and Rejection of Votes, Proxies, Etc. . . .3
Section 11. Fixing of Record Date . . . . . . . . . . . . . . . .3
ARTICLE III. BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . .4
Section 1. General Powers . . . . . . . . . . . . . . . . . . . .4
Section 2. Qualifications . . . . . . . . . . . . . . . . . . . .4
Section 3. Regular Meetings . . . . . . . . . . . . . . . . . . .4
Section 4. Special Meetings . . . . . . . . . . . . . . . . . . .5
Section 5. Notice . . . . . . . . . . . . . . . . . . . . . . . .5
Section 6. Quorum . . . . . . . . . . . . . . . . . . . . . . . .5
Section 7. Manner of Acting . . . . . . . . . . . . . . . . . . .5
Section 8. Vacancies . . . . . . . . . . . . . . . . . . . . . .6
Section 9. Compensation . . . . . . . . . . . . . . . . . . . . .6
Section 10. Informal Action by Directors . . . . . . . . . . . . .6
Section 11. Removal . . . . . . . . . . . . . . . . . . . . . . .6
Section 12. Committees . . . . . . . . . . . . . . . . . . . . . .6
Section 13. Age Limitation . . . . . . . . . . . . . . . . . . . .7
Section 14. Director Emeritus . . . . . . . . . . . . . . . . . .7
ARTICLE IV. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 1. Number and Qualifications . . . . . . . . . . . . . .7
Section 2. Election and Term of Office . . . . . . . . . . . . .7
Section 3. Removal . . . . . . . . . . . . . . . . . . . . . . .8
Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . .8
Section 5. President . . . . . . . . . . . . . . . . . . . . . .8
Section 6. The Vice-Presidents . . . . . . . . . . . . . . . . .8
Section 7. The Secretary . . . . . . . . . . . . . . . . . . . .8
Section 8. The Treasurer . . . . . . . . . . . . . . . . . . . .9
Section 9. Assistant Secretaries and Assistant Treasurers . . . .9
Section 10. Salaries . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE V. CONTRACTS. LOANS. CHECKS AND DEPOSITS . . . . . . . . . . . .9
Section 1. Contracts . . . . . . . . . . . . . . . . . . . . . .9
Section 2. Loans . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3. Checks, Drafts, etc . . . . . . . . . . . . . . . . .9
Section 4. Deposits . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI. CERTIFICATES OF STOCK OWNERSHIP . . . . . . . . . . . . . . 10
Section 1. Certificates for Shares . . . . . . . . . . . . . . 10
Section 2. Acquisition of Shares . . . . . . . . . . . . . . . 10
ARTICLE VII. FISCAL YEAR . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IX. LOST CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE X. STOCK LIMITATION . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE XI. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 11
Section 1. Indemnification for Successful Defense . . . . . . 11
Section 2. Other Indemnification . . . . . . . . . . . . . . . 11
Section 3. Written Request . . . . . . . . . . . . . . . . . . 12
Section 4. Nonduplication . . . . . . . . . . . . . . . . . . . 12
Section 5. Determination of Right to Indemnification . . . . . 12
Section 6. Advance Payment of Expenses as Incurred . . . . . . 12
Section 7. Nonexclusivity . . . . . . . . . . . . . . . . . . . 13
Section 8. Liberal Construction . . . . . . . . . . . . . . . . 13
ARTICLE XII. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE XIII. CORPORATE SEAL . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE XIV. EMERGENCY BYLAWS . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
RESTATED BYLAWS
OF
MID-PLAINS, INC.
The following Restated Bylaws (hereafter the "Bylaws") have been duly
adopted by the Board of Directors of Mid-Plains, Inc. (hereafter the
"corporation") under the authority given to it by the shareholders of the
corporation.
ARTICLE I. OFFICES
SECTION 1. Principal Office. The principal office of the corporation
in the State of Wisconsin shall be located at 1912 Parmenter Street,
Middleton, Wisconsin. The corporation may have such other offices, within
the State of Wisconsin, as the Board of Directors may designate from time
to time.
SECTION 2. Registered Office. The registered office of the
corporation required by the Wisconsin business corporation law to be
maintained in the State of Wisconsin may be, but need not be, identical
with the principal office in the State of Wisconsin, and the address of the
registered office may be changed from time to time by the Board of
Directors.
