FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-1732
MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)
WISCONSIN 39-0486870
(State of incorporation) (I.R.S Employer Identification
Number)
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
(Address of principal executive office)
Registrant's telephone number, including area code: 715-693-4470
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such report), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
The number of common shares outstanding at June 30, 1995 was
7,862,740.
<PAGE>
MOSINEE PAPER CORPORATION
FORM 10-Q
QUARTER ENDED JUNE 30, 1995
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Three Months Ended
June 30, 1995 (unaudited) and
June 30, 1994 (unaudited) 1
Condensed Consolidated Balance
Sheets June 30, 1995 (unaudited)
and December 31, 1994 (derived from
audited financial statements) 2
Condensed Consolidated Statements
of Cash Flows Three Months
Ended June 30, 1995 (unaudited)
and June 30, 1994 (unaudited) 3
Notes to Condensed Consolidated
Financial Statements 4
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 5
PART II. OTHER INFORMATION
Item 3. Defaults in Senior Securities 9
Item 4. Submission of Matters to a 9
Vote of Security Holders
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except 1995 1994 1995 1994
share data - unaudited) ---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $74,672 $64,784 $147,250 $126,779
Cost of sales 63,038 52,172 122,417 103,178
------ ------ ------- -------
Gross profit on sales 11,634 12,612 24,833 23,601
------ ------ ------- -------
Operating expenses:
Selling and advertising 2,496 2,499 4,988 4,718
Administrative 2,839 4,228 7,180 7,771
------ ------ ------- -------
Total operating expenses 5,335 6,727 12,168 12,489
------ ------ ------- -------
Income from operations 6,299 5,885 12,665 11,112
Other income (expense):
Interest expense (1,575) (1,112) (3,104) (2,063)
Other 82 76 943 20
------ ------ ------- ------
Income before income taxes and
cumulative effect adjustment 4,806 4,849 10,504 9,069
Provision for income taxes 1,920 1,970 4,213 3,670
------ ------ ------- ------
Income before cumulative effect
of a change in accounting
principles $2,886 2,879 6,291 5,399
Cumulative effect of a change
in accounting principles
(net of income taxes) --- --- --- (750)
------ ------ ------- ------
Net income $2,886 $2,879 $6,291 $4,649
====== ====== ======= ======
Income per share before
cumulative effect of a change
in accounting principles $0.36 $0.36 $0.80 $0.68
Cumulative effect of a change
in accounting principles
(net of income taxes) --- --- --- (0.09)
----- ----- ----- -----
Net income per share $0.36 $0.36 $0.80 $0.59
===== ===== ===== =====
Weighted average common
shares outstanding 7,863,096 7,863,287 7,863,096 7,863,287
========= ========= ========= =========
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, December 31,
($ thousands) 1995* 1994*
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalent $ 232 $ 1,555
Receivables, net 26,950 26,207
Inventories 36,882 30,600
Deferred income taxes 3,999 3,999
Other current assets 625 686
------- -------
Total current assets 68,688 63,047
------- -------
Property, plant and equipment, net 344,631 337,801
Less: accumulated depreciation 150,163 143,780
------- -------
Net depreciation value 194,468 194,201
------- -------
Other assets 8,576 8,015
------- -------
TOTAL ASSETS $271,732 $265,083
======= =======
LIABILITIES
Accounts payable $ 22,835 $ 19,523
Accrued and other liabilities 14,640 16,259
Accrued income taxes 732 953
------- -------
Total current liabilities 38,207 36,735
Long-term debt 91,333 91,383
Deferred income taxes 22,002 21,633
Postretirement benefits 14,720 14,427
Other noncurrent liabilities 10,502 10,799
------- -------
Total liabilities 176,764 174,977
------- -------
Commitments and contingencies -- --
Preferred stock of subsidiary 1,255 1,255
------- -------
STOCKHOLDERS' EQUITY
Preferred stock - $1 par value,
authorized - 1,000,000 shares,
none issued
Common stock - no par value,
authorized - 30,000,000 shares,
11,433,205 shares issued 44,827 25,984
Additional paid-in capital 13,851 13,851
Retained earnings 52,737 66,704
------- -------
Subtotals 111,415 106,539
Treasury stock (17,702) (17,688)
------- -------
Total stockholders' equity 93,713 88,851
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $271,732 $265,083
======= =======
<FN>
*The consolidated balance sheet at June 30, 1995 is unaudited. The December 31, 1994
consolidated balance sheet is derived from audited financial statements.
</TABLE>
<PAGE>
<TABLE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
<CAPTION>
Six Months Ended
June 30,
($ thousands - unaudited) 1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $6,291 $4,649
Provision for depreciation, depletion
and amortization 8,269 7,669
Recognition of deferred revenue (20) (20)
Provision for losses on accounts receivable 200 187
Gain on property, plant and equipment
disposals (946) (22)
Deferred income taxes 369 881
Changes in operating assets and
liabilities:
Accounts receivable (943) (2,949)
Inventories (6,282) (2,723)
Other assets (1,345) (896)
Accounts payable and other liabilities 2,860 1,151
Accrued income taxes (222) 500
----- -----
Net cash provided by operating activities 8,231 8,427
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (9,222) (8,204)
Proceeds from property, plant and
equipment disposals 1,022 97
----- -----
Net cash used in investing activities (8,200) (8,107)
----- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) under credit
agreements (49) 297
Dividends paid (1,291) (1,287)
Payment for purchase of company stock (14) ---
----- -----
Net cash used in financing activities (1,354) (990)
----- -----
Net decrease in cash and cash equivalents (1,323) (670)
Cash and cash equivalents at beginning
of year 1,555 1,521
----- -----
Cash and cash equivalents at end of period $ 232 $ 851
===== =====
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amount capitalized $3,214 $2,060
Income taxes paid 4,066 2,289
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
MOSINEE PAPER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying financial statements in the opinion of
management reflect all adjustments which are normal and
recurring in nature and which are necessary for a fair
statement of the results for the periods presented. Some
adjustments involve estimates which may require revision in
subsequent interim periods or at year-end. Such adjustments
include interim LIFO inventory valuations and the effective
income tax rate for the year. In all regards, the financial
statements have been presented in accordance with generally
accepted accounting principles applied in a consistent
manner.
<TABLE>
2. Inventories consist of the following:
<CAPTION>
June 30, December 31,
1995 1994
---- ----
<S> <C> <C>
Raw material $19,178 $14,534
Finished goods and work
in process 21,331 17,574
Supplies 8,774 8,759
------ ------
Subtotal 49,283 40,867
Less: LIFO reserve 12,401 10,267
------ ------
Net inventories $36,882 $30,600
====== ======
</TABLE>
3. Earnings per share of common stock is based on the weighted
average number of common shares outstanding and gives effect
to applicable preferred stock dividend requirements.
