<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
================================================================================
F O R M 1 0 - Q
================================================================================
[X] QUARTERLY REPORT UNDER 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 NO. 0-795
BADGER PAPER MILLS, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0143840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 WEST FRONT STREET
PESHTIGO, WISCONSIN 54157
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (715) 582-4551
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 report(s), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes. [_] No.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date: As of June 30, 1995, 1,956,330.
Indicate total number of pages contained in document filed: 16.
<PAGE>
BADGER PAPER MILLS, INC.
INDEX
<TABLE>
<CAPTION>
Pages
-----
<S> <C>
FINANCIAL INFORMATION
Consolidated Interim Statements of Operations and Retained
Earnings - Quarter and Six Months Ended
June 30, 1995 and 1994 3
Consolidated Balance Sheets - June 30, 1995 and
December 31, 1994 4
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1995 and 1994 5
Notes to Financial Statements 6-7
MANAGEMENT DISCUSSION AND ANALYSIS 7-9
OTHER INFORMATION 9
SIGNATURES 10
</TABLE>
-Page 2-
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED INTERIM STATEMENTS OF
OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $24,411,526 $17,755,603 $46,525,633 $34,804,143
Cost of Sales 21,510,504 17,222,845 42,435,622 33,615,665
----------- ----------- ----------- -----------
Gross Margin 2,901,022 532,758 4,090,011 1,188,478
Selling and Administrative
Expenses 1,039,583 915,918 1,916,622 1,800,213
----------- ----------- ----------- -----------
Operating Income (Loss) 1,861,439 (383,160) 2,173,389 (611,735)
Other Income, Net 195,400 124,935 624,089 (127,263)
Interest Expense (352,911) (381,100) (727,668) (715,616)
----------- ----------- ----------- -----------
Income (Loss) Before
Income Taxes 1,703,928 (639,325) 2,069,810 (1,454,614)
Income Tax Expense (Benefit) 579,298 (590,325) 703,768 (908,300)
----------- ----------- ----------- -----------
Net Income (Loss) 1,124,630 (49,000) 1,366,042 (546,314)
----------- ----------- ----------- -----------
Retained Earnings,
Beginning of Period 18,323,490 20,111,775 18,082,078 20,609,089
Cash Dividends - - - -
----------- ----------- ----------- -----------
Retained Earnings,
End of Period $19,448,120 $20,062,775 $19,448,120 $20,062,775
=========== =========== =========== ===========
Net Earning (Loss) Per Share $0.57 ($0.03) $0.70 ($0.28)
Dividends Per Share - - - -
Average Shares Outstanding 1,956,830 1,957,330 1,956,830 1,957,330
</TABLE>
See Notes to Financial Statements.
-Page 3-
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------- -------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash & Cash Equivalents $ 275,918 $ 1,375,057
Marketable Securities 3,757,294 3,397,184
Accounts Receivable - Net 8,517,513 6,770,635
Deferred Income Taxes 1,175,908 1,175,908
Inventories 5,951,955 6,318,834
Refundable Income Taxes 299,348 299,348
Other Current Assets 134,779 192,255
------------ ------------
Total Current Assets 20,112,715 19,529,221
Property, Plant, Equipment & Timberlands 75,030,233 73,853,230
Less Allowance for Depreciation & Depletion (44,602,126) (42,959,533)
------------ ------------
Total Property, Plant, Equipment & Timberlands 30,428,107 30,893,697
Other Assets 2,060,398 1,985,210
Restricted Funds from Industrial Revenue Bonds 384,653 1,973,595
------------ ------------
TOTAL ASSETS $ 52,985,873 $ 54,381,723
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Revolving Credit Notes Payable - $ 12,000,000
Current Portion of Long-Term Debt 111,232 111,232
Accounts Payable 5,545,900 5,110,671
Accrued Liabilities 4,016,354 3,582,795
------------ ------------
Total Current Liabilities 9,673,486 20,804,698
Deferred Income Taxes 2,218,240 2,218,240
Long Term Debt 18,828,876 10,650,714
Other Liabilities 1,779,150 1,587,992
------------ ------------
Total Liabilities 32,499,752 35,261,644
STOCKHOLDERS' EQUITY:
Common stock, no par value:
4,000,000 shares authorized
2,160,000 shares issued 2,700,000 2,700,000
Additional paid-in capital 166,119 166,119
Retained Earnings 19,448,120 18,082,078
Less treasury shares at cost:
203170 - 6/30/95; 203170 - 12/31/94 (1,828,118) (1,828,118)
------------ ------------
Total Stockholders' Equity 20,486,121 19,120,079
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 52,985,873 $ 54,381,723
============ ============
</TABLE>
See Notes to Financial Statements.