ARTICLE II. SHAREHOLDERS
SECTION 1. Annual Meeting. The date of the Annual Meeting of
Shareholders shall be in April of each year or at such other time as the
Board of Directors may determine. The specific date and time shall be
determined by the Board of Directors. The purpose of the annual meeting is
to elect directors and to transact other business as may properly come
before the meeting, pursuant to Section 4 below. If the election of
directors is not held at the annual meeting of the shareholders or other
business not transacted, or at any subsequent continuation after
adjournment thereof, the Board of Directors shall cause the election to be
held and the other business to be transacted at a special meeting of the
shareholders as soon thereafter as convenient.
SECTION 2. Special Meetings. Special meetings of the shareholders
for any purpose or purposes, unless otherwise prescribed by statute, may be
called by the President, the Secretary, or the Board of Directors, and
shall be called by the President at the request of holders of ten percent
(10%) of the issued voting stock of the corporation .
SECTION 3. Nominations for the Board of Directors. Nominations for
election to the Board of Directors may be made by the Board of Directors or
by any shareholder of the corporation. Nominations for the Board of
Directors, other than those made by or on behalf of the existing management
of the corporation, shall be made in writing and delivered or mailed to the
principal executive offices of the corporation not earlier than the January
1 and not later than the February 28 immediately preceding the
corporation's Annual Meeting of Shareholders at which such nomination is to
be acted upon. Notice of the appropriate time within which to make a
nomination shall be given to all shareholders in the proxy statement for
the year preceding the election. Any nominations for the Board of
Directors made by the shareholders shall contain the name, address and date
of birth of each proposed nominee, the principal occupation of each nominee
for the last five years, the name and address of the nominating
shareholder, and the number of shares of common stock of the corporation
owned by the proposed nominee and nominating shareholder.
SECTION 4. Shareholder Proposals. The proposal of other business
(other than the election of directors) to be considered by the shareholders
at an Annual Meeting of Shareholders may be made (i) by or at the direction
of the Board of Directors, or (ii) by any shareholder of the corporation
pursuant to timely notice in writing to the Secretary of the corporation.
To be timely, a Shareholder's Notice shall be delivered to or mailed and
received at the principal executive offices of the corporation by December
15 prior to the meeting in order to have such proposal considered for
inclusion in the proxy statement. Such Shareholder's Notice to the
Secretary shall set forth (a) as to the shareholder giving notice and the
beneficial owner, if any, on whose behalf the proposal is made, (i) their
name and record address, and (ii) the number of shares of capital stock of
the corporation which are beneficially owned by each of them, and (b) a
brief description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any material
interest in such business of such shareholder giving notice and the
beneficial owner, if any, on whose behalf the proposal is made. Only such
business shall be conducted at a special meeting of shareholders as shall
have been brought before the meeting pursuant to the corporation's Notice
of Meeting. Only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance
with the procedures set forth in this section.
SECTION 5. Place of Meeting. The Board of Directors may designate
any place, within the State of Wisconsin, as the place of meeting for any
annual meeting or for any special meeting called by the President, the
Secretary, or the Board of Directors. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place, within
the State of Wisconsin, as the place for the holding of such meeting. If
no designation is made, the place of meeting shall be the registered office
of the corporation in the State of Wisconsin, but any meeting may be
adjourned to reconvene at any place designated by vote of a majority of the
shareholders. If no designation is made, the place of meeting shall be the
principal business office of the corporation in the State of Wisconsin or
such other suitable place in the county of such principal office as may be
designated by the person calling such meeting, but any meeting may be
adjourned to reconvene at any place designated by vote of a majority of the
shares represented thereat.
SECTION 6. Notice of Meeting. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the
Secretary, or the Board of Directors, to each shareholder entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the shareholder at
the shareholder's address as it appears on the books of the corporation,
with postage thereon prepaid.
