SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________________________
FORM 10-K and ANNUAL REPORT
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
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)
200 West Front Street WISCONSIN
P.O. Box 149 (State of incorporation)
Peshtigo, Wisconsin 54157-0149 39-0143840
(Address of principal executive (I.R.S. Employer Identification
office) Number)
Registrant's telephone number, including area code: 715-582-4551
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Without Nominal or Par Value
__________________________________________________________________________
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
As of March 13, 1997, 1,945,130 shares of common stock were outstanding,
and the aggregate market value of the common stock (based upon the closing
sale price of the shares quoted by dealers to each other in the Over-The-
Counter Market) held by non-affiliates was approximately $17,020,000.
Determination of stock ownership by affiliates was made solely for the
purpose of responding to this requirement, and registrant is not bound by
this determination for any other purpose.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Proxy Statement for its 1997 Annual Meeting of Shareholders
to be filed with the Commission under Regulation 14A is herein
incorporated by reference into Part III of this Form 10-K to the extent
indicated in Part III hereof.
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
Five-year comparison of selected financial data
<CAPTION>
Years ended December 31,
1996 1995 1994 1993 1992
Earnings (in thousands):
<S> <C> <C> <C> <C> <C>
Net sales $76,276 $92,648 $73,674 $76,567 $72,152
Cost of sales 72,411 83,890 72,949 74,272 76,009
Gross profit (loss) 3,865 8,758 725 2,295 (3,857)
Selling and
administrative
expenses 4,136 3,852 3,872 4,715 5,451
Restructuring provision 7,430 504 - 3,850 -
Profit (loss) from
operations (7,701) 4,402 (3,147) (6,270) (9,308)
Other income 4,842 414 1,068 796 1,056
Interest expense 894 1,305 1,315 975 1,078
Unrealized holding gain
or (loss) on trading
securities 307 549 (846) - -
Earnings (loss) before
income taxes and
cumulative effect of
change in accounting
principle (3,446) 4,060 (4,240) (6,449) (9,330)
Cumulative effect of
change in accounting
principle - - - - (649)
Income tax expense
(benefit) (1,234) 1,312 (1,713) (2,388) (3,724)
Net earnings (loss) (2,212) 2,748 (2,527) (4,061) (6,255)
Common stock:
Number of shareholders 518 568 613 633 632
Weighted average shares
outstanding 1,944,699 1,953,868 1,957,163 1,957,176 1,959,467
Earnings (loss) per
share ($1.14) $1.41 ($1.29) ($2.07) ($3.19)
Cash dividends declared
per share $0.22 $0.10 - $0.20 $0.80
Book value per share $9.68 $11.04 $9.77 $11.06 $13.34
Financial position (in
thousands):
Working capital $9,923 $10,459 ($1,276) $836 $ 4,310
Capital expenditures 6,856 2,705 1,654 1,808 11,078
Total assets 51,952 52,578 54,382 59,046 75,972
Long-term debt 18,617 17,236 10,651 10,762 18,870
Shareholders' equity 18,832 21,443 19,120 21,650 26,097
</TABLE>
PART I
Item 1. Business
Badger Paper Mills, Inc. (the Company) was incorporated under the laws of
the State of Wisconsin in 1929. It has been producing paper for over 65
years. The industry segment in which the Company operates is in the
production of paper products.
Products and Distribution
The Company operates an ISO 9001 certified paper mill, consisting of two
paper machines located in Peshtigo, Wisconsin. Converting facilities
contiguous to the papermaking facilities include sheeters, trimmers,
sealers, perforators, printing presses, rewinders, waxers, paper drilling
and die-cutting equipment. The Company also has a flexographic printing
and converting operation at Plas-Techs, Inc. (Plas-Techs), a wholly-owned
subsidiary located in Oconto Falls, Wisconsin.
The Company closed its sulphite pulp mill in the second quarter of 1996.
Compliance with current and proposed environmental regulations at both the
federal and state levels had greatly increased the operating cost of the
pulping facility and were projected to require significant capital to
continue compliance. The capital investments necessary to achieve
environmental compliance and modernize this limited-capacity facility were
deemed to be excessive and would have placed an additional burden on the
operating cost of the facility.
The products of the Company's fine paper division represented 77 percent
of the paper products produced by the Company in 1996, and contributed
more than 62 percent of the Company's 1996 revenue. The fine paper
division's products are manufactured on the Company's Fourdrinier paper
machine in Peshtigo. Fine paper grades are produced utilizing fiber
purchased on the open market, including pre and post consumer recycled
fibers. These paper grades include multi-purpose business papers, offset,
opaque, endleaf, ledger, reply card, watermarked, water-oil-grease
resistant papers (WOGR), electrostatic copier, text and cover, and
technical and specialty papers. The Company offers a wide range of
colored papers and specializes in color matching. The Company sells a
portion of these products under certain trademarks and trade names,
including Ta-Non-Ka/R/, Copyrite/R/, BPM, ENVIROGRAPHIC/R/, and Northern
Brights/TM/. These products are sold through paper merchants, brokers and
value-added converters who in turn sell to other value-adding entities or
direct to the consumer. Consumers of the Company's fine paper products
are located primarily in the Midwest, although consumers of the Company's
fine paper products can be found in principal cities throughout North
America.
The Company's flexible packaging division represented 38 percent of the
Company's 1996 revenue, and 23 percent of the paper products manufactured
by the Company in 1996. In addition, paper is purchased from other
manufacturers to supplement the Company's production capacity in order to
increase utilization of the converting facilities. These products, which
include papers manufactured on the Company's Yankee paper machine, consist
of converted plain or printed waxed papers, laminating grades, machine-
glazed, colors, specialty-coated base papers, twisting papers and various
other specialty papers. These products are sold nationally and
internationally to manufacturers, consumers and converters by commissioned
brokers and by the Company's own sales personnel.
Plas-Techs operates a printing and converting facility that compliments
the Company's flexible packaging division products to better serve the
Company's customer base. Plas-Techs is capable of processing various
substrates of film and paper, enhancing the capabilities and flexibility
of both the Company's printing paper operations and its flexible packaging
paper operations, resulting in opportunities to expand business growth for
both. The Plas-Techs facility also has rewinding and poly bagmaking
equipment.
Competition
The Company's manufactured paper products are highly sensitive to
competition from numerous sources, including other paper products and
products of other composition. Product quality, price, volume and service
influence competition.
The Company's production of fine papers from the Fourdrinier paper machine
represents less than one percent of the production capacity in the United
States. Competition for these papers comes from other specialty mills in
North America and imports from other countries. Competition for flexible
packaging and specialty papers produced from the Yankee paper machine
comes from other specialty mills; some of the mills are similarly
constituted as the Company, while others have greater capacity. Backlogs
are maintained by offering quality products, prompt service and technical
assistance, including a research and development program to develop new
products to meet customer product design specifications.
Inventories; Raw Materials
Since the May 1996 closure of the Company's sulphite pulp mill, the
principal raw material used is purchased pulp. A critical factor in the
decision to close the pulp mill was the expectation that the Company would
continue to be able to purchase its long-term pulp requirements on the
open market more cost-effectively than producing the pulp.
Other raw materials are purchased directly from manufacturers. The
Company has at least two sources of supply for major items. Shortages of
purchased pulp or certain chemicals (including petrochemicals) could have
an adverse effect on the Company's ability to manufacture its products,
and could adversely affect product mix.
In-process and finished goods inventory at the end of 1996 was equivalent
to approximately 45 days of production on the Company's paper machines.
Energy
The Company is a large user of electricity and natural gas. An on-site
2,000 kilowatt electrical co-generation system has the capability of
producing approximately 15 percent of the Company's current electrical
requirements. The balance of the Company's electrical requirements are
purchased from local public or municipal cooperative utilities. The
Company's heat requirements come from two dual-fueled boilers capable of
burning natural gas or fuel oil, and one natural gas boiler. Natural gas
is purchased from various sources in the United States and Canada.
Management believes current sources of natural gas, fuel oil and
electricity are adequate to meet the needs of the Company.
Patents
The Company owns certain patents and licenses used in connection with its
business, none of which are individually considered material to its
business.
Research and Development
The Company's technical staff researches and develops new products. The
Company also utilizes the expertise of outside consultants from time to
time. The amounts spent on product research and development activities
were $862,000 in 1996, $300,000 in 1995 and $200,000 in 1994. The
expenditures were focused primarily in Peshtigo on research and
development of new products for flexible packaging and specialty printing
papers.
Backlog
As of December 31, 1996, the Company's backlog of orders was approximately
$875,000, as compared to $2,900,000 and $10,500,000 at December 31, 1995
and 1994, respectively. Rising prices at the end of 1994 fueled the
backlog, as customers anticipated further price increases. As prices
continued to fall throughout 1995 and 1996, customers delayed order
commitments.
Customers
Sales to Alco Standard Corporation were $12,030,000 or 15.8 percent of the
Company's net sales, and $10,732,000 or 11.6 percent in 1995. In 1994,
there were no customers that accounted for more than ten percent of the
Company's net sales.
Environmental Matters
In May 1996, the Company closed its sulphite pulping facility, which
management believes was the lowest volume sulphite mill then operating in
the United States. The last bleached sulphite pulp was processed in the
facility on May 3, 1996. Closure of the sulphite pulp mill necessitated
modification of the Title V Air Operating Permit application filed with
the Wisconsin Department of Natural Resources (WDNR). The Company is
currently modifying the application to reflect actual plant operations.