-Page 4-
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30, June 30,
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 1,366,042 $ (546,314)
Adjustments to Reconcile to Net Cash
provided by (used in) Operating Activities:
Depreciation 1,643,064 1,748,808
Deferred Income Taxes - (170,119)
Net Proceeds from (Purchases) Sales of Marketable Securities (30,135) 130,000
Unrealized (Gain) Loss on Marketable Securities (329,975) 479,606
(Increase) in Accounts Receivables, Net (1,746,878) (425,661)
Decrease (Increase) in Inventories 366,879 (790,545)
Decrease in Accounts Payable and Accrued Liabilities 868,788 198,700
Decrease Other 173,446 738,832
----------- -----------
Net Cash Provided by Operating Activities 2,311,231 1,363,307
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant and Equipment, Net (1,177,474) (857,361)
Decrease in Restricted Funds from Industrial Revenue Bonds 1,588,942 18,781
----------- -----------
Net Cash Provided by (Used in) Investing Activities 411,468 (838,580)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) on Long-Term Debt (1,321,838) (20,164)
(Payments) on Revolving Credit Notes Payable (2,500,000) (1,000,000)
----------- -----------
Net Cash (Used in) Financing Activities (3,821,838) (1,020,164)
----------- -----------
Net (Decrease) in Cash and Cash Equivalents (1,099,139) (495,437)
Cash and Cash Equivalents:
Beginning of Period $ 1,375,057 1,065,215
----------- -----------
End of Period $ 275,918 $ 569,778
=========== ===========
</TABLE>
See Notes to Financial Statements.
-Page 5-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. BASIS OF PRESENTATION
---------------------
The unaudited financial statements have been prepared by Badger Paper Mills,
Inc. (the "Company") pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and, in the opinion of the Company, included all
adjustments necessary for a fair statement of results for each period shown.
These adjustments were of a normal recurring nature. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such SEC rules and regulations. The Company believes that
the disclosures made are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's latest annual report.
B. INCOME TAXES
------------
The provision for income tax expense or benefit has been computed by
applying an estimated annual effective tax rate. This rate was a 34% expense for
the quarter and six months ended June 30, 1995. For the quarter and six months
ended June 30, 1994, the Company provided for a 39% benefit resulting from the
Company's operating losses. In addition, during the second quarter ended June
30, 1994, a research and development income tax benefit of $341,000 was
recognized.
C. EARNINGS PER SHARE
------------------
Earnings per share of common stock are computed by dividing net earnings by
the weighted average number of shares of common stock outstanding.
D. INVENTORIES
-----------
The major classes of inventories are as follows (in thousands):
June 30, December 31,
1995 1994
-------- ------------
Raw materials $3,108 $3,033
Work in process and finished stock 2,844 3,286
------ ------
$5,952 $6,319
====== ======
E. DEBT
----
On March 31, 1994, the Company entered into a 13-month amended revolving
credit agreement, effective through April 30, 1995, with its financing
institutions in the amount of
-Page 6-
<PAGE>
$15,000,000. The revolving credit agreement was amended August 21, 1994 to
reduce the credit line to $14,250,000. This agreement was further amended on
February 17, 1995 and April 28, 1995, reducing the credit line to $13,000,000,
and extending the maturity to April 30, 1998. These agreements provide for
covenants which are somewhat less restrictive than the predecessor agreement.