SECTION 7. Quorum. The holders of a majority of the issued common
stock of the corporation shall constitute a quorum at a meeting of
shareholders. Though less than a quorum of shareholders are represented at
a meeting, the holders of a majority of the issued voting common stock so
represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or be
represented, any business may be transacted which might have been
transacted at the meeting as originally notified. Once a share is
represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned
meeting. If a quorum exists, action on a matter (other than the election
of directors) by the shareholders is approved if the votes cast by the
shareholders favoring the action exceed the votes cast opposing the action.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder
entitled to vote may vote by proxy appointed in writing by such
shareholder. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise
provided in the proxy. Unless otherwise provided in the proxy, a proxy may
be revoked at any time before it is voted, either by written notice filed
with the Secretary or the acting Secretary of the meeting or by oral notice
given by the shareholder to the presiding officer during the meeting. The
presence of a shareholder who has filed his or her proxy shall not of
itself constitute a revocation.
SECTION 9. Voting. Each shareholder entitled to vote shall be
entitled to one vote for each share held upon each matter submitted to a
vote at a meeting of shareholders.
SECTION 10. Acceptance and Rejection of Votes, Proxies, Etc.. If the
name signed on a vote, consent, waiver, or proxy appointment corresponds to
the name of a shareholder, the corporation if acting in good faith is
entitled to accept the vote, consent, waiver, or proxy appointment and give
it effect as the act of the shareholders. The corporation is entitled to
reject a vote, consent, waiver, or proxy appointment if the Secretary or
other officer or agent authorized to tabulate votes, acting in good faith,
has reasonable basis for doubt about the validity of the signature on it or
about the signatory's authority to sign for the shareholder. The
corporation and its officer or agent who accepts or rejects a vote,
consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this section are not liable in damages to the shareholder
for the consequences of the acceptance or rejection. Corporate action
based on the acceptance or rejection of a vote, consent, waiver, or proxy
appointment under this section is valid unless a court of competent
jurisdiction determines otherwise.
SECTION 11. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders, or shareholders entitled to receive payment of any
distribution or dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may fix
in advance a date as the record date. Such record date shall not be less
then ten (10) nor more than seventy (70) days prior to the date on which
the particular action, requiring such determination of shareholders, is to
be taken. If no record date is so fixed by the Board of Directors for the
determination of shareholders entitled to notice of, or to vote at a
meeting of shareholders, or shareholders entitled to receive a share
dividend or distribution, the record date for determination of such
shareholders shall be at the close of business on:
(a) With respect to an annual shareholder meeting or any special
shareholder meeting called by the Board of Directors or any
person specifically authorized by the Board of Directors or these
Bylaws to call a meeting, the date on which the first notice is
delivered to shareholders;
(b) With respect to a special shareholder's meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date the
Board of Directors authorizes the share dividend;
(d) And with respect to a distribution to shareholders, (other than
one involving a repurchase or reacquisition of shares), the date
the Board of Directors authorizes the distribution.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the
original meeting.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. General Powers. The affairs of the corporation shall be
managed by its Board of Directors.
SECTION 2. Qualifications. Directors shall be residents of the
State of Wisconsin and shareholders of the corporation.
SECTION 3. Regular Meetings. A regular meeting of the Board of
Directors may be held without other notice than this By-law immediately
after, and at the same place as, the annual meeting of shareholders, and
each adjourned session thereof, and the Board of Directors may provide by
resolution for the holding of additional regular meetings. The time and
place, within or without the State of Wisconsin, for the holding of such
additional regular meetings shall be without other notice than such
resolution.
SECTION 4. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President, Secretary or
any two directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, within or without the
State of Wisconsin, as the place for holding any special meeting of the
Board of Directors called by them. If no other place is fixed, the place
of the meeting shall be the principal office of the corporation in the
State of Wisconsin.
SECTION 5. Notice. Notice of any special meeting shall be given at
least forty-eight (48) hours previously thereto by mail, telegram,
radiogram, facsimile, telex, e-mail, other form of wire or wireless
communication medium, or by personal service delivered to each director at
his or her address as designated. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, teletype,
facsimile, e-mail, or other form of wire or wireless communication medium,
such notice shall be deemed to be delivered when said notice is delivered
to the applicable transferring medium. Whenever any notice whatever is
required to be given to any director of the corporation under the
provisions of these By-laws or under the provisions of any statute, a
waiver thereof in writing, signed at any time, whether before or after the
time of meeting, by the director entitled to such notice, shall be deemed
equivalent to the giving of such notice. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business and at the beginning of the meeting (or
promptly upon his or her arrival) objects to holding the meeting or
transacting business at the meeting, and does not thereafter vote for or
assent to action taken at the meeting.
Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the Board of Directors, need be specified in
the notice or waiver of notice of such meeting.
SECTION 6. Quorum. A majority of the number of directors fixed by
the Board of Directors pursuant to Article IV of the Restated Articles of
Incorporation shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, but though less than such quorum is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors, unless the act of a greater number is
required by these By-laws or by law. Any or all directors may participate
in a regular or special meeting by, or conduct the meeting through the use
of, any means of communication by which (i) all directors participating may
simultaneously hear each other during the meeting or (ii) all communication
during the meeting is immediately transmitted to each participating
director, and each participating director is able to immediately send
messages to all other participating directors. If a meeting will be
conducted through the use of any means described in (i) and (ii) above, all
participating directors shall be informed that a meeting is taking place at
which official business may be transacted. A director participating in a
meeting by this means is deemed to be present in person at the meeting.
A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken is
deemed to have assented to the action taken unless: (1) he or she objects
at the beginning of the meeting (or promptly upon his or her arrival) to
holding it or transacting business at the meeting; or (2) his or her
dissent or abstention from the action taken is entered in the minutes of
the meeting; or (3) he or she delivers written notice of his or her dissent
or abstention to the presiding officer of the meeting before its
adjournment or to the corporation immediately after adjournment of the
meeting. The right of dissent or abstention is not available to a director
who votes in favor of the action taken.
SECTION 8. Vacancies. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
directors, shall be filled for the unexpired term by the affirmative vote
of a majority of the directors then in office; provided, that in case of a
vacancy created by the removal of a director by vote of the shareholders,
the shareholders shall have the right to fill such vacancy at the same
meeting or any adjournment thereof.
SECTION 9. Compensation. The Board of Directors shall receive such
compensation as the Board of Directors shall from time to time determine.
SECTION 10. Informal Action by Directors. Any action required to be
taken at a meeting of the Board of Directors, or any other action which may
be taken at a meeting of the Board of Directors, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall
be signed by all of the directors entitled to vote with respect to the
subject matter thereof.
SECTION 11. Removal. A director may be removed from office with or
without cause by the affirmative vote of a majority of the outstanding
shares entitled to vote for the election of such director, taken at a
meeting of shareholders called for that purpose. A director may resign at
any time by delivering written notice of his or her resignation to the
Board of Directors, to the President or Secretary of the corporation. A
resignation is effective when the notice is delivered unless the notice
specifies a later effective date.
SECTION 12. Committees.
(a) Creation of Committees. The Board of Directors may create one or
more committees and appoint members of the Board of Directors to serve on
them. Each committee must have two or more members, who serve at the
pleasure of the Board of Directors.
(b) Selection of Members. The creation of a committee and
appointment of members to it must be approved by a majority of all the
directors in office when the action is taken.
(c) Required Procedures. Sections of this Article III, which govern
meetings, action without meetings, notice and waiver of notice, quorum and
voting requirements of the Board of Directors, apply to committees and
their members.
(d) Authority. Each committee may exercise those aspects of the
authority of the Board of Directors which the Board of Directors confers
upon such committee in the resolution creating the committee. Provided,
however, a committee may not do any of the following: (1) authorize
distributions; (2) approve or propose to shareholders action that the
Wisconsin Business Corporation Act requires be approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of its committees;
(4) amend the Articles of Incorporation; (5) adopt, amend, or repeal
Bylaws; (6) approve a plan of merger; (7) authorize or approve
reacquisition of shares, except according to a formula or method prescribed
by the Board of Directors; or (8) authorize or approve the issuance or sale
or contract for sale of shares or determine the designation and relative
rights, preferences, and limitations of a class or series of shares, except
that the Board of Directors may authorize a committee (or a senior
executive officer of the corporation) to do so within limits specifically
prescribed by the Board of Directors. Unless otherwise provided by the
Board of Directors in creating the committee, a committee may employ
counsel, accountants and other consultants to assist it in the exercise of
authority.