The Title V permitting process requires that the Company provide a
monitoring system to provide emission data to the WDNR. Based on
information submitted in the Title V permit application, the Company does
not expect exceedances of the proposed limits.
Water resource conservation and re-use programs have permitted closure of
the Company's paper manufacturing effluent settling basins. These basins
have been cleaned and the site remediated in accordance with an agreement
with the WDNR. The Company currently directs all effluent flow from its
Peshtigo manufacturing operation into the Joint Municipal Industrial
Wastewater Treatment Plant (JWWTP) which the Company operates under
contract with the City of Peshtigo.
The Company has in force all of the necessary environmental operating
permits from the State of Wisconsin. The Company does not anticipate any
problem with the re-issuance of any permits.
Negotiations continue with the WDNR regarding the final closure cover for
the Company's Harbor Road Landfill. The Company expects that final
resolution to the closure proposal can be achieved by the end of the
second quarter 1997, and expects the costs related to such closure to be
within the amounts budgeted for such closure.
Employees
As of December 31, 1996, the Company had 354 employees, of which 274 were
covered by six-year collective bargaining contracts effective June 1,
1995.
Item 2. Properties
The Company considers its manufacturing and converting facilities to be in
good repair and suitable for the purpose intended.
In 1996, the Company completed improvements to the stock preparation and
raw material handling areas of its Peshtigo facility. These changes
enhance the diversity of paper grades offered by the Company and allow the
Company to more efficiently execute grade changes. In order to meet
increased capacity demands for narrow width papers, the flexible packaging
division has recently installed a 65" duplex slitter/rewinder for
conversion of paper to narrow width rolls.
Until early 1996, the Company had operated as a vertically-integrated pulp
and paper producer. As part of its ongoing focus to improve the Company's
operations, competitive position and profitability, the Company sold most
of its timberlands and closed its pulp mill in 1996. The Company
continues to own approximately 1,600 acres of land, following the sale of
14,000 acres of timberlands located in northern Wisconsin and the Upper
Peninsula of Michigan.
The Company's headquarters and principal facilities are located in
Peshtigo, Wisconsin. Its subsidiary, Plas-Techs, is located in Oconto
Falls, Wisconsin.
Item 3. Legal Proceedings
The Company has no pending material legal proceedings.
Item 4. Submission of matters to a vote of security holders
No such matters were submitted to a vote of security holders in the fourth
quarter of 1996.
PART II
Item 5. Market for the registrant's common stock and related security
holder matters
Badger Paper Mills, Inc. common shares are traded on the Nasdaq National
Market under the symbol BPMI. There were 515 shareholders of record as of
March 13, 1997. Stock price and dividend information is found on page 32
of this report.
Item 6. Selected financial data
Information regarding selected financial data of the Company is presented
on page 2 of this report.
Item 7. Management's discussion and analysis of financial condition and
results of operations
Results of Operations
The year 1996 has been a year of tremendous change for the Company as it
repositions and restructures itself to compete in the markets it serves
and strives to enhance shareholder value.
Until early 1996, the Company had operated as a vertically-integrated pulp
and paper producer. However, as part of its ongoing focus to improve
operations, competitive position and profitability, the Company decided to
sell most of its timberlands and close its sulphite pulp mill. The pulp
mill was closed in May of 1996, to reduce the Company's potential exposure
to the cost of complying with certain current and proposed federal and
state environmental regulations, particularly those applicable to the
operation of pulp mills.
An important part of the significant restructuring of the Company is the
implementation of the 9001 standard for Quality Management Systems. ISO
9000 are certification standards issued by the Geneva-based Organization
for Standardization. Approximately 11 percent of United States
manufacturers have achieved this certification, and the Peshtigo facility
became an ISO 9001 certified manufacturing facility in April, 1996. The
facility continues to improve the quality of operations, services and
products through participation of employees from all levels of the
organization. The application of the Company's quality system is
currently being expanded to include Plas-Techs' operations. The 9001
certification assures customers that the Company is committed to offer
quality product to a global market well into the next century. The
Company's quality policy is "Badger Paper Mills, Inc. will continually
meet our customer's needs in a responsible manner."
The restructuring initiatives have improved the strategic focus and
competitive position of the Company. The Company has positioned itself to
direct its management strengths and talent toward the dynamics of today's
specialty paper industry. The implementation of a strategic plan in 1996
initiated the following mission statement: "Our mission is to enhance
shareholder value through the manufacture and distribution of quality
specialty products to domestic and international customers. We will
effectively utilize the resources of the Company, its employees, assets,
and technology, while maintaining a safe, healthy and environmentally
conscious workplace."
The Company's $7.5 million stock preparation annex project was completed
in December, 1996. This annex houses a hydrapulper, a pulp conveyor to
the pulper, supported by a dewiring station and roll guillotine processor,
and includes a purchased pulp receiving area with two receiving docks and
storage facilities for up to four days of purchased pulp inventory.
Management believes this project will improve stock preparation and
material handling, as well as enhance the diversity of paper grades
offered and allow the Company to more efficiently execute grade changes.
1996 vs. 1995
In 1996, net sales decreased 17.7 percent to $76,276,000 from $92,648,000
during the same period in 1995. The volume of shipments in 1996 remained
relatively constant compared to 1995, but the average selling price
decreased by approximately 18 percent.
Cost of sales of $72,411,000 for 1996 decreased by 14 percent from
$83,890,000 in 1995. This reduction is the result of the decreased costs
associated with the closing of the pup mill operations in May 1996, as
well as the reduction in cost of purchased fiber of approximately 20
percent in 1996.
Gross margins for 1996 of $3,865,000 compare to $8,758,000 a year earlier,
primarily due to the decrease in paper prices.
Selling and administrative expenses totaled $4,136,000 and $3,852,000 for
1996 and 1995, respectively. The increase for 1996 was predominately the
result of the costs associated with the strategic planning initiative.
The Company recognized a $7,430,000 charge against earnings in 1996 for
costs associated with the closure of the pulp mill. Accompanied with
pending environmental concerns, another critical factor in closing the
pulp mill was that the Company determined it would be able to purchase its
long-term pulp requirements on the open market more cost effectively than
producing its own pulp. The charge includes the write down of pulp mill
assets and inventories at $5,294,000, costs associated with the early
retirement or severance of certain workers at $1,672,000 and provision for
other miscellaneous costs of $464,000. During 1995, the Company recorded
a charge of $504,000 in connection with a voluntary early retirement
incentive package offered to certain employees.
The Company also recognized a gain on sale of timberlands in 1996 of
$4,873,000. The Company sold approximately 14,000 acres or 85 percent of
its timberlands.
The Company recognized an unrealized holding gain on trading securities of
$307,000 in 1996 compared to a gain of $549,000 in 1995. Because the
Company's investments are accounted for in a trading account, unrealized
gains and losses are included in the Company's statement of operations in
accordance with FASB No. 115.
Interest expense for 1996 decreased $411,000 to $894,000 from $1,305,000
reported for 1995. The reduced level of credit line borrowings in 1996
was the major factor in this change.
Plas-Techs contributed approximately 7 percent to the consolidated revenue
of the Company and was profitable for 1996. This compares to 3.2 percent
of the Company's consolidated revenue in 1995.
The Company's effective tax rate was a 35.8 percent benefit in 1996 as
compared to a 32.3 percent effective tax in 1995.
1995 vs. 1994
Net sales for 1995 of $92,648,000 compared to $73,674,000 reported a year
earlier, a 26 percent increase. The volume of shipments decreased by 6
percent while the strong market conditions fueled a 34 percent increase in
average selling price. The cut size paper market was extremely strong
through the first three quarters of 1995, but slowed in the fourth
quarter. During 1995, the sale to unaffiliated customers of wet lap
sulphite pulp produced in the pulp mill increased by $3,607,000 to
$4,734,000 in 1995 from $1,127,000 in 1994. This was a result of both
increased pricing and increased shipments.
Cost of sales of $83,890,000 for 1995 increased 15 percent from
$72,949,000 for 1994. Production from operations remained constant from
1995 to 1994. Fiber pricing continued its upward trend with strong demand
through the first half of 1995. Pulp prices rose more than 140 percent
over a period of sixteen months. The additional cost relating to the
increased price of pulp was in excess of $13,000,000.
Gross margins for 1995 of $8,758,000 compared to $725,000 a year earlier,
and reflected the positive impact of rising paper prices more than
offsetting the increased pulp prices.
Selling and administrative expenses totaled $3,852,000 and $3,872,000 for
1995 and 1994, respectively.
Changes instituted in the Company's manufacturing and converting
facilities resulted in increased operating efficiencies and reduced
production costs. Operating results for 1995 included a charge in the
amount of $504,000 taken as a result of expenses incurred in connection
with a voluntary early retirement incentive package offered to hourly
workers in the first quarter, 1995. This program allowed the Company to
reduce the overstaffing brought about by changes implemented in the
manufacturing process during 1994.
The Company recognized an unrealized holding gain on trading securities of
$549,000 in 1995 compared to an $846,000 unrealized holding loss in 1994.
Because these investment securities are accounted for as a trading
account, unrealized gains and losses are included in the Company's
statement of operations in accordance with FASB No. 115.
Interest expense for 1995 decreased $10,000 to $1,305,000 from $1,315,000
reported in 1994. The reduction in the amount of short-term borrowings in
1995 was offset by rising interest rates. The Company's subsidiary, Plas-
Techs, contributed approximately 3.2 percent to the consolidated revenue
of the Company and was profitable for 1995.