4. Net income includes expenses, or credits, for incentive
compensation plans. The company calculates this liability
using the average price of Mosinee Paper's stock at the close
of each fiscal quarter as if all incentive compensation plans
had been exercised on that day. For the six months ended
June 30, 1995, these plans resulted in after tax income of
$203,000, or $0.03 per share, compared to an after tax
expense of $409,000, or $0.05 per share for the same period
last year. For the second quarter, the effect this year is
an after tax income of $555,000 or $0.07 per share, compared
to second quarter last year of an after tax expense of
$381,000 or $0.05 per share.
5. The company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 112, "Accounting for
Postemployment Benefits" as of January 1, 1994. The
cumulative effect for the transition obligation was an
after-tax expense of $750,000 or $0.09 per share.
6. Prior year per share data has been restated for the May 18,
1995 10% stock dividend.
7. Refer to notes to financial statements which appear in the
Annual Report on Form 10-K for the year ended December 31,
1994 for the company's accounting policies which are
pertinent to these statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(All $ amounts are in thousands, except per share
amounts)
RESULTS OF OPERATIONS
Record second quarter sales of $74,672 were 15% higher than the
$64,784 reported last year. Higher selling prices, resulting from
the continued escalation of raw material costs during the quarter,
accounted for the improvement over the prior year. Volume gains at
Pulp and Paper and Converted Products partially offset a weaker
mix of products sold, which occurred at all operations. Price
increases effected during the quarter were reasonably successful
as most competitors faced the same pressure of increased cost of
materials. Prices for wastepaper used in towel and tissue products
stabilized in June and have shown some reduction in July with the
possibility of further weakening in August. A price increase for
purchased grades of pulp is expected early in the fourth quarter.
Strong efforts to increase selling prices to offset any further
cost increases will continue to be made. In summary, selling price
improvements amounting to $11 million were somewhat offset by
unfavorable product mix/volume effects of $1 million.
Record sales for the first half of 1995 of $147,250 increased 16%
over the $126,779 reported for the same period last year. The
improvement was primarily due to higher selling prices at all
operating units. Volume increases at Pulp and Paper provided
nearly $5 million of increased sales helping to offset a decline
at Bay West which resulted from the effect of higher selling
prices as some customers less sensitive to quality switched to
lower priced suppliers. In summary, nearly $20 million of the
increase is attributable to higher selling prices while product
mix/volume effects offset each other.
Cost of sales for the second quarter of $63,038 increased 21% over
the $52,172 reported at the same time last year. As a percent of
net sales, cost of sales increased to 84% from the year earlier
level of 81% reflecting the higher costs of pulp, wastepaper and
linerboard. Continued emphasis on cost reduction and improved
operating efficiency has helped to reduce the impact of these
higher costs. As mentioned earlier, wastepaper prices have
stabilized in June and are showing signs of being lower in the
third quarter with some decreases having occurred in July.
Additionally, equipment related problems occurred during May at
the Towel and Tissue mill in Ohio resulted in a loss of production
and efficiency that effectively added to cost of sales. These
problems were fixed in June awaiting permanent repair with new
equipment to be installed near the end of the year. For the
quarter, cost increases have amounted to $12 million.
Cost of sales for the year-to-date of $122,417 increased 19% from
the year earlier period of $103,178. As a percent of net sales,
cost of sales increased to 83% from the year earlier level of 81%
primarily due to raw material cost increases. The raw material
cost increases discussed above have impacted both first and second
quarters with the second quarter bearing much more of the
increase.
Gross profit for the second quarter, reflecting the above,
decreased 8% to $11,634 from the year earlier level of $12,612.
For the quarter, this amounted to a 16% gross profit margin
compared to the 19% achieved last year during the same period. On
a year-to-date basis, gross profit reached $24,833, 5% ahead of
last year's level of $23,601. Gross profit margin, so far in 1995,
is 17% compared to last year's level of 19%.
Operating expenses of $5,335 for the second quarter and $12,168
for the first half of 1995 declined 21% and 3%, respectively, from
the same periods last year. Selling expenses remained comparable
to last year for the same period. General and administrative
expenses for the second quarter of $2,838 declined 33% from the
$4,228 reported for the same period last year. Excluding the
effect of adjustments to the accrued liability for incentive
compensation programs based on the market price of the company's
stock (SARs) of income of <PAGE>$925 from lower stock prices and
an expense of $641 last year, general and administrative expenses
increased $176, or 5%, over the previous year.
Similarly, on a year-to-date basis general and administrative
expenses of $7,180 declined 8% from the prior year level of
$7,771. After adjusting for SAR related effects of income of $339
for the current year and an expense of $688 during the prior year,
general and administrative expenses of $7,520 increased 6% over
the prior year level. For both the quarter and six month period
this year, general inflationary increases in operating expenses,
both selling and general and administrative, principally employee
compensation incentive compensation programs and employee
training, have been partially offset by cost reduction programs in
other operating categories.
Reflecting the above, income from operations for the second
quarter $6,299 increased 7% above the $5,885 recorded during last
year's second quarter. Year-to-date income from operations of
$12,665 increased 14% over the $11,112 reported for the same
period last year. After adjusting for SAR related effects, income
from operations during the second quarter of the year of $5,375
declined 18% from the prior year of $6,526. Year-to-date income
from operations, similarly adjusted, of $12,335 increased over
last year's level of $11,800.
Interest expense for the second quarter of $1,575 and $3,104 for
the first six months of this year rose $463 and $1,041,
respectively, over the amounts paid for the same period last year.
The increase is wholly attributable to higher interest rates in
effect during the current year. Lower average debt in 1995
partially offset the effect of higher rates. Other income for the
quarter includes gain from the sale of timberlands incompatible
with the company's fiber needs of $152, or $0.01 per share, and
for the first six months of the year of $1,020, or $0.08 per
share.
Accordingly, income before the cumulative effect of a change in
accounting principle and income taxes of $4,806 for the second
quarter were similar to the $4,849 reported for the same period
last year. For the first six months, income before the cumulative
effect of a change in accounting principle and income taxes of
$6,291 improved 17% over the prior year level of $5,399.
The provision for income taxes of $1,920 for the quarter and
$4,213 for the year-to-date are based on an effective tax rate of
40% for both periods. During the prior year an effective tax rate
of 40.6% for the second quarter and 40.5% for the year-to-date
resulted in income tax provisions of $1,970 and $3,670 for the
respective periods.
Income before the cumulative effect of a change in an accounting
principle of $2,886, or $0.36 per share, for the second quarter
equaled the $2,879, or $0.36 per share, reported for the same
period last year. For the first six months, income before the
cumulative effect of a change in an accounting principle of
$6,291, or $0.80 per share, rose over the prior year level of
$5,399, or $0.68 per share.
The company adopted Statement of Financial Accounting Standards
No. 112, "Employers Accounting for Postemployment Benefits"
effective January 1, 1994. The accumulated liability as of
December 31, 1993 for these benefits required an after-tax expense
of $750, or $0.09 per share.