SECTION 13. Age Limitation. Effective June 1, 1997, the age limit
for directors of the corporation shall be seventy (70) years of age.
Directors shall resign from the Board of Directors coincident with their
attainment of age seventy (70).
SECTION 14. Director Emeritus. The Board of Directors may appoint
one or more former directors to the position of Director Emeritus to assist
the Board with the discharge of its duties upon such terms and conditions
and at such compensation as the Board of Directors may determine. A
Director Emeritus shall not be entitled to vote on any matter that comes
before the Board.
ARTICLE IV. OFFICERS
SECTION 1. Number and Qualifications. The principal officers of the
corporation shall be a President, a Vice-President, a Secretary, an
Assistant Secretary, a Treasurer and an Assistant Treasurer, each of whom
shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected by the Board
of Directors. Whenever the Board of Directors shall so order, two offices
may be held by the same person except President and Vice-President, and
President and Secretary. Officers of the corporation, other than the
President, need not be directors of the corporation.
SECTION 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at the
first meeting of the Board of Directors held after each annual meeting of
the shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as conveniently may
be. Each officer shall hold office until his or her successor shall have
been elected and shall have been qualified or until his or her death or
until he or she shall resign.
SECTION 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation will be served thereby.
SECTION 4. Vacancies. Should a vacancy in any officer position arise
because of an officer's death, resignation, removal, disqualification or
otherwise, such vacancy, upon recommendation of the President, shall be
filled by the Board of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal executive
officer of the corporation and subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He or she shall, when present, preside at all
meetings of the shareholders and of the Board of Directors. He or she
shall have authority, subject to such rules as may be prescribed by the
Board of Directors, to appoint such officers, agents and employees of the
corporation as he or she shall deem necessary, to prescribe their powers,
duties, and compensation, and to delegate authority to them. He or she may
sign, with the Secretary or any other proper officer of the corporation
thereunto authorized by the Board of Directors, certificates representing
shares of the corporation, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed,
except in cases where the signing or the execution thereof shall be
expressly delegated by the Board of Directors or by these By-laws to some
other officer or agent of the corporation, or shall be required by law to
be otherwise signed or executed; and in general shall perform all duties
incident to the office of the President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. The Vice-Presidents. Any Vice-President shall perform
such duties and have such authority as from time to time may be delegated
or assigned to him or her by the President or the Board of Directors. In
the absence of the President or in the event of his or her death, inability
or refusal to act, the Vice-President delegated authority under Section 5
and, in the absence of such delegation, the Vice-President with the most
seniority as a Vice-President and who is not then absent or disabled, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Any
Vice-President may sign, with the Secretary, certificates representing the
shares of the corporation; and shall perform such other duties as from time
to time may be assigned to him or her by the President or by the Board of
Directors.
SECTION 7. The Secretary. The Secretary shall: (a) keep the minutes
of the shareholders and of the Board of Directors meetings in one or more
books provided for that purpose; (b) see that all notices are given in
accordance with the provisions of these By-laws or as required by law; (c)
be custodian of the corporate records; (d) keep a register of the post
office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the President, or a
Vice-President, certificates of stock ownership of the corporation, the
issuance of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties incident to the office
of Secretary and such other duties as from time to time may be assigned to
him or her by the President or by the Board of Directors.
SECTION 8. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his or her duties
in such sum and with such surety or sureties as the Board of Directors
shall determine. He or she shall: (a) have charge and custody of and be
responsible for all funds and securities of the corporation, receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in
such banks, trust companies or other depositaries as shall be selected in
accordance with the provisions of Article V of these By-laws; and (b) in
general perform all of the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him or her by the
President or by the Board of Directors.
SECTION 9. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries, when authorized by the Board of Directors, may sign
with the President or any Vice-President certificates for shares of the
corporation the issuance of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers shall
respectively, if required by the Board of Directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as
the Board of Directors shall determine. The Assistant Secretaries and
Assistant Treasurers, in general, shall perform such duties as shall be
assigned to them by the Secretary or the Treasurer, respectively, or by the
President or the Board of Directors.