The Company's effective tax rate was 32.3 percent in 1995 compared to a
tax benefit of 40.4 percent in 1994. The 1994 tax benefit results from
operating losses and exceeds the statutory rates due to research and
development credits, and tax-exempt interest. Offsetting the 1994 tax
benefits were state income taxes and other tax-affected items.
Liquidity and Capital Resources
Capital Expenditures
Capital expenditures were $6,856,000 in 1996 compared to $2,705,000 for
1995 and $1,654,000 for 1994. Depreciation and depletion in 1996 totaled
$2,743,000, and compares to $3,224,000 and $3,323,000 reported in 1995 and
1994, respectively.
The largest capital project for 1996, the stock preparation area at the
wet end of the paper machines, was completed in December, 1996.
In 1997, capital expenditures are expected to approximate $5,000,000. Of
this amount, $1,400,000 is slated for a new Chadwick eight-color
flexographic press scheduled for startup in June 1997 at Plas-Techs. At
the Peshtigo facility, approximately $1,200,000 is targeted for a new
process control computer system for the Yankee paper machine.
Capital Resources
During 1996, the Company renegotiated a revolving credit agreement which
allows for a credit line of $13,000,000. The renegotiated agreement
expires April 30, 1999. The agreement requires the Company to meet
certain covenants, including the maintenance of tangible net worth of not
less than $17,300,000 from the date of the agreement through June 29,
1997. Tangible net worth shall then be maintained at not less than
$18,500,000 from June 30, 1997 to December 30, 1997; not less than
$20,000,000 from December 31, 1997 to June 29, 1998; not less than
$22,000,000 from June 30, 1998 to December 30, 1998, and not less than
$24,500,000 thereafter.
Certain other covenants limit dividend and certain other restricted
payments to amounts which do not result in default, and after giving
effect to any such payments, the aggregate amount of each payment
commencing July 1, 1996 and thereafter cannot exceed 33 percent of
consolidated net income after such date.
At December 31, 1996, $9,500,000 was outstanding under the revolving
credit agreement referenced above, a $1,500,000 increase from the amount
of such borrowings at December 31, 1995.
Cash Flows
Cash provided from operations was $5,331,000 in 1996 and $6,586,000 in
1995. The decrease relates to lower net income tax offset by an increase
in proceeds from sales of marketable securities and a decrease in accounts
receivable. Cash used in investing activities was $3,045,000 in 1996,
compared to $1,290,000 in 1995.
Cash provided by financing activities in 1996 was $958,000 compared to
$5,836,000 in 1995. The 1996 amount included an increase in the amounts
under the revolving credit agreements in the amount of $1,500,000.
Accounting Matters
The Company is required to adopt Statement of Financial Accounting
Standard (SFAS) No. 128, "Earnings Per Share," in 1997. SFAS 128
specifies the computation, presentation, and disclosure requirements for
earnings per share. The adoption of this statement will result in the
presentation by the Company of basic and diluted earnings per share, as
defined by the statement, and is not expected to have a material impact on
the earnings per share reported in the financial statements. Upon
adoption of this statement, all prior-period earnings per share amounts
will be restated to conform to the provisions of SFAS No. 128.
Item 8. Financial statements and supplementary data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors
Badger Paper Mills, Inc.
Peshtigo, Wisconsin
We have audited the accompanying consolidated balance sheets of Badger
Paper Mills, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of operations, changes in shareholders'
equity and cash flows for each of the three years in the period ended
December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Badger
Paper Mills, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
February 4, 1997
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
(dollars in thousands)
1996 1995
ASSETS
Current Assets:
Cash and cash equivalents $ 4,079 $ 835
Marketable securities 1,800 3,138
Accounts receivable, net 4,556 6,955
Inventories 6,837 7,314
Refundable income taxes 1,466 173
Deferred income taxes 981 1,059
Prepaid expenses and other 1,194 560
Total current assets 20,913 20,034
Property, plant, equipment and
timberland, net 27,405 30,340
Property, plant and equipment held
for sale 1,410 --
Other assets 2,224 2,204
------- -------
Total assets $51,952 $52,578
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 119 $ 115
Accounts payable 7,409 5,823
Accrued liabilities 3,462 3,637
------- -------
Total current liabilities 10,990 9,575
Long-term debt 18,617 17,236
Deferred income taxes 1,621 2,604
Other liabilities 1,892 1,720
Contingencies (Note 11)
Shareholders' equity:
Common stock, no par value; 4,000,000
shares authorized, 2,160,000 shares
issued 2,700 2,700
Additional paid-in capital 178 168
Retained earnings 17,994 20,633
Treasury stock, at cost, 214,870 and
217,670 shares in 1996 and 1995,
respectively (2,040) (2,058)
------- -------
Total shareholders' equity 18,832 21,443
------- -------
Total liabilities and shareholders'
equity $51,952 $52,578
======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1996, 1995 and 1994
(dollars in thousands, except per share data)
1996 1995 1994
Net Sales $76,276 $92,648 $73,674
Cost of sales 72,411 83,890 72,949
------- ------- -------
Gross margin 3,865 8,758 725
Selling and administrative
expenses 4,136 3,852 3,872
Restructuring provision 7,430 504 --
------- ------ ------
Operating income (loss) (7,701) 4,402 (3,147)
------- ------ ------
Other income (expense):
Interest and dividend income 224 375 425
Interest expense (894) (1,305) (1,315)
Unrealized holding gain (loss)
on trading securities 307 549 (846)
Gain on sale of property, plant
and equipment and timberlands 4,871 -- 460
Miscellaneous, net (253) 39 183
------ ------ ------
4,255 (342) (1,093)
------ ------ ------
Income (loss) before income taxes (3,446) 4,060 (4,240)
Provision (benefit) for income
taxes (1,234) 1,312 (1,713)
------- ------- -------
Net income (loss) $(2,212) $ 2,748 $(2,527)
======= ======= =======
Net earnings (loss) per
share $(1.14) $1.41 $(1.29)
======= ======= ========
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
for the years ended December 31, 1996, 1995, and 1994
(dollars in thousands)
1996 1995 1994
Common stock:
Balance, December 31 $ 2,700 $ 2,700 $ 2,700
------- ------- -------
Additional paid-in capital:
Balance, January 1 168 168 168
Treasury stock issued 10 -- --
------- ------- -------
Balance, December 31 178 168 168
Retained earnings:
Balance, January 1 20,633 18,080 20,607
Net income (loss) (2,212) 2,748 (2,527)
Cash dividends of $.22 and $.10
in 1996 and 1995, respectively (427) (195) --
------- ------ -------
Balance, December 31 17,994 20,633 18,080
Treasury stock:
Balance, January 1 (2,058) (1,828) (1,825)
Shares acquired (15,000 and 500
shares in 1995 and 1994,
respectively) -- (233) (3)
Shares issued (2,800 and 500
shares in 1996 and 1995,
respectively) 18 3 --
------- ------- -------
Balance, December 31 (2,040) (2,058) (1,828)
------- ------- -------
Shareholders' equity:
Balance, December 31 $18,832 $21,443 $19,120
======= ======= =======
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995, and 1994
(dollars in thousands)
1996 1995 1994
Cash flows from operating activities:
Net income (loss) $(2,212) $2,748 $(2,527)
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and depletion 2,743 3,224 3,323
Pulp mill closure provision, net of
cash expenditures 6,923 -- --
Deferred income taxes (905) 503 (1,537)
Net proceeds from sales of marketable
securities, trading 2,533 1,174 320
Unrealized holding (gain) loss on
marketable securities, trading (307) (549) 846
Realized loss (gain) on sale of
marketable securities 468 159 --
Gain on sale of property, plant and
equipment and timberlands (4,871) -- (460)
Changes in assets and liabilities:
Accounts receivable, net 2,399 (184) (663)
Inventories (113) (995) 2,514
Accounts payable and accrued
liabilities 719 801 1,269
Refundable income taxes (1,293) 126 557
Other (753) (421) (407)
------ ------ ------
Net cash provided by operating
activities 5,331 6,586 3,235
------ ------ ------
Cash flows from investing activities:
Additions to property, plant and
equipment (6,856) (2,705) (1,654)
Proceeds from sale of property, plant
and equipment and timberlands 5,133 -- 750
Purchases of marketable securities (3,601) (870) --
Proceeds from sale of marketable
securities 2,245 345 --
Restricted funds from Industrial
Development Revenue Bond 34 1,940 87
------ ------ ------
Net cash used in investing activities (3,045) (1,290) (817)
------ ------ ------
Cash flows from financing activities:
Payments on long-term debt (115) (1,411) (108)
Increase (decrease) in revolving credit
borrowings 1,500 (4,000) (2,000)
Dividends paid (427) (195) --
Acquisition of treasury stock -- (230) --
------ ----- -----
Net cash provided by (used in)
financing activities 958 (5,836) (2,108)
------ ------ ------
Net increase (decrease) in cash and cash
equivalents 3,244 (540) 310
Cash and cash equivalents:
Beginning of year 835 1,375 1,065
------ ------ ------
End of year $4,079 $ 835 $1,375
====== ====== ======
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
BADGER PAPER MILLS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Principles:
Badger Paper Mills, Inc. and Subsidiary (the Company) operates in one
industry segment which is the production of paper products. The
following is a summary of significant accounting policies.
a. Consolidation Principles: The consolidated financial statements
include the accounts of Badger Paper Mills, Inc. and its
wholly-owned subsidiary. All significant intercompany accounts
and transactions have been eliminated.
b. Concentration of Credit Risk: Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of cash and cash equivalents and trade
accounts receivable. The Company places its cash and cash
equivalents with high quality financial institutions. The
Company provides credit in the normal course of business to its
customers. These customers are located in the Midwestern region
of the United States. The Company performs ongoing credit
evaluations of its customers and maintains allowances for
potential credit losses and generally does not require
collateral to support the accounts receivable balances.
c. Estimates: Preparation of the consolidated financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the finan-
cial statements and the reported amounts of revenues and ex-
penses during the reported period. Actual results could differ
from those estimates.
d. Cash Equivalents: For financial reporting purposes, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
e. Marketable Securities: The Company classified its investments as
a trading portfolio at December 31, 1995 and 1994. These
investments were sold during 1996. The investment portfolio at
December 31, 1996, which consists of debt securities, is
classified as available for sale. The difference between cost
and fair value is insignificant.
f. Receivables: Accounts receivable are stated net of an allowance
for discounts and doubtful accounts of $165,000 and $190,000 at
December 31, 1996 and 1995, respectively.