Reflecting the above, net income for the second quarter of $2,886,
or $0.36 per share, was comparable to the $2,879, or $0.36 per
share reported last year at the same time. For the year-to-date,
net income $6,291, or $0.80 per share, improved over the $4,649,
or $0.59 per share reported for the same time period last year. On
a year-to-date basis, adjusting reported income per share for the
effects of SAR based incentive compensation, land sales and
accounting changes, income of $0.70 trails the prior year level of
$0.75.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations for the first six months of the year
of $8,231 declined slightly from the $8,427 reported for the same
period last year. Increased sales levels accounted for the higher
accounts receivable level and represented a $943 use of cash.
Inventories at several locations continue to reflect higher levels
established in anticipation of price increases that occurred
during the second quarter for purchased pulp, linerboard and waste
paper resulting in a $6,282 use of cash. Partially offsetting
these uses of cash was an increase in accounts payable of $2,860.
Cash used in investing activities represented $9,222 of capital
expenditures partially offset by $1,022 of proceeds from
timberland and equipment disposals. The primary capital
expenditures include an automated roll wrap system at Pulp and
Paper and improvement of wax blending equipment and a new winder
at Converted Products. Cash used in financing activities resulted
from debt repayment of $49 and payment of dividends to
shareholders of $1,291.
As a result of operating, investing and financing activities for
the first six months of the year cash decreased by $1,323 to $232
at June 30, 1995 from the $1,555 balance at the end of 1994.
The company maintains a credit agreement with one bank acting as
agent and certain financial institutions as lenders to issue up to
$90,000 of unsecured borrowing less the amount of commercial paper
outstanding and also maintains a loan agreement with another bank
for $20,000, making the total amount available for borrowing of
$110,000. As of June 30, 1995 the company had issued and
outstanding $46,216 of commercial paper and had other borrowing
under these agreements of $45,000 for a total debt of $91,216.
This leaves approximately $19,000 available to supplement cash
provided from operations for uses in the business which, at the
present time the company believes to be adequate for the operation
of the business and currently anticipated capital expenditures.
Long-term debt of $91,333 declined slightly from the prior year
end level of $91,383 reflecting the utilization and generation of
cash described above. As a percent of total capitalization, long-
term debt declined slightly to 49% from the year-end level of 51%.
Working capital, reflecting the increase in inventories and
accounts receivable, and accompanied by a modest increase in
current liabilities, increased to $30,481 from the year-end level
of $26,312. The current ratio, reflecting this improvement,
increased to 1.8:1 from the year-end mark of 1.7:1.
PART II - OTHER INFORMATION
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Sorg Paper Company, a subsidiary of the registrant, omitted
the payment of its quarterly cash dividends of $1.38 per share,
payable July 1, 1995 to shareholders of record, on its 5-1/2%
cumulative preferred stock, par value $100. The number of 5-1/2%
cumulative preferred shares outstanding is 12,552 and the amount
of dividends in arrears is $483,122.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held on
April 20, 1995.
<TABLE>
The matters voted upon, including the number of votes cast
for or withheld, as well as the number of abstentions and broker
non-votes, as to each such matter were as follows:
<CAPTION>
Matter Shares
Broker
For Withheld Against Abstain Non-Vote
<S> <C> <C> <C> <C> <C>
1. Election of
Directors
(a) San W. Orr, Jr. 6,300,376 44,281 N/A N/A 0
(b) Harry R. Baker 6,303,359 41,118 N/A N/A 0
2. Adoption of 1994 5,984,904 N/A 274,189 85,283 281
Executive Stock
Option Plan
3. Amendment of 5,640,616 N/A 631,366 50,908 21,767
Company's restated
articles of
incorporation to
increase authorized
shares to 30,000,000
4. Amendment of 6,134,160 N/A 96,056 92,574 21,867
Company's restated
articles of
incorporation to
change the common
stock to shares
without par value
5. Approval of 6,299,415 N/A 29,954 15,288 0
appointment of
independent auditors
for year ending
December 31, 1995
</TABLE>
<PAGE>
ITEM 5. OTHER INFORMATION:
On April 20, 1995, the company announced a 10% stock dividend
payable May 18, 1995 to shareholders of record as of May 4, 1995.
The company also declared a cash dividend of $0.09 per share
payable May 18, 1995 on all shares on a post-dividend basis to
shareholders of record as of May 4, 1995.
The description of the Company's common stock set forth on
Exhibit (99)(a) to this Form 10-Q is provided for the purpose of
updating any previous description of the Company's common stock
and reflects the adoption of the amendments to the Company's
Restated Articles of Incorporation at the annual meeting of
shareholders held April 20, 1995 to increase the authorized shares
to 30,000,000 and change the common stock to shares without par
value.
At the annual meeting of shareholders held April 20, 1995,
the shareholders approved an amendment to the company's restated
articles on incorporation which increased the number of authorized
shares of common stock from 15,000,000 to 30,000,000 and changed
the company's authorized common stock from $2.50 par value per
share to shares without par value. The company has no present
plans to issue any of the additional authorized common stock nor
are there any commitments for the issuance of the additional
common stock at this time except in connection with employee stock
option plans currently in effect.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
Page
----
(a) Exhibits required by Item 601 of Regulation S-K.
(3)(i) Articles of Incorporation
Restated Articles of Incorporation, 12
as last amended April 26, 1995
(11) Computation of earnings per share 48
(27) Financial Data Schedule 50
(99) Additional Exhibits
(a) Description of Common Stock 51
(b) Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MOSINEE PAPER CORPORATION
August 14, 1995 GARY P. PETERSON
Gary P. Peterson
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
Exhibit (3)(i)
RESTATED ARTICLES OF INCORPORATION,
AS AMENDED,
OF
MOSINEE PAPER CORPORATION
ARTICLE 1. The name of the corporation shall be Mosinee
Paper Corporation.
ARTICLE 2. The period of existence shall be perpetual.
ARTICLE 3. The purpose shall be to engage in any lawful
business or purpose whatever for which corporations may be
organized under the Wisconsin Business Corporation Law, Chapter
180 of the Wisconsin Statutes.
ARTICLE 4. The Corporation shall have authority to issue
30,000,000 shares of common stock without par value (hereinafter
sometimes referred to as "Common Stock") and 1,000,000 shares of
preferred stock, $1.00 par value (hereinafter sometimes referred
to as "Preferred Stock").
The designation, relative rights, and preferences of each
class of shares are as follows:
(a) PREFERRED STOCK.
1. Series: The Preferred Stock may be issued from time to
time by the Board of Directors as herein provided in one or more
series. The designation, relative rights, and preferences of the
shares of each series of Preferred Stock may differ from those of
any other series of which there are shares outstanding, except to
the extent that any such difference is prohibited by the Wisconsin
Business Corporation Law, Chapter 180 of the Wisconsin Statutes,
as in effect at the time of the adoption of the resolution of the
Board of Directors creating such series of Preferred Stock.