SECTION 10. Salaries. The salary of the President shall be fixed
from time to time by the Board of Directors or by a duly authorized
committee thereof. All other salaries of principal officers shall be fixed
by the President, subject to review by the Board of Directors.
ARTICLE V. CONTRACTS. LOANS. CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the corporation,
and such authorization may be general or confined to specific instances.
SECTION 2. Loans. No long-term loans shall be contracted on behalf
of the corporation without approval of a majority of the Board of
Directors.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued
in the name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such manner as shall
from time to time be determined by or under the authority of resolution of
the Board of Directors or any of its committees.
SECTION 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositories as may be
selected by or under the authority of the Board of Directors.
ARTICLE VI. CERTIFICATES OF STOCK OWNERSHIP
SECTION 1. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form as shall be determined by the
Board of Directors. Such certificates shall be signed by the President or
any Vice-President and by the Secretary or Assistant Secretary. All
certificates shall be consecutively numbered or otherwise identified. The
name and address of the shareholder to whom the certificates thereby are
issued, and date of issue, shall be entered on the books of the
corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor pursuant to Article IX hereof
or upon such other terms and indemnity to the corporation as the Board of
Directors may prescribe.
SECTION 2. Acquisition of Shares. The corporation may acquire its
own shares and the shares so acquired shall constitute authorized but
unissued shares.
ARTICLE VII. FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
January and end on the last day of December in each following year.
ARTICLE VIII. AMENDMENTS
The corporation's shareholders may amend or repeal the corporation's
Bylaws even though the Bylaws may also be amended or repealed by its Board
of Directors.
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors of the corporation unless the
shareholders in adopting, amending, or repealing a particular bylaw provide
expressly that the Board of Directors may not amend or repeal that bylaw.
The Secretary of the corporation shall mail a copy of each amendment
adopted by the Board of Directors at the time of payment of the dividend
next following the adoption of the amendment.
ARTICLE IX. LOST CERTIFICATES
Any shareholder claiming a certificate of stock to have been lost,
stolen or destroyed shall make an affidavit or affirmation of such fact,
and shall give the Board of Directors such bond as the Treasurer may
require sufficient to indemnify against any claim that may be made against
the corporation on account of the alleged loss, theft or destruction of
such certificate or any damage or loss that may arise from issuing a new
certificate, whereupon the Board of Directors may by resolution duly
entered on record order a new certificate of the same alleged to be lost or
destroyed.
ARTICLE X. STOCK LIMITATION
No one shareholder shall be entitled to hold more than five percent
(5%) of the authorized and issued capital stock of the corporation
provided, however, this limitation shall automatically terminate without
any further action of the Board of Directors only upon the effective date
of a Plan of Merger or share exchange approved by the requisite number of
shareholders which in effect causes the issued capital stock of the
corporation to be exchanged for the capital stock of a holding/parent
company of the corporation.
ARTICLE XI. INDEMNIFICATION
SECTION 1. Indemnification for Successful Defense. Within twenty
(20) days after receipt of a written request pursuant to Section 3 below,
the corporation shall indemnify a director or officer, to the extent he or
she has been successful on the merits or otherwise in the defense of a
proceeding, for all reasonable expenses incurred in the proceeding if the
director or officer was a party because he or she is a director or officer
of the corporation. The phrase "director or officer" in this Article XI
shall mean each present, former, and future director or officer of the
corporation or an individual who, while a director or officer of the
corporation, is or was serving at the corporation's request as an officer,
director, partner, trustee, member of any governing or decision-making
committee, manager, employee or agent of another corporation or foreign
corporation, limited liability company, partnership, joint venture, trust
or other enterprise.
SECTION 2. Other Indemnification.
(a) In cases not included under Section 1 above, the corporation
shall indemnify a director or officer against liability and expenses
incurred by such person in a proceeding to which the person was a party
because he or she is a director or officer unless liability was incurred
because the person breached or failed to perform a duty he or she owes or
owed to the corporation and the breach or failure to perform constitutes
any of the following:
(1) A willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the person
has a material conflict of interest.