1. Summary of Significant Accounting Principles, continued:
g. Inventories: Substantially all inventories are valued at the
lower of cost or market with cost being determined on the
last-in, first-out (LIFO) basis.
h. Property, Plant, Equipment and Timberlands: These assets are
stated at cost, less depreciation and depletion. Depreciation
of plant and equipment is provided on the straight-line basis
over the estimated useful lives of the assets, and depletion on
timberlands is determined on the cost method.
i. Income Taxes: Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax
bases of assets and liabilities and their financial reporting
amounts at each year-end based on enacted tax laws and statutory
tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax
payable for the period and the change during the period in
deferred tax assets and liabilities.
j. Revenue Recognition: Revenue is recognized by the Company when
goods are shipped.
k. Research and Product Development Costs: Research and product
development costs related to potential new products and appli-
cations are expensed when incurred. These costs totaled
$862,000, $300,000 and $200,000, for 1996, 1995 and 1994,
respectively, and are included in cost of sales.
l. Net Earnings Per Share: Net earnings per share are computed
based on the weighted average number of shares of common stock
outstanding during the year (1,944,699 shares, 1,953,868 shares
and 1,957,163 shares in 1996, 1995 and 1994, respectively).
m. Reclassifications: Certain reclassifications have been made to
the 1995 and 1994 financial statements to conform to the 1996
presentation.
2. Inventories:
The major classes of inventories at December 31, 1996 and 1995 are as
follows (in thousands):
1996 1995
Raw materials $ 994 $3,483
Work-in-process and finished stock 4,122 3,831
Pulpwood inventory to be sold 1,721 --
------ ------
$6,837 $7,314
====== ======
The current cost of raw materials, work-in-process and finished stock
inventories valued on the LIFO cost method approximated $8,380,000 and
$12,709,000 at December 31, 1996 and 1995, respectively. It is not
practical to separate finished stock and work-in-process inventories.
As a result of the pulp mill closure, the remaining pulpwood inventory
will not be used in production. This inventory has been recorded at
its net realizable value.
3. Property, Plant, Equipment and Timberlands:
The major classes of property, plant, equipment and timberlands at
December 31, 1996 and 1995 are as follows (in thousands):
1996 1995
Land $ 120 $ 117
Buildings 8,083 7,440
Machinery, equipment and railroad
siding 50,802 67,925
Timberlands 79 533
Construction-in-progress 3,478 480
------- -------
62,562 76,495
Accumulated depreciation and
depletion 35,157 46,155
------- -------
$27,405 $30,340
======= =======
At December 31, 1996 and 1995, $16,749,000 and $21,810,000, respec-
tively, of fully depreciated assets were still in use. The property,
plant and equipment held for sale relates to the closure of the pulp
mill.
During 1996, the Company sold timberlands for $5,051,000 resulting in
a gain of $4,873,000.
4. Accrued Liabilities:
Accrued liabilities at December 31, 1996 and 1995 are as follows (in
thousands):
1996 1995
Compensation and related taxes $1,965 $2,232
Profit sharing 723 668
Other 774 737
----- -----
$3,462 $3,637
===== =====
5. Debt:
Long-term debt at December 31, 1996 and 1995 consists of the following
(in thousands):
1996 1995
Revolving credit agreement $ 9,500 $ 8,000
Industrial Development Revenue 7,550 7,617
Bonds (IDRBs)
Urban Development Action Grant 1,686 1,734
------ ------
18,736 17,351
Current portion 119 115
------ ------
$18,617 $17,236
====== ======
The Company's revolving credit facility provides for borrowings up to
$13 million and extends to April 30, 1999. A commitment fee of 3/8%
is payable for unused amounts. Interest on borrowings is at the LIBOR
rate plus 1.5% (totaling 7.0% at December 31, 1996). Borrowings are
collateralized by inventory, accounts receivable, marketable
securities and certain property, plant and equipment.
Certain of the IDRBs are due in monthly installments of $5,555 plus
interest through maturity in 1999. The remaining IDRBs are due at
maturity in 2006. Interest on the IDRBs is payable monthly at
floating rates determined by remarketing agents (4.2% at December 31,
1996) and may be converted to fixed rates at certain dates in the
future, at the Company's option, as specified in the agreements. The
average rate in 1996 for these bonds was 3.6%.
The IDRBs are collateralized by bank letters of credit expiring in
1998. The Company pays annual fees at 1% of the amount available
under the letters of credit. As amended in August 1996, the letters
of credit require, among other items, the Company to maintain minimum
tangible net worth of $17,300,000 through June 1997 and increasing at
varying levels to $24,500,000 at December 31, 1998 and a current ratio
of 1.9 to 1.0 or greater. Additionally, dividends and treasury stock
purchases are limited to 33% of the Company's cumulative net income
from July 1, 1996.
The Urban Development Action Grant is due in monthly installments of
$15,437, including interest at an effective rate of approximately
6.5%, through maturity in April, 2000, at which time a final payment
of $1,499,490 is due. This grant is collateralized by certain
machinery and equipment. The carrying amount of the Company's long-
term debt approximates fair value.
Future maturities of long-term debt as of December 31, 1996, are as
follows (in thousands):
Year ending December 31,
1997 $ 119
1998 123
1999 9,628
2000 1,516
Thereafter 7,350
-------
$18,736
=======
6. Income Taxes:
The benefit for income taxes consists of the following (in thou -
sands):
1996 1995 1994
Currently payable
(refundable):
Federal $ (359) $ 800 $ (188)
State 30 9 12
------ ----- -----
(329) 809 (176)
Deferred:
Federal (915) 503 (1,538)
State 10 - 1
------ ------ ------
(905) 503 (1,537)
------ ------ ------
$(1,234) $1,312 $(1,713)
====== ====== ======
The significant differences between the effective tax rate and the
statutory federal tax rates are as follows:
1996 1995 1994
Statutory Federal tax rate (34.0)% 34.0% (34.0)%
Tax-exempt interest (0.4) (1.3) (1.1)
State taxes 0.8 0.1 0.2
Research & development
credits, net - - (6.4)
Other (2.2) (0.5) 0.9
----- ----- ----
Effective tax rate (35.8)% 32.3% (40.4)%
===== ===== =====
The components of the deferred tax assets and liabilities as of
December 31, 1996 and 1995, are as follows (in thousands):
1996 1995
Deferred tax assets:
Accounts receivable $ 43 $ 51
Inventories 370 287
Accrued expenses 550 657
Deferred compensation 152 174
Postretirement benefits 585 471
Unrealized loss on
securities 3 110
Tax credit carryforward 2,381 2,774
State net operating loss
carryforwards 466 441
State credit carryforwards 1,146 1,003
Valuation allowance (1,393) (1,079)
------ ------
4,303 4,889
Deferred tax liabilities:
Fixed assets 4,943 6,434
------ ------
Net liability $ 640 $ 1,545
====== ======
For Federal income tax purposes, the Company has research and
development credit carryovers and alternative minimum tax credit
carryovers of $542,000 and $1,839,000, respectively. For state income
tax purposes, the Company has net operating loss and tax credit
carryovers of $11,572,000 and $1,737,000, respectively. Certain
carryforwards expire at various times over the next 10-15 year period.
For financial reporting purposes, a valuation allowance has been
established to the extent that state carryforwards, absent future
taxable income, will expire unused.
7. Employee Benefits:
The Company has profit sharing plans covering substantially all
employees. Contribution expenses associated with these plans were
$723,000, $668,000 and $679,000 in 1996, 1995 and 1994, respectively.
8. Supplemental Cash Flow Information:
At December 31, 1996, 1995 and 1994, accounts payable included
$732,000, $97,000 and $132,000, respectively, for property and
equipment additions.
Cash paid for interest and income taxes was as follows (in thousands):
1996 1995 1994
Interest $876 $1,406 $1,340
Income taxes 937 683 (733)
9. Major Customers:
Sales to a customer, which represents over 10 percent of the Company's
net sales, were $12,030,000 and $10,732,000 in 1996 and 1995. In 1994,
there were no customers which represented over 10 percent of the
Company's net sales.
10. Restructuring Provisions:
During 1996, the Company recorded a charge of $7,430,000 resulting from
the closure of the pulp mill. The charge includes the write down of
pulp mill assets and inventories ($5,294,000), costs associated with
the early retirement or severance of certain workers ($1,672,000) and
provision for other miscellaneous costs ($464,000). During 1995, the
Company recorded a charge of $504,000 in connection with a voluntary
early retirement incentive package offered to certain employees.