Subject to the other provisions of this Article 4, the Board
of Directors is hereby expressly authorized, in the resolution
creating each series of Preferred Stock, to fix and determine the
designation, relative rights, and preferences of the shares in
such series, including, without limitation:
(i) the number of shares to constitute such series and
the distinctive designation thereof;
(ii) the dividend rate on the shares and whether
dividends on the shares shall be cumulative;
(iii) the right, if any, of the Corporation to redeem
the shares;
(iv) whether a sinking fund shall be established with
respect to any such shares and, the obligation, if any, of
the Corporation to redeem shares of such series pursuant to a
sinking fund;
<PAGE>
(v) the right, if any, of holders of shares to convert
the same into, or exchange the same for, other securities of
this Corporation;
(vi) the amount per share payable to the holders of the
shares upon the voluntary and involuntary liquidation,
dissolution or winding up of the Corporation;
(vii) the right, if any, of the holders of shares to
vote; and
(viii) generally to fix the relative rights and
preferences of the shares, provided, however, that no such
right or preference shall be in conflict with these Articles
of Incorporation or with the resolution adopted by the Board
of Directors creating any series of which there are shares
then outstanding.
2. Dividends: Dividends on the outstanding Preferred Stock
of each series shall be declared and paid or set apart for payment
in the amount provided in or determined in accordance with the
resolution adopted by the Board of Directors creating such series,
out of the assets of the Corporation legally available therefor,
before any dividends shall be declared and paid or set apart for
payment on the Common Stock with respect to the same dividend
period. Dividends on the shares of any series shall be cumulative
only if and to the extent set forth in the resolution adopted by
the Board of Directors creating such series. No dividends may be
declared and paid or set apart for payment with respect to any
dividend period on the Common Stock until dividends, if any, on
all outstanding shares of Preferred Stock (including cumulative
dividends if and to the extent any such shares shall be entitled
thereto) shall have been declared and paid or set apart for
payment with respect to the same dividend period.
All shares of Preferred Stock of all series shall be of equal
rank, preference, and priority as to dividends, and when the
stated dividends are not paid in full the shares of all series of
the Preferred Stock shall share ratably in the payment thereof in
accordance with the sums which would be payable on such shares if
all dividends were paid in full.
3. Voting Rights: Except as otherwise specifically
provided in these Articles of Incorporation or in the resolution
of the Board of Directors creating any series of the Preferred
Stock, or as otherwise provided by law, the Preferred Stock shall
not have any right to vote in elections of directors or for any
other purpose and the Common Stock shall have the exclusive right
to vote in elections of directors and for all other purposes.
4. Liquidation: In the event of any liquidation,
dissolution, or winding up of the Corporation, whether voluntary
or involuntary, each series of Preferred Stock shall have
preference and priority over the Common Stock for payment of the
amount, if any, to which such series of Preferred Stock shall be
entitled in accordance with the provisions thereof, and each
holder of Preferred Stock shall be entitled to be paid in full his
share of such amount, or have a sum sufficient for the payment in
<PAGE>
full set aside, before any payments shall be made to the
holders of the Common Stock. If, upon liquidation, dissolution, or
winding up of the Corporation, the assets of the Corporation or
proceeds thereof which are distributable among the holders of the
shares of all series of the Preferred Stock shall be insufficient
to pay in full the preferential amount aforesaid, then such
assets, or the proceeds thereof, shall be distributed among such
holders ratably in accordance with the respective amounts which
would be payable if all amounts payable thereon were paid in full.
After the payment to the holders of Preferred Stock of all such
amounts to which they are entitled, if any, the remaining assets
and funds of the Corporation shall be divided and paid to the
holders of the Common Stock.
5. Redemption: If any series of Preferred Stock shall be
redeemable, then at the option of the Board of Directors the
Corporation may redeem all or any part of any series of Preferred
Stock outstanding, by means of a sinking fund or otherwise, by
paying for each share the then applicable redemption price plus an
amount equal to accrued and unpaid dividends, if any, to the date
fixed for redemption. From and after the earlier of the date
fixed as the date of redemption or the date upon which the
Corporation shall have deposited with a bank or trust company,
accumulated, or otherwise set aside in trust funds for the purpose
of and sufficient for such redemption (unless default shall be
made by the Corporation in providing moneys at the time and place
of redemption for the payment of the redemption price), all
dividends upon the Preferred Stock so called for redemption shall
cease to accrue, and all rights of the holders of said Preferred
Stock as shareholders in the Corporation, except the right to
receive the redemption price upon surrender of the certificate
representing the Preferred Stock so called for redemption (duly
endorsed for transfer, if required), shall cease and determine.
6. Preferred Stock-Series A:
A. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating
Preferred Stock" (the "Series A Preferred Stock") and the
number of shares constituting such series shall be 150,000.
Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than that of the shares then
outstanding.
B. Dividends and Distributions.
(I) Subject to the prior and superior rights of
the holders of any shares of any series of capital stock
of the Corporation ranking prior and superior to the
shares of Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Stock and
of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March,
June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend
<PAGE>
Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $5 or (b) subject to
the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares
of Common Stock, par value $2.50 per share, of the
Corporation (the "Common Stock") or a subdivision of the
outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction
of a share of Series A Preferred Stock. In the event
the Corporation shall at any time declare or pay any
dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to
such event.
(II) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided
in paragraph (I) of this Section 6(B) immediately after
it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $5 per share on the Series A
Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(III) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Preferred
Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend
<PAGE>
and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which
record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
C. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(I) Each share of Series A Preferred Stock shall
entitle the holder thereof to 100 votes on all matters
submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any
time declare or pay any dividend on Common Stock payable
in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(II) Except as otherwise provided herein or by
law, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote
of shareholders of the Corporation.
(III) Except as set forth herein, holders of
Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any
corporate action.
D. Certain Restrictions.
(I) Whenever quarterly dividends or other
dividends or distributions payable on the Series A
Preferred Stock as provided in Section B are in arrears,
thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of
<PAGE>
Series A Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking
on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid
ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable
or in arrears in proportion to the total amounts
to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Preferred
Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing
or by publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after
consideration of the respective annual dividend
rates and other relative rights and preferences of
the respective series and classes, shall determine
in good faith will result in fair and equitable
treatment among the respective series or classes.
(II) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under
paragraph (I) of this Section D purchase or otherwise
acquire such shares at such time and in such manner.
E. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as
<PAGE>
part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth
herein.
F. Liquidation, Dissolution, or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of
stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provisions for
adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of
Common Stock, or (2) to the holders of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred
Stock and all other such parity stock in proportion to the
total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.
In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
G. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case the shares of Series A Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set
forth) equal to the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at
any time declare or pay any dividend on Common Stock payable
in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in
<PAGE>
each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
H. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
I. Amendment. The Restated Articles of Incorporation,
as amended, of the Corporation shall not be amended in any
manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote
of the holders of at least two-thirds of the outstanding
shares of Series A Preferred Stock, voting together as a
single series.
(b) COMMON STOCK.
1. Issuance: From time to time Common Stock may be issued
in such amounts and for such purposes and for such consideration
(but not less than the par value thereof) as shall be determined
by the Board of Directors.
2. Dividends: Subject to the rights of the Preferred
Stock, the holders of the Common Stock shall be entitled to
receive dividends in cash, property, or shares of the Corporation,
out of the assets of the Corporation legally available therefor,
when and as declared by the Board of Directors.