The amended agreement also provides that the notes bear interest at tier-based
LIBOR rates which total 8.0625% at June 30, 1995, requires the Company to
maintain consolidated tangible net worth of at least the $19,000,000, provided
however that tangible net worth shall not be increased or reduced by any
unrealized appreciation or depreciation on the Company's marketable securities,
a current ratio of at least 1.9:1, and maintain a leverage ratio of no more than
1.9:1. The agreement further states that the Company shall not expend or be
obligated for capital expenditures for the period January 1, 1995 through
December 31, 1995, in excess of $4,000,000. Capital projects for this period
are projected to fall well within these limitations. The Company may also
provide for dividend and other restrictive payments so long as these payments do
not exceed 33% of the cumulative consolidated net income commencing January 1,
1995, and so long as no default or event of default exists. At June 30, 1995,
$9,500,000 was borrowed by the Company against the line.
F. CONTINGENCIES
-------------
The Company operates in an industry which is subject to laws and regulations
at both federal and state levels relating to the protection of the environment.
The Company undergoes continued environmental testing and analysis, and the
precise cost of compliance with requirements has not been determined.
In addition, the Company is subject to various claims, the ultimate outcomes
of which management cannot predict. Management believes that the outcomes will
not have a material adverse effect on the Company's consolidated financial
position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
The Company reported record sales for the second quarter and first six
months of 1995. Sales for the second quarter ended June 30, 1995, were
$24,411,526, or 37.5% over the $17,755,603 reported for the same period in 1994.
Volume of paper shipments were off slightly for the quarter when compared to a
year earlier, while the average selling price of the papers sold increased
almost 40%. Sulphite pulp shipment volume, as well as prices, were
substantially higher during the second quarter of 1995 when compared to the same
period in 1994. Sulphite pulp sales now represent 5% of the Company's total
revenue.
Sales for the six-month period ended June 30, 1995, were $46,525,633
compared to $34,804,143 reported for the same period a year ago. The increase
in revenue for the first six
-Page 7-
<PAGE>
months of 1995 is primarily attributable to the improved pricing throughout the
paper industry, slight increase in volume, and increased sulphite pulp sales.
Cost of sales increased 25% and 26% respectively for the second quarter and
six months of 1995 compared to the same periods a year earlier. Higher cost of
purchased fiber is the single factor most affecting cost of sales. Purchased
pulp prices have risen more than 140% over the past 16 months. The world demand
for fiber continues to be strong and current market conditions suggest that it
should remain firm throughout the balance of the year and well into 1996. The
Company's sulphite pulp mill continues to operate well, and pulp exceeding the
Company's internal paper machine demand continues to be marketed. A market pulp
price increase already announced of $75 a ton effective October 1, 1995, and
projected higher pulp prices for 1996 will additionally benefit the Company's
integrated pulping capacity, although also affect the prices paid by the Company
for raw materials. Gross margins increased to $2,901,022 and $4,090,011 for
the second quarter and six months ended June 30, 1995, respectively, compared to
$532,758 and $1,188,478 for the same periods a year earlier. In addition to the
factors cited above, changes instituted in our manufacturing and converting
facilities have resulted in increasing operating efficiencies and reducing
production costs.
Administrative expenses of $1,039,583 and $1,916,622 for the second quarter
and six months of 1995 compare to $915,918 and $1,800,213 for the same periods a
year earlier. As a percent of sales for the second quarter and first six
months of 1995, administrative expenses of 4.3% and 4.1% compare to 5.2% for the
second quarter and first six months of 1994, representing a decrease of 17% and
21% respectively.
Other income of $195,400 and $624,089 for the second quarter and six months
of 1995 compare to an income of $124,935 for the second quarter, 1994, and a
loss of $127,263 for the first six months of 1994. The Company recognized
unrealized gain in securities of $329,975 for the first six months of 1995
compared to unrealized loss of $479,606 for the same period in 1994. Because
the Company's investment securities are accounted for as a trading account,
unrealized gains and losses are included in the Company's statement of
operations in other income.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures during the second quarter and six months, 1995,
amounted to $835,072 and $1,177,474, as compared to $331,601 and $857,361 for
the same periods in 1994. Capital expenditures have been maintained at levels to
sustain manufacturing operations. The Company is currently investigating
several capital projects which are intended to improve quality and productivity.