11. Contingencies:
The Company is responsible for the closure of a solid waste landfill,
estimated to occur in 1997. The Wisconsin Department of Natural
Resources is presently considering the Company's proposed methods and
materials to be used in closing the site. The range of the costs
associated with this closure, depending upon the methods and materials
used, is estimated to be $200,000 to $1,000,000. The Company is
accruing the low end of the range.
PART III
Item 9. Changes in and disagreements with accountants on accounting and
financial disclosure
No such disagreements have occurred.
Item 10. Directors and executive officers of the registrant
(a) Directors of the registrant
The information required by this item is incorporated by reference
from the information included under the captions, "Election of
Directors" and "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" set forth in the Company's definitive proxy
statement for its 1997 Annual Meeting of Shareholders.
(b) Executive officers of registrant
Period Served
Name Age Office In This Office
Claude L. Van Hefty 58 President 2 1/3 years
Previously Vice 1 1/2 years
President/Lignin Sales
& Fiber Procurement
Previously Vice President, 1 year
General Manager Dayton
Division
Director of Purchasing 13 1/4 years
Michael J. Bekes 39 Vice President/COO 1 year
Vice President/COO, 1 1/2 years
Fletcher Paper Co.
Mill Manager, Fletcher 1/2 year
Paper Co.
Manager of Operations, 5 1/2 years
Fletcher Paper Co.
Ralph C. Kinzel 62 Vice President of 4 1/4 years
Environmental Affairs
and Technical Services
Previously Manager of 12 3/4 years
Environmental Affairs
and Technical Services
Miles L. Kresl, Jr. 57 Vice President/ 3 3/4 years
Administration
Secretary 17 1/4 years
Treasurer 15 3/4 years
Clifton A. Martin 45 Vice President, General 3/4 year
Manager, Plas-Techs, Inc.
General Manager, Plas-Techs, 3 3/4 years
Inc.
Sales Representative 6 1/2 years
Mark C. Neumann 37 Vice President/Sales 1 3/4 years
Director of Marketing 2 3/4 years
Sales Representative 7 1/2 years
Officers are elected to hold office until the next annual meeting of
shareholders following the annual meeting of shareholders or until
their successors are elected and qualified. There is no arrangement or
understanding between any of the above officers or any other person
pursuant to which such officer was selected for the office held. No
family relationship of any kind exists between the officers.
ITEM 11. Executive compensation
The information required by this Item is incorporated by reference
from the information included under the captions "Executive
Compensation", "Report of Compensation Committee on Annual Executive
Management Compensation", and "Compensation Committee Interlocks and
Insider Participation" set forth in the Company's definitive proxy
statement for its 1997 Annual Meeting of Shareholders.
Item 12. Security ownership of certain beneficial owners and management
(a) Security ownership of certain beneficial owners
The information required by this Item is incorporated by reference
from the information included under the caption, "Stock Ownership of
Certain Beneficial Owners and Management", set forth in the Company's
definitive proxy statement for its 1997 Annual Meeting of
Shareholders.
(b) Security ownership of management
The information required by this Item is incorporated by reference
from the information included under the captions, "Stock Ownership of
Certain Beneficial Owners and Management," and "Election of
Directors", set forth in the Company's definitive proxy statement for
its 1997 Annual Meeting of Shareholders.
Item 13. Certain relationships and related transactions
The information required by this Item is incorporated by reference
from the information included under the caption, "Election of
Directors", set forth in the Company's definitive proxy statement for
its 1997 Annual Meeting of Shareholders.
PART IV
Item 14. Exhibits, financial statement schedules and reports on From 8-K
(a) (1) List of financial statements:
The following is a list of the financial statements of Badger
Paper Mills, Inc., together with the report of independent
accountants, included in this report:
Pages
Report of Independent Accountants . . . . . . . . . . . . . 12
Consolidated balance sheets, December 31, 1996 and 1995 . 13
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . 14
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 1996, 1995 and 1994 . 15
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . 16
Notes to Financial Statements . . . . . . . . . . . . . . 17
(a) (2) List of financial schedules:
The following is a listing of data submitted herewith:
Pages
Report of Independent Accountants on Financial Statement
Schedule . . . . . . . . . . . . . . . . . . . . . . . . . 30
Schedule for the years ended December 31, 1996, 1995 and
1994: 31
II Valuation and Qualifying Accounts and Reserves . . .
Financial statement schedules other than that listed above are
omitted for the reason that they are either not applicable, not
required, or that equivalent information has been included in the
financial statements, the notes thereto or elsewhere herein.
(a) (3) Exhibits
(3) (i) Restated Articles of Incorporation, as amended.
(ii) By-laws as amended through March 13, 1997.
(4) (i) U. S. $18,000,000 Credit Agreement by and among Badger
Paper Mills, Inc., New Riverview Holdings, Inc., Plas-
Techs, Inc., and Harris Trust and Savings Bank, indi-
vidually and as agent and PNC Bank, Ohio National
Association dated as of June 30, 1993. (Incorporated
by reference to Exhibit 4 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1993).
(ii) Waiver and First Amendment thereto dated as of June
30, 1993 (Incorporated by reference to Exhibit 4(ii)
to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994).
(iii) Second Amendment thereto dated as of March 31, 1994
(Incorporated by reference to Exhibit 4(a) to the
Company's Report on Form 10-Q for the quarter ended
March 31, 1994).
(iv) Third Amendment thereto dated August 31, 1994
(Incorporated by reference to Exhibit 4(iv) to the
Company's Annual Report on Form 10-K for the year
December 31, 1994).
(v) Fourth Amendment thereto dated February 17, 1995 (In-
corporated by reference to Exhibit 4(v) to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
(vi) Fifth Amendment thereto dated as of April 28, 1995
(Incorporated by reference to Exhibit 4 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995).
(vii) Sixth Amendment and Waiver dated August 9,1996
(Incorporated by reference to Exhibit 4 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996).
(10) Material Contracts:**
(i) Supplemental Executive Retirement Plan dated December
18, 1992. (Incorporated by reference to Exhibit 10
(ii) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992).
(ii) Health Insurance Retirement Benefit Agreement dated
July 22, 1992, between the Company and Edwin A. Meyer,
Jr. (Incorporated by reference to Exhibit 10(iv) to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1993).
(iii) Health Insurance Retirement Benefit Agreement dated
July 22, 1992, between the Company and Bennie C.
Burish. (Incorporated by reference to Exhibit 10(v) to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1993).
(iv) Executive Employment Agreement dated March 1, 1995,
between the Company and Claude L. Van Hefty (Incorpo-
rated by reference to Exhibit 10(vii) to the Company's
Annual Report on Form 10-K for the year ended December
31, 1994).
(v) Health Insurance Retirement Benefit Agreement dated
January 1, 1996 between the Company and Claude L. Van
Hefty.
(23) Consent of Independent Public Accountants.
(27) Financial Data Schedule (EDGAR version only).
(99) Definitive Proxy Statement for 1996 Annual Meeting of
Shareholders (to be filed with the Commission under
Regulation 14A and incorporated by reference herein to
the extent indicated in this Form 10-K).
** Each of the "material contracts" represents a management
compensatory agreement or arrangement.
(b) Reports on Form 8-K:
None.
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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.
DATE: March 27, 1997
BADGER PAPER MILLS, INC.
/s/ Claude L. Van Hefty
Claude L. Van Hefty, President
(Chief Executive Officer)
/s/ Miles L. Kresl, Jr.
Miles L. Kresl, Jr.
Vice President/Administration
Corporate Secretary, Treasurer
(Principal Financial Officer)
/s/ George J. Zimmerman
George J. Zimmerman
Controller
(Chief Accounting Officer)
Pursuant to the Requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
/s/ James L. Kemerling Director March 27, 1997
James L. Kemerling
/s/ Thomas J. Kuber Director March 27, 1997
Thomas J. Kuber
/s/ Earl R. St. John, Jr. Director March 27, 1997
Earl R. St. John, Jr.
/s/ Ralph D. Searles Director March 27, 1997
Ralph D. Searles
/s/ Claude L. Van Hefty Director March 27, 1997
Claude L. Van Hefty
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors
Badger Paper Mills, Inc.
and Subsidiary
Peshtigo, Wisconsin
Our report on the financial statements of Badger Paper Mills, Inc. and
Subsidiary is included on page 12 of this Form 10-K. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedule listed in the index on page 26 of this Form
10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
February 4, 1997
<PAGE>
Schedule II - Valuation and Qualifying Accounts and Reserves
for the years ended December 31, 1996, 1995 and 1994 (in thousands)
Column A Column B Column C Column D Column E
Additions
Balance at Charged to Balance
Beginning Costs and at End of
Description of Year Expenses Deductions Year
Deducted in the balance
sheet from the assets to
which they apply:
Allowance for discounts
and doubtful
accounts:
Year ended December
31, 1996: $ 136 $1,249 $1,258 (A) $ 127
Doubtful accounts 54 896 412 (B) 38
------ ------ ------ -----
Discounts $ 190 $2,145 $2,170 $ 165
====== ====== ====== =====
Year ended December
31, 1995: $ 233 $ 661 $ 758 (A) $ 136
Doubtful accounts 53 1,052 1,051 (B) 54
------ ------ ------ -----
Discounts $ 286 $1,713 $1,809 $ 190
====== ====== ====== =====
Year ended December
31, 1994: $ 171 $ 772 $ 710 (A) $ 233
Doubtful accounts 38 825 810 (B) 53
------ ------ ------ -----
Discounts $ 209 $1,597 $1,520 $ 286
====== ====== ====== =====
(A) Write-off of uncollectible accounts.