3. Voting Rights: Except as otherwise provided in these
Articles of Incorporation, the Common Stock shall have the
exclusive right to vote for the election of directors and for all
other purposes, and each holder of Common Stock shall be entitled
to one vote for each share thereof held.
4. Liquidation: Upon any liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary,
and after the earlier of the date on which the holders of the
Preferred Stock of each series shall have been paid in full the
amounts to which they shall be entitled or the date on which an
amount sufficient to pay the aggregate amount to which the holders
of the Preferred Stock of each series shall be entitled shall have
been deposited with a bank or trust company or otherwise set aside
as a trust fund for the benefit of the holders of such Preferred
Stock, the remaining assets of the Corporation shall be
distributed pro rata to the holders of the Common Stock in
accordance with their respective rights and interests, to the
exclusion of the holders of the Preferred Stock.
(c) GENERAL PROVISION.
A consolidation or merger of the Corporation with or into
another corporation or corporations or a sale, whether for cash,
shares of stock, securities, or properties, of all or
substantially all of the assets of the Corporation shall not be
<PAGE>
deemed or construed to be a liquidation, dissolution, or winding
up of the Corporation within the meaning of this Article.
Amendment of this Article 4 shall require the affirmative
vote of at least two-thirds of all classes of shares of the
Corporation. As used herein, all classes of shares shall mean all
shares entitled to vote in elections of Directors considered as
one class unless any class or series of shares is entitled to vote
thereon as a class, in which event such terms shall mean to be a
requirement of the affirmative vote of at least two-thirds of the
shares of each class of shares and series entitled to vote thereon
as a class and of the total shares entitled to vote thereon.
ARTICLE 5. No holder of shares of this Corporation shall be
entitled as of right to subscribe for, purchase, or receive any
part of any new or additional issue of shares of any class or
series thereof, whether now or hereafter authorized, or of any
bonds, debentures, or other securities convertible into shares of
any class or series thereof, or of any warrants which confer upon
the holder thereof the right to subscribe for or purchase from the
Corporation any of its shares of any class or series thereof,
whether issued for cash or other consideration, and all such
additional shares, bonds, debentures, other securities convertible
into shares, and warrants may be issued and disposed of by the
Board of Directors to such person or persons and on such terms and
for such consideration (so far as may be permitted by law) as the
Board of Directors, in its absolute discretion, may deem
advisable.
ARTICLE 6. The address of the registered office is Mosinee,
Wisconsin.
ARTICLE 7. The name of the registered agent at such address
is Clarence Scholtens.
ARTICLE 8. The Board of Directors of the Corporation shall
consist of such number of members as the By-Laws may provide, but
shall be not less than three (3), not more than twelve (12) prior
to January 31, 1978, and not more than ten (10) from and after
such date. Members of the Board of Directors shall have such
qualifications as may from time to time be provided by the By-
Laws. The Board of Directors shall be divided into three (3)
classes, to be as nearly equal as possible. The classification
and term of office of Directors holding office at the time of the
adoption of this amendment to Article 8 shall be unaffected by
such adoption. The term of office of the members of the class of
Directors elected at the meeting of shareholders at which this
amendment to Article 8 is adopted shall expire at the third annual
meeting of shareholders following the election of the members of
such class, and at each annual meeting of shareholders following
the meeting at which this amendment to Article 8 is adopted the
number of Directors equal to the number of members in the class
whose term expires at the time of such meeting shall be elected to
hold office until the third annual meeting of shareholders
following the election of the members of such class. Each
Director shall hold office for the term for which he is elected
and until his successor shall have been elected and qualified.
The affirmative vote of four-fifths of the outstanding shares
entitled to vote in elections of Directors shall be required to
<PAGE>
remove Directors from office. Amendment of this Article 8 shall
require the affirmative vote of four-fifths of the shares of the
Corporation entitled to vote thereon, unless any class or series
of shares is entitled to vote thereon as a class, in which event
amendment of this Article 8 shall require the affirmative vote of
four-fifths of the shares of each class of shares and series
entitled to vote thereon as a class and of the total shares
entitled to vote thereon.
ARTICLE 9.
PART I
These Articles of Incorporation may be amended in the manner
authorized by the Wisconsin Business Corporation Law at the time
of amendment unless a specific Article of Incorporation (including
this Article) requires a different proportion of the shares of the
Corporation.
PART II
(a) Except as set forth in clause (d) of this Article, the
affirmative vote of the holders of four-fifths of all shares of
the Corporation entitled to vote in elections of directors,
considered for the purposes of this Article as one class, shall be
required (i) for the adoption of any agreement for the merger or
consolidation of the Corporation with or into any other
corporation, or (ii) to authorize any sale, lease, exchange,
mortgage, pledge, or other disposition of all or any substantial
part of the assets of the Corporation to, or any sale, lease,
exchange, mortgage, pledge, or other disposition to the
Corporation or any subsidiary thereof in exchange for securities
of the Corporation of, any assets of any other corporation,
person, or entity, if, in either case, as of the record date for
the determination of shareholders entitled to notice thereof and
to vote thereon or consent thereto such other corporation, person,
or entity is the beneficial owner, directly or indirectly, of more
than ten percent of the outstanding shares of the Corporation
entitled to vote in elections of directors, considered for the
purposes of this Part II as one class. Such affirmative vote or
consent shall be in addition to the vote or consent of the holders
of the shares of the Corporation otherwise required by law, these
Articles of Incorporation, or any agreement between this
Corporation and any national securities exchange.
(b) For the purposes of this Part II, (i) any corporation,
person, or other entity shall be deemed to be the beneficial owner
of any shares of the Corporation (A) which it has the right to
acquire pursuant to any agreement or upon exercise of conversion
rights, warrants or options, or otherwise, or (B) which are
beneficially owned, directly or indirectly (including shares
deemed owned through application of subclause (A), above), by any
other corporation, person, or entity with which it or its
"affiliate" or "associate" (as defined below) has any agreement,
arrangement, or understanding for the purpose of acquiring,
holding, voting, or disposing of stock of the Corporation, or
which is its "affiliate" or "associate" as those terms are defined
in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on January 1, 1969,
<PAGE>
and (ii) the outstanding shares of the Corporation shall include
shares deemed owned through application of subclauses (A) and (B)
above but shall not include any other shares which may be issuable
pursuant to any agreement, or upon exercise of conversion rights,
warrants or options, or otherwise.
(c) The Board of Directors shall have the power and duty to
determine for the purposes of this Part II on the basis of
information known to such Board, whether (i) such other
corporation, person, or other entity beneficially owns more than
ten percent of the outstanding shares of the Corporation entitled
to vote in elections of directors, (ii) a corporation, person, or
other entity is an "affiliate" or "associate" (as defined above)
of another, and (iii) the memorandum of understanding referred to
below is substantially consistent with the transaction covered
thereby. Any such determination shall be conclusive and binding
for all purposes of this Part II.