The Company's Oconto Falls, Wisconsin, subsidiary, Plas-Techs, Inc., expansion
project announced during the first quarter, 1995, doubling the size of the
existing facility, was completed during the second quarter. Plas-Techs is now
in the process of relocating equipment and off-site inventory to the new
facility. Plas-Techs' business has increased in excess of 30% annually since
its acquisition in 1991, and had out grown its original physical dimensions.
The project cost, approximating $700,000, is being funded through the
utilization of proceeds from the sale of $4,000,000 industrial development
revenue bonds originally issued in 1992 and reserved for plant expansion
purposes. The remaining portion of the restricted cash from sale of industrial
-Page 8-
<PAGE>
development revenue bonds in the amount of $1,300,000 was no longer required for
purchase of plant and equipment and was used to repay a portion of the bonds and
reduce the outstanding balance associated with Plas-Techs, Inc. to $2,700,000 at
June 30, 1995.
The Company operates in an industry which is subject to laws and regulations
at both federal and state levels relating to the protection of the environment.
The Company undergoes continued environmental testing and analysis, and the
precise cost of compliance with requirements has not been determined.
As of June 30, 1995, the Company's capital resources for funding on-going
operations and capital expenditures include $3,757,294 in marketable securities;
$384,653 in restricted funds from previous industrial revenue bond issuances,
and a $13,000,000 revolving credit agreement expiring April 30, 1998, of which
$9,500,000 is currently used. The Company believes it has adequate capital
resources to meet its near-term capital and operating needs.
Cash provided from operating activities totaled $2,311,231 for the first six
months of 1995, and compares to cash provided from operating activities of
$1,363,307 for the first six months of 1994.
Working capital of $10,439,229 at June 30, 1995, increased $11,714,706 from
December 31, 1994. Several components of working capital contributed to the
increase. A reclassification of revolving credit notes payable of $9,500,000 at
June 30, 1995, to the long-term debt (see Note E to financial statements), and
an increase of $1,746,878 in accounts receivable were major factors which
increased working capital. Offsetting the increase included a decrease in cash
and marketable securities of $739,029; a $366,879 decrease in inventories, and
an increase of $868,788 in accounts payable and accrued liabilities. During the
first six months of 1995, $2,500,000 of revolving credit notes payable were
repaid, reducing the outstanding balance to $9,500,000 at June 30, 1995. In
addition, $1,321,838 of the December 31, 1994 long-term debt of $10,650,714 was
repaid during the first six months of 1995.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits:
(4) Fifth Amendment to Credit Agreement dated April 28, 1995.
(27) Financial data schedules
-Page 9-
<PAGE>
SIGNATURE
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.
BADGER PAPER MILLS, INC.
(Registrant)
/s/ CLAUDE L. VAN HEFTY
DATE: August 14, 1995 By_________________________________
Claude L. Van Hefty
President
(Chief Executive Officer)
/s/ MILES L. KRESL, JR.
DATE: August 14, 1995 By_________________________________
Miles L. Kresl, Jr.
Vice President/Administration,
Corporate Secretary, & Treasurer
(Principal Financial Officer)
-Page 10-
<PAGE>
FIFTH AMENDMENT TO
CREDIT AGREEMENT
This Fifth Amendment to Credit Agreement dated as of April 28, 1995 among
Badger Paper Mills, Inc. ("Badger"), PlasTechs, Inc. ("PlasTechs")
(collectively, Badger and PlasTechs are hereinafter sometimes referred to as
"Borrowers" and individually each is sometimes referred to as a "Borrower"),
Harris Trust and Savings Bank, PNC Bank, Ohio, National Association, and Harris
Trust and Savings Bank, as Agent.