(B) Discounts taken and allowed.
Column C(2) has been omitted as the answer would be "None."
<PAGE>
STOCKHOLDER INFORMATION
Market makers: Stock transfer agent:
Robert W. Baird & Co., Inc. Harris Trust & Savings Bank
Herzog, Heine, Geduld, Inc. 111 West Monroe Street
Chicago, Illinois 60690
Stock price and dividend information: The following table presents high
and low sales prices of the Company's Common Stock in the indicated
calendar quarters, as reported on the Nasdaq National Market.
1996 1995
Quarter High Low High Low
First . . . . $16.00 $14.50 $15.25 $ 9.25
Second . . . 15.75 13.75 15.75 14.00
Third . . . . 14.75 10.75 16.25 14.44
Fourth . . . 12.50 8.00 16.75 15.00
Quarterly Dividends Per Share: Dividend rates are established by the
Board of Directors. The Company's line of credit maintains certain
covenants which control the payment of dividends. See "Management's
Discussion and Analysis -- Liquidity and Capital Resources -- Capital
Resources."
Quarter 1996 1995
First . . . . . . . . . . $.05 $ -
Second . . . . . . . . . .05 -
Third . . . . . . . . . . .06 .05
Fourth . . . . . . . . . .06 .05
---- ----
Total $.22 $.10
==== ====
Annual meeting of shareholders: The annual meeting of shareholders of
Badger Paper Mills, Inc. will be held at The Best Western Riverfront Inn,
1821 Riverside Avenue, Marinette, Wisconsin, on Tuesday, May 13, 1997, at
10:00 a.m.
<PAGE>
DIRECTORS AND OFFICERS
Board of directors: Corporate officers:
James L. Kemerling, Claude L. Van Hefty
Consultant President and CEO
Thomas J. Kuber Michael J. Bekes
President, Vice President and COO
K&K Warehousing;
CEO, Great Lakes Pulp & Ralph C. Kinzel
Fibre, Inc. Vice President of
Environmental and
Earl R. St. John, Jr. Technical Service
Owner and President
Earl St. John Forest Miles L. Kresl, Jr.
Products, Inc. Vice President/
St. John Trucking, Inc. Administration,
Treasurer and
Ralph D. Searles Corporate Secretary
President and CEO,
Great Northern Corp. Clifton A. Martin
Vice President, General
Claude L. Van Hefty Manager, Plas-Techs, Inc.
President and CEO
Badger Paper Mills, Inc. Mark C. Neumann
Vice President/Sales
<PAGE>
EXHIBIT INDEX
BADGER PAPER MILLS, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
Exhibit No. Description
(3) (i) Restated Articles of Incorporation, as amended.
(ii) By-laws as amended through March 13, 1997.
(4) (i) U. S. $18,000,000 Credit Agreement by and among Badger Paper
Mills, Inc., New Riverview Holdings, Inc., Plas-Techs, Inc.,
and Harris Trust and Savings Bank, individually and as agent
and PNC Bank, Ohio National Association dated as of June 30,
1993. (Incorporated by reference to Exhibit 4 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993).
(ii) Waiver and First Amendment thereto dated as of June 30, 1993
(Incorporated by reference to Exhibit 4(ii) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994).
(iii) Second Amendment thereto dated as of March 31, 1994 (In-
corporated by reference to Exhibit 4(a) to the Company's
Report on Form 10-Q for the quarter ended March 31, 1994).
(iv) Third Amendment thereto dated August 31, 1994 (Incorporated
by reference to Exhibit 4(iv) to the Company's Annual Report
on Form 10-K for the year December 31, 1994).
(v) Fourth Amendment thereto dated February 17, 1995 (In-
corporated by reference to Exhibit 4(v) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994).
(vi) Fifth Amendment thereto dated as of April 28, 1995
(Incorporated by reference to Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1995).
(vii) Sixth Amendment and Waiver dated August 9,1996 (Incorporated
by reference to Exhibit 4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996).
(10) Material Contracts:**
(i) Supplemental Executive Retirement Plan dated December 18,
1992. (Incorporated by reference to Exhibit 10 (ii) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992).
(ii) Health Insurance Retirement Benefit Agreement dated July 22,
1992, between the Company and Edwin A. Meyer, Jr.
(Incorporated by reference to Exhibit 10(iv) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993).
(iii) Health Insurance Retirement Benefit Agreement dated July 22,
1992, between the Company and Bennie C. Burish.
(Incorporated by reference to Exhibit 10(v) to the Company's
Annual Report on Form 10-K for the year ended December 31,
1993).
(iv) Executive Employment Agreement dated March 1, 1995, between
the Company and Claude L. Van Hefty (Incorporated by
reference to Exhibit 10(vii) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994).
(v) Health Insurance Retirement Benefit Agreement dated January
1, 1996 between the Company and Claude L. Van Hefty.
(23) Consent of Independent Public Accountants.
(27) Financial Data Schedule (EDGAR version only).
(99) Definitive Proxy Statement for 1996 Annual Meeting of
Shareholders (to be filed with the Commission under
Regulation 14A and incorporated by reference herein to the
extent indicated in this Form 10-K).
** Each of the "material contracts" represents a management
compensatory agreement or arrangement.
EXHIBIT 3(i)
ARTICLES OF AMENDMENT
TO THE RESTATED ARTICLES OF INCORPORATION OF
BADGER PAPER MILLS, INC.
THE UNDERSIGNED, Claude L. Van Hefty and Miles L. Kresl, Jr.,
hereby certify that they are, and at all times herein mentioned have been,
the duly elected and acting President and Corporate Secretary,
respectively, of Badger Paper Mills, Inc. (the "Corporation"), and further
certify pursuant to Section 180.1006 of the Wisconsin Business Corporation
Law that:
ARTICLE I
The name of the Corporation is Badger Paper Mills, Inc.
ARTICLE II
Article IV of the Corporation's Restated Articles of
Incorporation is hereby amended and shall hereafter read in its entirety
as follows:
ARTICLE IV
(A) General Powers, Number, Classification and Tenure of
Directors. The general powers, number, classification, tenure
and qualifications of the directors of the corporation shall be
as set forth in Sections 3.01 and 3.02 of Article III of the By-
Laws of the corporation as such Sections shall exist from time
to time. No provision of Section 3.01 or 3.02 of the By-Laws
shall be amended, altered, changed or repealed except by the
affirmative vote of shareholders holding at least seventy-five
percent (75%) of the voting power of the then outstanding shares
of capital stock of the corporation entitled to vote generally;
provided, however, that the Board of Directors, by resolution
adopted by the Requisite Vote (as hereinafter defined), may
amend, alter, change or repeal any provision of Sections 3.01 or
3.02 of the By-Laws without a vote of the shareholders. As used
herein, the term "Requisite Vote" shall mean the affirmative
vote of the number of directors in the two largest classes of
directors provided for in Section 3.01 of the By-Laws, plus one
director.
(B) Removal of Directors. Any director may be removed
from office, but only for Cause (as hereinafter defined) by the
affirmative vote of holders of at least seventy-five percent
(75%) of the voting power of the then outstanding shares of
capital stock of the corporation entitled to vote generally;
provided, however, that if the Board of Directors by resolution
adopted by the Requisite Vote shall have recommended removal of
a director, then the shareholders may remove such director from
office without Cause by the affirmative vote of shareholders
holding a majority of such outstanding shares. As used herein,
"Cause" shall exist only if the director whose removal is
proposed (i) has been convicted of a felony by a court of
competent jurisdiction and such conviction is no longer subject
to direct appeal or (ii) has been adjudged by a court of
competent jurisdiction to be liable for willful misconduct in
the performance of his or her duties to the corporation in a
matter which has a material adverse effect on the business of
the corporation and such adjudication is no longer subject to
direct appeal.
(C) Amendments. Notwithstanding any other provision of
these Restated Articles of Incorporation, the provisions of this
Article IV shall be amended, altered, changed or repealed only
by the affirmative vote of shareholders holding at least
seventy-five percent (75%) of the voting power of the then
outstanding shares of capital stock of the corporation entitled
to vote generally.
ARTICLE III
The foregoing amendment to the Corporation's Restated Articles
of Incorporation was adopted in accordance with Section 180.1003 of the
Wisconsin Business Corporation Law on May 14, 1996.
ARTICLE IV
The effective time of the foregoing amendment shall be the time
of filing of these Articles of Amendment.
IN WITNESS WHEREOF, the undersigned have executed these Articles
of Amendment to the Corporation's Restated Articles of Incorporation, in
duplicate, at Marinette, Wisconsin, this 14th day of May, 1996.
BADGER PAPER MILLS, INC.
By: /s/ Claude L. Van Hefty
Claude L. Van Hefty
President
By: /s/ Miles L. Kresl, Jr.
Miles L. Kresl, Jr.
Corporate Secretary
This document was drafted by and should be returned to Thomas E.
Hartman, Esq., Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202.
<PAGE>
RESTATED
ARTICLES OF INCORPORATION
The following Restated Articles of Incorporation duly adopted
pursuant to the authority and provisions of Chapter 180 of the Wisconsin
Statutes, supersede and take the place of the existing articles of
incorporated and amendments thereto:
ARTICLE I. The name of said corporation shall be BADGER PAPER
MILLS, INC., and the location and principal office of said corporation
shall be in the City of Peshtigo, and State of Wisconsin, where its
principal books of account and corporate records shall be kept, but said
corporation may establish such other and further branch offices from time
to time in such place or places either within or without the State of
Wisconsin as the board of directors may desire.