(2) A violation of criminal law, unless the director or officer
had reasonable cause to believe his or her conduct was
lawful or not reasonable cause to believe his or her conduct
was unlawful.
(3) A transaction from which the director or officer derived an
improper personal profit.
(4) Willful misconduct.
(b) Determination of whether indemnification is required under this
section shall be made pursuant to Section 5 below.
(c) The termination of a proceeding by judgment, order, settlement,
or conviction, or upon a plea of no contest or an equivalent plea, does
not, by itself, create a presumption that indemnification of the director
or officer is not required under this section.
SECTION 3. Written Request. A director or officer who seeks
indemnification under Sections 1 or 2 above shall make a written request to
the corporation.
SECTION 4. Nonduplication. The corporation shall not indemnify
a director or officer under Sections 1 or 2 above if the director or
officer has previously received indemnification or allowance of expenses
from any person, including the corporation, in connection with the same
proceeding. However, the director or officer has no affirmative duty to
look to any other person for indemnification nor to first exhaust his or
her remedies to seek indemnification from such other person.
SECTION 5. Determination of Right to Indemnification. The director
or officer seeking indemnification under Section 2 above shall seek one of
the methods for determining his or her right to indemnification pursuant to
the provisions of Section 180.0855(1) through (6) of the Wisconsin
Statutes; and such selection shall be made within sixty (60) days after the
commencement of any proceeding. Such selection shall be made in writing
and delivered to the Secretary of the corporation. If it is determined
that indemnification is required under Section 2 above, the corporation
shall pay all liabilities and expenses not prohibited by Section 4 above
within ten (10) days after receipt of the written determination as to a
director's or officer's indemnification under Section 2 above. The
corporation shall also pay all expenses incurred by the director or officer
in the determination process.
SECTION 6. Advance Payment of Expenses as Incurred. Upon written
request by the person seeking indemnification under Section 2 above, the
corporation will pay or reimburse his or her reasonable expenses as
incurred if the person requesting such indemnification provides the
corporation with all of the following: (a) a written affirmation of his or
her good faith belief that he or she has not breached or failed to perform
his or her duties to the corporation and (b) a written undertaking,
executed by such person, to repay the allowance and reasonable interest on
the allowance to the extent it is ultimately determined under Section 5
above that indemnification under Section 2 above is not required and that
indemnification is not ordered by a court under Section 180.0854 of the
Wisconsin Statutes. The undertaking under this section shall be an
unlimited general obligation of the director or officer and may be accepted
without reference to his or her ability to repay the allowance. The
undertaking may be secured or unsecured.
SECTION 7. Nonexclusivity.
(a) Except as provided in (b), Sections 1, 2, and 6 above do not
preclude any additional right to indemnification or allowance of expenses
that a director or officer may have under any of the following:
(1) The articles of incorporation.
(2) A written agreement between the director or officer and the
corporation.
(3) A resolution of the Board of Directors.
(4) A resolution, after notice, adopted by a majority vote of
all of the corporation's voting shares then issued and
outstanding.
(5) The statutes or common law of the State of Wisconsin.
(b) Regardless of the existence of an additional right under (a), the
corporation shall not indemnify a director or officer or permit a director
or officer to retain any allowance of expenses, unless it is determined by
or on behalf of the corporation that the director or officer did not breach
or fail to perform a duty he or she owed or owes to the corporation which
constitutes conduct under Section 2(a) (1), (2), (3) or (4). A director or
officer who is a party to the same or related proceeding for which
indemnification or an allowance of expenses is sought may not participate
in a determination under this subsection.
(c) Sections 1 to 8 herein do not affect the corporation's power to
pay or reimburse expenses incurred by a director or officer in any of the
following circumstances:
(1) As a witness in a proceeding to which he or she is not a
party.
(2) As a plaintiff or petitioner in a proceeding because he or
she is or was a director or officer of the corporation.
SECTION 8. Liberal Construction. In order for the corporation to
obtain and retain qualified directors and officers, the foregoing
provisions shall be liberally administered in order to afford maximum
indemnification of directors or officers and, accordingly, the
indemnification above provided for shall be granted in all cases unless to
do so would clearly contravene applicable law, controlling precedent, or
public policy.
ARTICLE XII. DISTRIBUTIONS.