(d) The provisions of this Part II shall not be applicable
to (i) any merger or consolidation of the Corporation with or into
any other corporation, or any sale, lease, exchange, mortgage,
pledge, or other disposition of all or any substantial part of the
assets of the Corporation to, or any sale, lease, mortgage,
pledge, or other disposition to this Corporation or any subsidiary
thereof in exchange for securities of the Corporation of, any
assets of any other corporation, person, or other entity, if the
Board of Directors shall by resolution have approved a memorandum
of understanding with such other corporation, person, or other
entity, with respect to and substantially consistent with such
transaction prior to the time such other corporation, person, or
other entity shall have become a beneficial owner of more than ten
percent of the shares of the Corporation entitled to vote in
elections of directors, or (ii) any merger or consolidation of the
Corporation with, or any sale, lease, exchange, mortgage, pledge,
or other disposition to this Corporation or any subsidiary thereof
of any assets of, any corporation or which a majority of the
outstanding shares of all classes entitled to vote in elections of
directors is owned of record or beneficially by the Corporation
and its subsidiaries.
(e) No amendment to these Articles of Incorporation shall
amend, alter, change, or repeal any of the provisions of this Part
II, unless the amendment effecting such amendment, alteration,
change, or repeal shall receive the affirmative vote or consent of
the holders of four-fifths of the shares of the Corporation
entitled to vote thereon, provided, however, that if any class or
series of shares is entitled to vote thereon as a class, there
shall be required the affirmative vote of four-fifths of the
shares of each class of shares and series entitled to vote thereon
as a class and of the total shares entitled to vote thereon.
ARTICLE 10
PART I
(a) Except as otherwise expressly provided in Part II of
this Article 10 and in addition to any other provision of law and
as may otherwise be set forth in these Articles, the consummation
<PAGE>of any Business Combination shall require that all of the
following conditions shall have been met:
(i) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such
Business Combination shall be at least equal to the highest
of the following:
(A) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes,
and soliciting dealers' fees) paid by the Interested
Shareholder for any shares of Common Stock acquired by
it (1) within the two-year period immediately prior to
the first public announcement of the proposal of the
Business Combination (the "Announcement Date") or (2) in
the transaction in which it became an Interested
Shareholder, whichever is higher:
(B) the Fair Market Value per share of Common
Stock on the Announcement Date or on the date on which
the Interested Shareholder became an Interested
Shareholder (such later date is referred to in this
Article 10 as the "Determination Date"), whichever is
higher; and
(C) (if applicable) the price per share equal to
the Fair Market Value per share of Common Stock
determined pursuant to paragraph (a)(i)(B) above,
multiplied by the ratio of (1) the highest per share
price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the
Interested Shareholder for any shares of Common Stock
acquired by it within the two-year period immediately
prior to the Announcement Date to (2) the Fair Market
Value per share of Common Stock on the first day in such
two-year period upon which the Interested Shareholder
acquired any shares of Common Stock.
(ii) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of shares of any class of
outstanding Voting Stock other than common stock (and other
than Institutional Voting Stock), shall be at least equal to
the highest of the following (it being intended that the
requirements of this paragraph (a)(ii) shall be required to
be met with respect to every class of outstanding Voting
Stock [other than Institutional Voting Stock], whether or not
the Interested Shareholder has previously acquired any shares
of a particular class of Voting Stock):
(A) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Shareholder for any shares of such class of Voting Stock
acquired by it (1) within the two-year period
immediately prior to the Announcement Date or (2) in the
<PAGE>
transaction in which it became an Interested
Shareholder, whichever is higher;
(B) (if applicable) the highest preferential
amount per share to which the Holders of shares of such
class of Voting Stock are entitled in the event of any
voluntary or involuntary liquidations, dissolution or
winding up of the Corporation;
(C) the Fair Market Value per share of such class
of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher; and
(D) (if applicable) the price per share equal to
the Fair Market Value per share of such class of Voting
Stock determined pursuant to paragraph (a)(ii)(C) above,
multiplied by the ratio of (1) the highest per share
price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the
Interested Shareholder for any shares of such class of
Voting Stock acquired by it within the two-year period
immediately prior to the Announcement Date to (2) the
Fair Market Value per share of such class of Voting
Stock on the first day in such two-year period upon
which the Interested Shareholder acquired any shares of
such class of Voting Stock.
(iii) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including
common stock) shall be in cash or in the same form as the
Interested Shareholder has previously paid for shares of such
class of Voting Stock. If the Interested Shareholder has
paid for shares of any class of the Voting Stock with varying
forms of consideration, the form of consideration for such
class of Voting Stock shall be either cash or the form used
to acquire the largest number of shares of such class of
Voting Stock previously acquired by it.
(iv) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination: (A) except as approved by a majority
of the Continuing Directors, there shall have been no failure
to declare and pay at the regular date therefor any full
quarterly dividend (whether or not cumulative) on the
outstanding Preferred Stock; (B) there shall have been (1) no
reduction in the annual rate of dividends paid on the Common
Stock (except as necessary to reflect any subdivision of the
common stock), except as approved by a majority of the
Continuing Directors, and (2) an increase in such annual rate
of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the
effect of reducing the number of outstanding shares of the
Common Stock, unless the failure so to increase such annual
rate is approved by a majority of the Continuing Directors;
and (C) such Interested Shareholder shall have not become the
beneficial owner of any additional shares of Voting Stock
except as part of the transaction which results in such
Interested Shareholder becoming an Interested Shareholder.
<PAGE>
(v) After such Interested Shareholder has become an
Interested Shareholder, such Interested Shareholder shall not
have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances,
guarantees, pledges, or other financial assistance or any tax
credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such
Business Combination or otherwise.
(vi) A proxy or information statement describing the
proposed Business Combination and containing the information
specified for proxy or information statements under the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act,
rules or regulations) shall be mailed to shareholders of the
Corporation at least 30 days prior to the consummation of
such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to
such Act or subsequent provisions).
(b) The term "Business Combination", as used in this
Article 10, shall mean:
(i) any merger or consolidation of the Corporation or
any Subsidiary with (a) any Interested Shareholder or (b) any
other corporation (whether or not itself an Interested
Shareholder) which is, or after such merger or consolidation
would be, an Affiliate of an Interested Shareholder; and
(ii) any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition (in one transaction or a
series of transactions) to or with any Interested Shareholder
or any Affiliate of any Interested Shareholder of any assets
of the Corporation or any Subsidiary having an aggregate Fair
Market Value of $1,000,000 or more; and
(iii) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Shareholder or any Affiliate of
any Interested Shareholder in exchange for cash, securities,
or other property (or a combination thereof) having an
aggregate Fair Market Value of $1,000,000 or more; and
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Shareholder or any Affiliate of
any Interested Shareholder; and
(v) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any other transaction (whether or not
with or into or otherwise involving an Interested
Shareholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
<PAGE>
owned by any Interested Shareholder or any Affiliate of any
Interested Shareholder.