ARTICLE II. The business and purposes of said corporation shall be
to conduct a general manufacturing business, to take, buy, sell, hold and
use patents and patent rights, to engage in lumbering and forestry
operations, to buy, sell, deal in, lease, exchange, and hold, improve and
operate all kinds of real and personal property, timber and mining lands
and rights, water power and power rights, or to mortgage, pledge or
dispose of the same in any manner whatsoever, to build and maintain dams
and reservoirs for power and logging purposes, to construct, lease, hold,
buy and sell private lines of railroads and other tracts and means of
transportation for purposes of its business, and generally to do whatever
may seem to the corporation to be appropriate to the accomplishment of the
foregoing business and purposes, without limitation by inference from any
enumeration above stated.
ARTICLE III. The capital stock of this corporation shall consist of
1,200,000 shares of common stock. The common stock shall have no nominal
or par value and may be issued from time to time for such consideration as
may be fixed from time to time by the Board of Directors.
No holder of shares of common stock of this corporation
shall as a matter of right because he is holder of such shares, be
entitled or have the right to subscribe for, purchase, or receive any part
of any new or additional issue of stock now authorized.
ARTICLE IV. The number of directors constituting the Board of Directors
of the corporation shall be fixed by the By-Laws of the corporation, but
shall not be less than five or more than nine.
ARTICLE V. The period of existence of the corporation shall be
perpetual.
ARTICLE VI. Only persons holding stock according to the regulations
thereof shall be directors.
ARTICLE VII. Any two general offices may be held by one and the same
person at the same time whenever the directors by resolution shall so
order.
ARTICLE VIII. Said corporation shall have a corporate seal of such design
with such inscription as the By-Laws shall provide or as the board of
directors by resolution shall adopt.
ARTICLE IX. Address of the registered office at the time of adoption of
these restated articles is West Front Street, Peshtigo, Wisconsin.
ARTICLE X. Name of the registered agent at such address at the time of
adoption of the restated articles is Walter F. Adrian.
ARTICLE XI. These articles may be amended in the manner authorized by
law at the time of amendment.
EXHIBIT 3(ii)
BY-LAWS
of
BADGER PAPER MILLS, INC.
A Corporation
ARTICLE I. Offices
1.01 Principal and Business Offices. The corporation may have such
principal and other business offices in addition to Peshtigo, Wisconsin,
either within or without the State of Wisconsin, as the Board of Directors
may designate or as the business of the corporation may require from time
to time.
1.02 Registered Office. The registered office of the corporation
required by the Wisconsin Business Corporation Law to be maintained in the
State of Wisconsin may be, but need not be, identical with the principal
office of the corporation, and the address of the registered office may be
changed from time to time by the Board of Directors or by the registered
agent. The business office of the registered agent of the corporation
shall be identical to such registered office.
ARTICLE II. Shareholders
2.01 Annual Meeting. The annual meeting of the shareholders shall be
held on the second Tuesday in May in each year at 10:00 o'clock A. M., or
at such other time and date within thirty days before or after said date
as may be fixed by or under the authority of the Board of Directors, for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday in the State of Wisconsin, such meeting
shall be held on the next succeeding business day. If the election of
directors shall not be held on the day designated herein, or fixed as
herein provided, for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be
held at a special meeting of the shareholders as soon thereafter as
conveniently may be.
2.02 Special Meeting. Special meetings of the shareholders, for any
purpose of purposes, unless otherwise prescribed by statute, may be called
by the Chairman of the Board of Directors, the President or Board of
Directors or by the person designated in the written request of the holder
of not less than one-tenth of all shares of the corporation entitled to
vote at the meeting.
2.03 Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Wisconsin, as the place of
meeting for any annual meeting or for any special meeting called by the
Board of Directors. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal business
office of the corporation in Peshtigo, Wisconsin, or such other suitable
place in Marinette County, Wisconsin as may be designated by the person
calling such meeting, but any meeting may be adjourned to reconvene at any
place designated by vote of a majority of the shares represented thereat.
2.04 Notice of Meeting. Written notice stating the place, day, and
hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten (10) days nor more than fifty (50) days before the meeting, either
personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling the meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears on the
stock record books of the corporation with postage thereon prepaid.
2.05 Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, seventy (70) days. If the
stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to bote at a meeting of
shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date as the record date
for any such determination of shareholders, such date in any case to be
not more than seventy (70) days and, in case of a meeting of shareholders,
not less than ten (10) days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken. If
the stock transfer books are not closed and no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the close of business on the date on which notice of the meeting
is mailed or on the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination
of shareholders entitled to vote at any meeting of shareholders has been
made as provided in this section, such determination shall be applied to
any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of
closing has expired. If no record date is fixed by the Board of Directors
or by the Wisconsin Business Corporation Law for the determination of
shareholders entitled to demand a special meeting under Section 2.02, the
record date shall be the date that the first shareholder signs the demand.
Except, as provided by the Wisconsin Business Corporation Law for a court-
ordered adjournment, a determination of shareholders entitled to notice of
and to vote at a meeting of shareholders is effective for an adjournment
of such meeting unless the Board of Directors fixes a new record date,
which it shall do if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting.
2.06 Voting Records. After a record date for a special or annual
meeting of shareholders has been fixed, the corporation shall prepare a
list of the names of all of the shareholders entitled to notice of the
meeting. The list shall be arranged by class or series of shares, if any,
and shall show the address of and number of shares held by each
shareholder. Such list shall be available for inspection by any
shareholder, beginning two business days after notice of the meeting is
given for which the list was prepared, and continuing to the date of the
meeting, at the corporation's principal office or at a place identified in
the meeting notice in the city where the meeting will be held. A
shareholder or his, her, or its agent may, on written demand, inspect and,
subject to the limitations imposed by the Wisconsin Business Corporation
Law, copy the list, during regular business hours and at his, her, or its
expense, during the period that it is available for inspection pursuant to
Section 2.07. The corporation shall make the shareholders' list available
at the meeting and any shareholder or his, her, or its agent or attorney
may inspect the list at any time during the meeting or any adjournment
thereof. Refusal or failure to prepare or make available the
shareholders' list shall not affect the validity of any action taken at a
meeting of shareholders.
2.07 Quorum. Shares entitled to vote as a separate voting group may
take action on a matter at a meeting only if a quorum of those shares
exists with respect to that matter. Except as otherwise provided in the
articles of incorporation or the Wisconsin Business Corporation Law, a
majority of the votes entitled to be cast on the matter shall constitute a
quorum of the voting group for action on that matter. Once a share is
represented for any purpose at a meeting, other than for the purpose of
objecting to holding the meeting or transacting business at the meeting,
it is considered present for purposes of determining whether a quorum
exists for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for the adjourned
meeting. If a quorum exists, except in the case of the election of
directors, action on a matter shall be approved if the votes cast within
the voting group favoring the action exceed the votes cast opposing the
action, unless the articles of incorporation or the Wisconsin Business
Corporation Law requires a greater number of affirmative votes. Unless
otherwise provided in the articles of incorporation, each director shall
be elected by a plurality of the votes cast by the shares entitled to vote
in the election of directors at a meeting at which a quorum is present.
Though less than a quorum of the outstanding votes of a voting group are
represented at a meeting, a majority of the votes so represented may
adjourn the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting
as originally notified.
2.08 Conduct of Meetings. The Chairman of the Board of Directors or,
and in his absence, the President, and in his or her absence, a Vice-
President in the order provided under Section 4.06, and in their absence,
any person chosen by the shareholders present shall call the meeting of
the shareholders in order and shall act as Chairman of the meeting, and
the Secretary of the corporation shall act as Secretary of all meetings of
the shareholders, but in the absence of the Secretary, the presiding
officer may appoint any other person to act as secretary of the meeting.
2.09 Proxies. At all meetings of shareholders, a shareholder entitled
to vote may vote in person or by proxy appointed in writing by the
shareholder or by his or her duly authorized attorney in fact. Such proxy
shall be filed with the Secretary of the corporation before or at the time
of the meeting. Unless otherwise provided in the proxy, a proxy may be
revoked at any time before it is voted, either by written notice filed
with the Secretary or the acting secretary of the meeting or by oral
notice given by the shareholder to the presiding officer during the
meeting. The presence of a shareholder who has filed his, her, or its
proxy shall not of itself constitute a revocation. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. The Board of Directors shall have the power and
authority to make rules establishing presumptions as to the validity and
sufficiency of proxies.
2.10 Voting of Shares. There shall be no cumulative voting of shares.
Each outstanding share shall be entitled to one vote upon each matter
submitted to a vote at a meeting of shareholders.
2.11 Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the name of another
corporation may be voted either in person or by proxy, by the
president of such corporation or any other officer appointed by such
president. A proxy executed by any principal officer of such other
corporation or assistant thereto shall be conclusive evidence of the
signer's authority to act, in the absence of express notice to this
corporation, given in writing to the Secretary of this corporation,
of the designation of some other person by the board of directors or
the by-laws of such other corporation.
(b) Legal Representatives and Fiduciaries. Shares held by a
Personal Representative, guardian, conservator, trustee in
bankruptcy, receiver, or assignee for creditors may be voted by such
holder, either in person or by proxy, without a transfer of such
shares into his, her or its name. Shares standing in the name of a
fiduciary may be voted by such fiduciary, either in person or by
proxy. A proxy executed by a fiduciary shall be conclusive evidence
of the signer's authority to act, in the absence of express written
notice to the Secretary of this corporation that such manner of
voting is expressly prohibited or otherwise directed by the document
creating the fiduciary relationship.