The Board of Directors may authorize, and the corporation may make,
distributions (including dividends on its outstanding shares) in the manner
and upon the terms and conditions provided by law.
ARTICLE XIII. CORPORATE SEAL.
The Board of Directors may provide a corporate seal which may be
circular in form and have inscribed thereon any designation including the
name of the corporation, Wisconsin as the state of incorporation, and the
words "Corporate Seal."
ARTICLE XIV. EMERGENCY BYLAWS.
The following provisions of this Article XIV, "Emergency Bylaws" shall
be effective only during an emergency, which is defined as when a quorum of
the corporation's directors cannot be readily assembled because of some
catastrophic event or events. These Emergency Bylaws are not effective
after the emergency ends.
During such emergency:
(a) Notice of Board of Director Meetings. Any one member of the
Board of Directors or any one of the following officers: President,
Vice-president, Secretary, or Treasurer, may call a meeting of the Board of
Directors. Notice of such meeting need be given only to those directors
whom it is practicable to reach, and may be given in any practical manner,
including by publication and radio. Such notice shall be given at least
six (6) hours prior to commencement of the meeting.
(b) Temporary Directors and Quorum. One or more officers of the
corporation present at the emergency Board of Directors meeting, as is
necessary to achieve a quorum, shall be considered to be directors for the
meeting, and shall so serve in order of rank, and within the same rank, in
order of seniority. In the event that less than a quorum of the directors
are present (including any officers who are to serve as directors for the
meeting), those directors present (including the officers serving as
directors) shall constitute a quorum.
(c) Actions Permitted To Be Taken. The Board of Directors as
constituted in paragraph (b), and after notice as set forth in paragraph
(a) may:
(1) Officers' Powers. Prescribe emergency powers to any
officer of the corporation;
(2) Delegation of Any Power. Delegate to any officer or
director, any of the powers of the Board of Directors;
(3) Lines of Succession. Designate lines of succession of
officers and agents, in the event that any of them are unable to discharge
their duties;
(4) Relocate Principal Place of Business. Relocate the
principal place of business, or designate successive or simultaneous
principal places of business;
(5) All Other Action. Take any other action, convenient,
helpful, or necessary to carry on the business of the corporation.
<TABLE>
EXHIBIT 12
MID-PLAINS, INC.
Computation of Ratio of Earnings to Fixed Charges
Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
In Thousands:
Net Income $1,660 $3,425 $2,889 $2,882 $2,680
Income Tax
Expense 2,139 2,109 1,715 1,551 1,562
Interest Charges 1,177 957 896 955 1,004
Total Earnings 4,976 $6,491 $5,500 $5,388 $5,246
Interest
Expense 1,177 957 896 955 1,004
Ratio of Earnings
To Interest
Expense 4.23 6.78 6.14 5.64 5.23
</TABLE>
EXHIBIT 21
MID-PLAINS, INC.
SIGNIFICANT SUBSIDIARY OF THE CORPORATION
The active subsidiaries of Mid-Plains, Inc. are listed below.
The names of certain subsidiaries, which considered in aggregate
would not constitute a significant subsidiary, have been omitted.
Name State of Organization
Mid-Plains Communications Systems, Inc. Wisconsin
PCS Wisconsin, LLC Wisconsin
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1058
<SECURITIES> 0
<RECEIVABLES> 3323
<ALLOWANCES> 0
<INVENTORY> 1317
<CURRENT-ASSETS> 6249
<PP&E> 50552
<DEPRECIATION> 21730
<TOTAL-ASSETS> 39888
<CURRENT-LIABILITIES> 4398
<BONDS> 0
0
0
<COMMON> 11889
<OTHER-SE> 7608
<TOTAL-LIABILITY-AND-EQUITY> 39888
<SALES> 0
<TOTAL-REVENUES> 27087
<CGS> 0
<TOTAL-COSTS> 20371
<OTHER-EXPENSES> 42
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1177
<INCOME-PRETAX> 5581
<INCOME-TAX> 2139
<INCOME-CONTINUING> 3442
<DISCONTINUED> 0
<EXTRAORDINARY> 1782
<CHANGES> 0
<NET-INCOME> 1660
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