PART II
The provisions of Part I of this Article 10 shall be
applicable to each particular Business Combination unless (i) such
Business Combination shall have been approved by the affirmative
vote of at least two-thirds of the voting power of all shares of
Voting Stock (considered for purposes of this Article 10 as one
class, it being understood that for purposes of this Article 10,
each share of Voting Stock shall have the number of votes granted
to it pursuant to Article 4 of these Articles of Incorporation)
which are then held by Independent Shareholders or (ii) the Board
of Directors shall by resolution have approved a memorandum of
understanding with such Interested Shareholder with respect to and
substantially consistent with such Business Combination prior to
the time such Interested Shareholder shall have become an
Interested Shareholder.
PART III
For the purposes of this Article 10, the following terms
shall have the meaning hereinafter set forth:
(a) "Affiliate" or "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in
effect on March 16, 1984.
(b) A person shall be a "beneficial owner" of any Voting
Stock:
(i) which such person or any of its Affiliates or
Associates (as herein defined) beneficially owns, directly or
indirectly; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (b)
the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or
indirectly, by any other person with which such person or any
of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
(c) "Continuing Director" shall mean any member of the Board
of Directors of the Corporation (the "Board") who is unaffiliated
with the Interested Shareholder referred to in the definition of
"Business Combination" in (b) of Part I of this Article 10 and was
a member of the Board prior to the time that the Interested
Shareholder became an Interested Shareholder and any successor of
a Continuing Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Continuing Director by
<PAGE>a majority of Continuing Directors then on the Board.
(d) "Fair Market Value" means: (i) in the case of stock,
the highest closing sale price during the 30-day period
immediately preceding the date in question of a share of such
stock on the Composite Tape for the New York Stock Exchange-Listed
Stocks, or, if such stock is not quoted on the Composite Tape for
the New York Stock Exchange, or, if such stock is not listed on
such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such
stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a
share of such stock during the 30-day period preceding the date in
question on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or, if NASDAQ is not then
in use, any other system then in use, or, if no such quotations
are available, the Fair Market Value on the date in question of a
share of such stock as determined by the Board in good faith; and
(ii) in the case of property other than cash or stock, the Fair
Market Value of such property on the date in question as
determined by the Board in good faith.
(e) "Independent Shareholder" shall mean any person who or
which:
(i) is the beneficial owner, directly or indirectly, of
one or more shares of Voting Stock, and
(ii) is not the Interested Shareholder, an Affiliate or
an Associate of the Interested Shareholder or a party to or
subject to any agreement or understanding with the Interested
Shareholder or any Affiliate of an Associate thereof for the
purpose of acquiring, holding, voting, or disposing of any
shares of Voting Stock; which Interested Shareholder or
Affiliate or Associate of the Interested Shareholder is
referred to in the definition of "Business Combination" in
(b) of Part I of this Article 10.
(f) "Institutional Voting Stock" shall mean any class of
Voting Stock which was issued to and continues to be held solely
by one or more insurance companies, pension funds, commercial
banks, savings banks and/or similar financial institutions or
institutional investors.
(g) "Interested Shareholder" shall mean any person (other
than the Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of
more than 10% of the voting power of the outstanding Voting
Stock; or
(ii) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in
question, became the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the then
outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
<PAGE>
beneficially owned by any Interested Shareholder, if such
assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933.
For the purposes of determining whether a person is an
Interested Shareholder pursuant to this paragraph (g), the
number of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned through application of
paragraph (b) of this Part III but shall not include any
other shares of Voting Stock which may be issuable pursuant
to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or
otherwise.
(h) In the event of any Business Combination in which the
Corporation survives, the phrase "consideration other than cash to
be received" as used in paragraphs (a)(i) and (ii) of Part I of
this Article 10 shall include the shares of Common Stock and/or
the shares of any other class of outstanding Voting Stock retained
by the holders of such shares.
(i) A "person" shall mean any individual, firm, corporation,
or other entity.
(j) "Subsidiary" means any corporation of which a majority
of any class of equity security is owned, directly or indirectly,
by the Corporation; provided, however, that for the purposes of
the definition of Interested Shareholder set forth in paragraph
(g) of this Part III, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity security
is owned, directly or indirectly, by the Corporation.
(k) "Voting Stock" shall mean each share of stock of the
Corporation generally entitled to vote in elections of Directors.
The directors of the Corporation shall have the power and
duty to determine, for the purposes of this Article 10, on the
basis of information known to them after reasonable inquiry, (a)
whether a person is an Interested Shareholder, (b) whether a
person is an Independent Shareholder, (c) the number of shares of
Voting Stock beneficially owned by any person, (d) whether a
person is an Affiliate or Associate of another, (e) whether a
class of Voting Stock is Institutional Voting Stock and (f)
whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the
issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $1,000,000 or more. Any such determination made
in good faith shall be binding and conclusive on all parties.
PART IV
Nothing contained in this Article 10 shall be construed to
relieve any Interested Shareholder from any fiduciary obligation
imposed by law.
<PAGE> PART V
Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified
by law, these Articles of Incorporation or the Bylaws of the
Corporation), the affirmative vote of (a) the holders of
four-fifths or more of each class of shares and series entitled to
vote thereon as a class and of the total shares entitled to vote
thereon, and (b) the holders of two-thirds or more of each class
of shares and series entitled to vote thereon as a class and of
the total shares entitled to vote thereon held by Independent
Shareholders shall be required to amend or repeal, or adopt any
provisions inconsistent with, this Article 10 of these Articles of
Incorporation.
ARTICLE 11. These Articles shall supersede and take the
place of the heretofore existing Articles of Incorporation and all
amendments thereto.
ARTICLE 12.
PART I
Subject to the provisions of Part II hereof, 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 law.
PART II
Any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors, shall
be filled only by the affirmative vote of a majority of the
directors then in office, though less than a quorum of the Board
of Directors. A director elected to fill a vacancy, other than a
vacancy created by an increase in the number of directors, shall
be elected for the unexpired term of his predecessor. A director
elected to fill a vacancy created by an increase in the number of
directors shall be elected for a term of office continuing only
until the next succeeding annual election of directors of any
class.
PART III
Notwithstanding any other provisions of these Articles of
Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified
by law, these Articles of Incorporation or the Bylaws of the
Corporation), the affirmative vote of (a) the holders of
four-fifths or more of each class of shares and series entitled to
vote thereon as a class and of the total shares entitled to vote
thereon, and (b) the holders of two-thirds or more of each class
of shares and series entitled to vote thereon as a class and of
the total shares entitled to vote thereon held by Independent
Shareholders (as defined in Article 10) shall be required to amend
or repeal, or adopt any provisions inconsistent with, this Article
12 of these Articles of Incorporation.