W I T N E S S E T H :
WHEREAS, the Borrowers and the Lenders have heretofore executed and
delivered that certain Credit Agreement dated as of June 30, 1993 (as amended
through the Fourth Amendment thereto dated as February 17, 1995, the "Credit
Agreement"); and
WHEREAS, the Borrowers have requested that the Lenders make certain
amendments to the Credit Agreement;
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, the parties hereto agree that the Credit Agreement shall
be and hereby is amended as follows:
1. Section 3.3 of the Credit Agreement is hereby amended by deleting the
amount "$250,000" appearing in the second line thereof and inserting in its
place the amount "$100,000."
2. Section 3.4 of the Credit Agreement is hereby amended by deleting the
amount "$1,000,000" appearing in the fourth line thereof and inserting in its
place the amount "$100,000."
3. Section 7.6 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 7.6. Current Ratio. Badger will, as of the last day of each
fiscal month of Badger maintain a Consolidated Current Ratio of not less
than .90 to 1.0 for each fiscal month of Badger ending on or prior to
March 31, 1995 and not less than 1.90 for each fiscal month thereafter.
<PAGE>
4. Section 7.7 of the Credit Agreement is hereby amended in its entirety to
read as follows:
Section 7.7. Consolidated Tangible Net Worth. Badger will, as of the
last day of each fiscal month of Badger ending during each of the
periods specified below maintain Consolidated Tangible Net Worth at not
less than:
FROM AND INCLUDING TO AND INCLUDING CONSOLIDATED TANGIBLE
NET WORTH SHALL NOT BE
LESS THAN
December 1994 November 1995 $19,000,000
December 1995 November 1996 $20,000,000
December 1996 November 1997 $21,500,000
December 1997 Thereafter $23,000,000
5. Section 7.9 of the Credit Agreement is hereby amended in its entirety to
read as follows: "[Intentionally Omitted]."
6. Section 7.10 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 7.10. Liquid Assets. Badger will at all times maintain on a
consolidated basis Liquid Assets in an amount equal to not less than 35%
of the total outstanding amount of the Tax-exempt Financings.
7. Section 7.13 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 7.13. Capital Expenditures. Badger will not, nor will it
permit any Subsidiary to, expend or become obligated for Capital
Expenditures in an aggregate amount in excess of $4,000,000 during any
fiscal year of Badger.
8. Section 7.15 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 7.15. Dividends and Certain Other Restricted Payments.
Badger will not, without the prior written consent of the Lenders,
declare or pay any dividends on or make any other distributions in
respect of any class of its capital stock (other than dividends payable
solely in its capital stock) and no Borrower will directly or indirectly
or through any Subsidiary purchase, redeem
-2-
<PAGE>
or otherwise acquire or retire any of its capital stock (all such
payments and distributions are collectively referred to as, "Restricted
Payments"); provided, however, Badger may declare and make Restricted
Payments only after January 1, 1995 so long as (i) no Default or Event
of Default exists prior to or would result after giving effect to any
such Restricted Payments and (ii) after giving effect to any such
Restricted Payments the aggregate amount of Restricted Payments made
during the period (taken as a single accounting period) commencing
January 1, 1995 and ending on the last day of the most recent fiscal
month for which financial statements have been delivered shall not
exceed 33% of the Consolidated Net Income for such period.
9. The definition of "Termination Date" appearing in Section 10 of the
Credit Agreement is hereby amended by deleting the date "April 30, 1995"
appearing therein and inserting in its place the date "April 30, 1998."
10. Section 12.18 of the Credit Agreement is hereby amended in its entirety
to read as follows:
Section 12.18. Assignment of Commitments by Lenders. Each Lender
shall have the right at any time, with the prior consent of the Agent,
to sell, assign, transfer or negotiate all or any part of its Commitment
to one or more commercial banks or other financial institutions. Upon
any such assignment and its notification to the Agent, the assignee
shall become a Lender hereunder, all Loans and the Commitment it thereby
holds shall be governed by all the terms and conditions hereof, and the
Lender granting such assignment shall have its Commitment and its
obligations and rights in connection therewith, reduced by the amount of
such assignment. Upon the effectiveness of any such assignment the
Borrower shall execute new Notes payable to the Assignor and Assignee in
the amount of their new Commitments.
11. Upon the effectiveness of this Amendment, the aggregate Commitments of
the Lenders shall be reduced ratably to $13,000,000.
12. Each Borrower represents and warrants to the Lenders that (a) each of
the representations and warranties set forth in Section 5 of the Credit
Agreement are true and correct on and as of the date of this Amendment as if
made on and as of the date of this Amendment and as if each reference therein to
the Credit Agreement referred to the Credit Agreement, as amended hereby; (b) no
Event of Default has occurred or is continuing; and (c) without limiting the
effect of the foregoing, each Borrower's execution, delivery and performance of
this Amendment have been duly authorized, and this Amendment has been executed
and delivered by a duly authorized officer of each Borrower.
-3-
<PAGE>
Each Borrower has heretofore executed and delivered to the Agent certain
security agreements and mortgages and each Borrower hereby agrees that
notwithstanding the execution and delivery of this Amendment, such security
agreements and mortgages shall be and remain in full force and effect and that
any rights and remedies of the Agent thereunder, obligations of such Borrower
thereunder and any liens and security interests created or provided for
thereunder shall be and remain in full force and effect and shall not be
affected, impaired or discharged thereby. Nothing herein contained shall in any
manner affect or impair the priority of the liens and security interests created
and provided for by the Collateral Document as to the indebtedness which would
be secured thereby prior to giving effect to this Amendment.
This Amendment may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each of which
when so executed shall be an original but all of which shall constitute one and
the same instrument. Except as specifically amended and modified hereby, all of
the terms and conditions of the Credit Agreement shall remain unchanged and in
full force and effect. All references to the Credit Agreement in any document
shall be deemed to be references to the Credit Agreement, as amended hereby. All
capitalized terms used herein without definition shall have the same meaning
herein as they have in the Credit Agreement. This Amendment shall become
effective as of April 28, 1995 upon execution by each Borrower and the Lenders.
This Amendment shall be construed and governed by and in accordance with the
internal laws of the State of Illinois.
-4-
<PAGE>
Dated as of the date first above written.
Badger Paper Mills, Inc.
By /s/ Miles L. Kresl, Jr.
-----------------------
Name Miles L. Kresl, Jr.
-----------------------
Title Vice President/Admin.
-----------------------
PlasTechs, Inc.
By /s/ Miles L. Kresl, Jr.
-----------------------
Name Miles L. Kresl, Jr.
-----------------------
Title Secretary-Treasurer
-----------------------
Harris Trust and Savings Bank, in its
individual capacity as a Lender and as
Agent
By /s/ George M. Dluhy
-----------------------
Name George M. Dluhy
-----------------------
Title Vice President
-----------------------
PNC Bank, Ohio, National Association
By /s/ Stephen D. Lind
-----------------------
Name Stephen D. Lind
-----------------------
Title Officer
-----------------------
-5-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 275,918
<SECURITIES> 3,757,294
<RECEIVABLES> 8,517,513
<ALLOWANCES> 0
<INVENTORY> 5,951,955
<CURRENT-ASSETS> 20,112,715
<PP&E> 75,030,233
<DEPRECIATION> 44,602,126
<TOTAL-ASSETS> 52,985,873
<CURRENT-LIABILITIES> 9,673,486
<BONDS> 18,828,876
<COMMON> 2,700,000
0
0
<OTHER-SE> 166,119
<TOTAL-LIABILITY-AND-EQUITY> 52,985,873
<SALES> 24,411,526
<TOTAL-REVENUES> 24,411,526
<CGS> 21,510,504
<TOTAL-COSTS> 22,550,087
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 352,911
<INCOME-PRETAX> 1,703,928
<INCOME-TAX> 579,298
<INCOME-CONTINUING> 1,124,630
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,124,630
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