Exhibit 11
MOSINEE PAPER CORPORATION
MOSINEE, WISCONSIN
COMPUTATION OF PER SHARE EARNINGS
<PAGE>
EXHIBIT 11
<TABLE>
MOSINEE PAPER CORPORATION
Statement of Computation of Per Share Income
For the Periods Ended June 30, 1995 and 1994
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net Income $6,291,327 $4,649,251
Less: The Sorg Paper Company
Preferred Stock Dividends 34,518 34,518
--------- ---------
Net Income Available to Mosinee
Paper Corporation Common Stock $6,256,756 $4,614,733
========= =========
Weighted Average Shares of Mosinee
Paper Corporation Common Stock
Outstanding During the Year 7,863,096 7,863,287
========= =========
Net Income Per Share* $ 0.7957 $ 0.5869
========= =========
Net Income Per Share Rounded
to Nearest Cent $ 0.80 $ 0.59
========= =========
<FN>
*Net Income per Share = Net Income Available to Mosinee Paper
Corporation Common Stock
-------------------------------------
Weighted Average Shares of Mosinee
Paper Corporation Common Stock Outstanding
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JUNE 30, 1995 OF MOSINEE PAPER CORPORATION AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 232,138
<SECURITIES> 0
<RECEIVABLES> 29,106,213
<ALLOWANCES> 2,156,266
<INVENTORY> 36,881,701
<CURRENT-ASSETS> 68,687,766
<PP&E> 344,631,155
<DEPRECIATION> 150,162,651
<TOTAL-ASSETS> 271,732,437
<CURRENT-LIABILITIES> 38,206,610
<BONDS> 91,333,442
<COMMON> 44,827,479
0
0
<OTHER-SE> 48,885,613
<TOTAL-LIABILITY-AND-EQUITY> 271,732,437
<SALES> 147,249,507
<TOTAL-REVENUES> 147,249,507
<CGS> 122,416,974
<TOTAL-COSTS> 134,585,262
<OTHER-EXPENSES> (943,289)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,103,985
<INCOME-PRETAX> 10,504,397
<INCOME-TAX> 4,213,000
<INCOME-CONTINUING> 6,291,397
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,291,397
<EPS-PRIMARY> .80
<EPS-DILUTED> 0
</TABLE>
Exhibit (99)(a)
DESCRIPTION OF COMMON STOCK
The following description of the Common Stock does not purport to be
complete and is qualified in its entirety by the Company's Restated
Articles of Incorporation, as amended (the "Articles"), the Company's
Restated Bylaws, as amended (the "Bylaws"), and the Wisconsin Business
Corporation Law ("WBCL").
The authorized common stock of the Company (the "Common Stock")
consists of 30,000,000 shares, without par value.
VOTING RIGHTS
Each holder of Common Stock is entitled to one vote for each share
held of record on the stock transfer books of the Company on each matter to
be voted upon at any annual or special meeting of the shareholders of the
Company except to the extent the voting power of shares held by any person
in excess of 20% may be limited to one-tenth of the full voting power of
such excess shares under the provisions of section 180.1150 of the WBCL.
DIVIDENDS
Holders of Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors of the Company out of funds legally
available therefor.
LIQUIDATION PREFERENCE
Upon liquidation of the Company, holders of Common Stock are entitled
to receive the net assets of the Company after satisfaction of the prior
rights of any creditors of the Company and the holders of any class of
preferred stock which may then have been issued and outstanding.
MISCELLANEOUS
The Common Stock is not convertible and carries no preemptive rights.
The Common Stock is nonassessable except as provided in section
180.0622(2)(b) of the WBCL (relating to claims for wages for up to six
months' service, but not in excess of the amount of the consideration paid
for the shares).
ELECTION OF DIRECTORS AND OTHER BUSINESS
The Articles provide that the number of directors shall be determined
by the Board of Directors pursuant to the bylaws, but that there shall be
not less than three nor more than ten directors, divided into three classes
to be as nearly equal in size as possible. The classification of the Board
of Directors could make more difficult or discourage attempts to obtain
control of the Company through the election of directors because a minimum
of two meetings held for the purpose of electing directors would be
required for any party to elect a majority of the members of the Board.
<PAGE>
The Bylaws require that not less than 60 days' nor more than 90 days'
notice be given to the Company of any intention to nominate a candidate for
director or to propose business from the floor at any annual or special
meeting of shareholders.
SPECIAL REQUIREMENTS FOR CERTAIN BUSINESS COMBINATIONS
ARTICLES
The Articles provide that an affirmative vote of 80% of the Common
Stock is required to approve a merger, a sale of all or substantially all
of the assets or certain other business combinations involving the Company
and a company controlled by a holder of 10% of the Common Stock under which
the Company would not be the surviving party or purchaser unless the
acquisition of Common Stock by the 10% holder involved had received certain
prior approval of the Board of Directors. In addition, the affirmative
vote of two-thirds of the Common Stock held by disinterested shareholders
is required where any business combination involves an "interested
shareholder" (generally the holder of 10% or more of the Common Stock or an
affiliate of such person), as defined in the Articles unless (1) the
consideration offered the shareholders of the Company meets certain "fair
price" requirements or (2) the transaction is approved by a majority of the
Board's disinterested directors prior to the date on which the interested
shareholder became an interested shareholder.
Various provisions dealing with certain business combinations, and the
provision for the classification of the Board of Directors, can be amended
only by the affirmative vote of 80% of the outstanding shares of Common
Stock or two-thirds of the shares of Common Stock held by independent
shareholders (as defined generally to mean shareholders not having an
interest in the surviving entity in any business combination) or both.
Certain of these provisions of the Articles and Bylaws, including the
classification of directors, could make more difficult or discourage a
merger, tender offer, proxy contest or other attempt to obtain control of
the Company.
WBCL
The WBCL also provides various limitations on voting power and other
actions in connection with certain mergers, consolidations, acquisitions or
liquidations. Under the WBCL, in discharging their duties to the Company
and in determining what they believe to be in the best interests of the
Company, directors and officers may, in addition to considering the effect
of any action on the Company's shareholders, consider the effects of the
action of employees, suppliers, customers, the communities in which the
Company operates and any other factors that the directors and officers deem
pertinent.
SHAREHOLDER RIGHTS PLAN
Each share of the Common Stock entitles its holder to one nonvoting
preferred share purchase right ("Right"). Rights become exercisable 10
days after a person or group acquires 20% <PAGE>or more of the outstanding
Common Stock (an "Acquiring Person"). The Board may reduce this threshold
amount to 10%. The Right will entitle the holder to purchase from the
Company .01 share of Series A Junior Participating Preferred Stock at a
price of $60. If the Company is acquired in a merger or other business
combination, the holder may exercise the Right and receive common stock of
the acquiring company having a market value equal to 200% of the exercise
price of the Right. If a person becomes an "Acquiring Person", the holder
may exercise the Right and receive Common Stock having a market value equal
to 200% of the exercise price of the Right. Rights are subject to
redemption by the Company for $.05 per Right until a person or group
becomes an Acquiring Person. After a person or group becomes an Acquiring
Person, but before the Acquiring Person acquires 50% of the Common Stock,
the Company may exchange one share of Common Stock for each Right. Rights
will expire on July 10, 1996 unless extended by the Company. The Company
has reserved 100,000 shares of Series A Junior Participating Preferred
Stock.