(c) Pledgees. A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred
into the name of the pledgee, and thereafter the pledgee shall be
entitled to vote the shares so transferred.
(d) Treasury Stock. Treasury shares shall not be voted at any
meeting or counted in determining the total number of outstanding
shares entitled to vote.
(e) Minors. Shares held by a minor may be voted by such minor
in person or by proxy, and no such vote shall be subject to
disaffirmance or avoidance, unless prior to such vote the Secretary
of the corporation has received written notice or has actual
knowledge that such shareholder is a minor.
(f) Incompetents and Spendthrifts. Shares held by an
incompetent or spendthrift may be voted by such incompetent or
spendthrift in person or by proxy and no such vote shall be subject
to disaffirmance or avoidance, unless prior to such vote the
Secretary of the corporation has actual knowledge that such
shareholder has been adjudicated an incompetent or spendthrift or
actual knowledge of filing of judicial proceedings for appointment of
a guardian.
(g) Joint Tenants. Shares registered in the names of two or
more individuals who are named in the registration as joint tenants
may be voted in person or by proxy signed by any one or more of such
individuals if either (i) no other such individual or his legal
representative is present and claims the right to participate in the
voting of such shares or prior to the vote files with the Secretary
of the corporation a contrary written voting authorization or
direction or written denial of authority of the individual present or
signing the proxy proposed to be voted, or (ii) all such other
individuals are decreased and the Secretary of the corporation has no
actual knowledge that the survivor has been adjudicated not to be the
successor to the interests of those deceased.
ARTICLE III. Board of Directors
3.01 General Powers and Number. The business and affairs of the
corporation shall be managed by its Board of Directors. The number of
directors of the corporation shall be as determined from time to time by
the Board of Directors, but shall not be less than five nor more than nine
persons.
3.02 Tenure and Qualifications. Each director shall be a stockholder
of the corporation but need not be a resident of the State of Wisconsin.
Each director shall hold office for a term of three years according to the
Class to which such director is elected under this Section 3.02, until his
or her prior death, resignation or removal. Any director may be removed
from office by affirmative vote of two-thirds of the outstanding shares
entitled to vote for the election of such director, taken at a meeting of
shareholders called for that purpose or by the affirmative vote of two-
thirds of the directors in office at the time such vote is taken. Any
director may resign at any time by filing his or her written resignation
with the Secretary of the corporation.
The Board of Directors shall be divided into three Classes which shall
have equal numbers of directors to the extent practicable. The initial
term of office of Class I shall expire at the annual meeting of the
shareholders in 1982; the initial term of office of Class II shall expire
at the annual meeting of shareholders in 1983; and the initial term of
office of Class III shall expire at the annual meeting of shareholders in
1984. Each such Class shall have a regular three-year term commencing at
the expiration of the respective initial terms. The current directors of
the corporation hereby are designated members of the classes as follows:
Class I Class II Class III
Timothy M. Dempsey Alvin O. Adrian Bennie C. Burish
Robert G. Schrank Robert F. Ecker Edwin A. Meyer, Jr.
This Section 3.02 may not be amended, altered or repealed except upon the
affirmative vote of two-thirds of the outstanding shares entitled to vote
upon such matters, taken at a meeting of shareholders called for that
purpose.
3.03 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this by-law immediately after the
annual meeting of the shareholders, and each adjourned session thereof.
The place of such regular meeting shall be the same as the place of the
meeting of the shareholders which precedes it, or such other suitable
place as may be announced at such meeting of shareholders. The Board of
Directors also shall meet regularly on the first Tuesday of February, on
the fourth Wednesday of July, on the fourth Tuesday in October, and at
such time and place as may be fixed by the Chairman of the Board of
Directors, in his absence, by the President. The Board of Directors may
provide, by resolution, the time and place, either within or without the
State of Wisconsin, for the holding of additional regular meetings without
other notice than such resolution.
3.04 Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the Chairman of the Board of Directors,
the President, Secretary, or any two directors. The Chairman, the
President or Secretary calling any special meeting of the Board of
Directors may fix any place, either within or without the State of
Wisconsin, as the place for holding any special meeting of the Board of
Directors called by them, and if no other place is fixed, the place of
meeting shall be the principal business office of the corporation in
Peshtigo, Wisconsin.
3.05 Notice; Waiver. Notice of each meeting of the Board of Directors
(unless otherwise provided in or pursuant to Section 3.03) shall be given
by written notice delivered personally or mailed or given by telegraph or
facsimile to each director at his or her business address or at such other
address as such director shall have designated in writing filed with the
Secretary, in each case not less than three days prior thereto. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage thereon prepaid. If notice
be given by telegram or facsimile, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company and if
by facsimile, when transmission is made. Whenever any notice whatever is
required to be given to any director of the corporation under the Articles
of Incorporation or by-laws or any provision of law, a waiver thereof in
writing, signed at any time, whether before or after the time of meeting,
by the director entitled to such notice, shall be deemed equivalent to the
giving of such notice. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director
attends a meeting and objects thereat to the transaction of any business
because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
3.06 Quorum. Except as otherwise provided by law or by the Articles
of Incorporation or these by-laws, a majority of the number of directors
as provided in Section 3.01 shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors, but a majority of
the directors present (though less than such quorum) may adjourn the
meeting from time to time without further notice.
3.07 Manner of Acting. The act of a 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 or by the
Articles of Incorporation or these by-laws.
3.08 Conduct of Meetings. The Chairman of the Board of Directors or,
in his absence, the President, and in his or her absence, a Vice-President
in the order provided by the Board of Directors and in their absence, any
director chosen by the directors present, shall call meetings of the Board
of Directors to order and shall act as Chairman of the meeting. The
Secretary of the corporation shall act as secretary of all meetings of the
Board of Directors, but in the absence of the Secretary, the presiding
officer may appoint any Assistant Secretary or any director or other
person present to act as Secretary of the meeting.
3.09 Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may
be filled by either: the shareholders; the Board of Directors; or, if the
directors then remaining in office constitute fewer than quorum of the
Board of Directors, by the affirmative vote of a majority of the directors
remaining in office; provided, however, that if such vacancy shall have
been created by removal of a director by vote of the shareholders, the
shareholders shall have the right to fill such vacancy at the same meeting
at which removal was voted, or any adjournment of that meeting. Directors
elected by the shareholders under this Section 3.09 shall hold office
until the next annual meeting of shareholders at which the term of the
Class to which they have been elected shall expire.
3.10 Compensation. The Board of Directors, by affirmative vote of
majority of the directors then in office, and irrespective of any personal
interest of any of its members may establish reasonable compensation of
all directors for services to the corporation as directors, officers or
otherwise or may delegate such authority to an appropriate committee. The
Board of Directors also shall have authority to provide for or to delegate
authority to an appropriate committee to provide for reasonable pensions,
disability or death benefits, and other benefits or payments, to
directors, officers and employees and to their estates, families,
dependents or beneficiaries on account of prior service rendered by such
directors, officers and employees to the corporation.
3.11 Committees. The Board of Directors by resolution adopted by the
affirmative vote of a majority of all of the directors then in office may
create one or more committees, appoint members of the Board of Directors
to serve on the committees and designate other members of the Board of
Directors to serve as alternates. Each committee shall have two or more
members who shall, unless otherwise provided by the Board of Directors,
serve at the pleasure of the Board of Directors. A committee may be
authorized to exercise the authority of the Board of Directors, except
that a committee may not do any of the following: (a) authorize
distributions; (b) approve or propose to shareholders action that the
Wisconsin Business Corporation Law requires to be approved by
shareholders; (c) fill vacancies on the Board of Directors or, unless the
Board of Directors provides by resolution that vacancies on a committee
shall be filled by the affirmative vote of the remaining committee
members, on any Board committee; (d) amend the corporation's Articles of
Incorporation; (3) adopt, amend or repeal by-laws; (f) approve a plan of
merger not requiring shareholder approval; (g) authorize or approve re-
acquisition of shares, except according to a formula or method prescribed
by the Board of Directors; and (h) authorize or approve the issuance or
sale or contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series of
shares, except that the Board of Directors may authorize a committee to do
so within limits prescribed by the Board of Directors in creating the
committee, a committee may employ counsel, accountants and other
consultants to assist it in the exercise of its authority.
Audit Committee. There shall be an Audit Committee composed of not
less than three (3), nor more than five (5) members of the Board of
Directors, a majority of whom shall be directors who are not active
officers of the corporation. It shall be the duty of the Audit Committee
to recommend to the Board of Directors the accounting firm to be selected
by the Board, or to be recommended by it for shareholder approval, as
independent auditor of the corporation and to act on behalf of the Board
in meeting and reviewing with the independent auditors and the appropriate
corporate officers matters relating to corporate financial reporting and
accounting procedures and policies, adequacy of financial, accounting, and
operating controls, and the scope of the respective audits of the
independent auditors and of any internal auditor of the corporation. The
Committee shall review the results of such audits with the respective
auditing agency and promptly shall report thereon to the Board of
Directors. The Committee additionally shall submit to the Board of
Directors any recommendations it may have from time to time with respect
to financial reporting and accounting practices and policies and
financial, accounting, and operation controls and safeguards.
3.12 Unanimous Consent Without Meeting. Any action required or
permitted by the Articles of Incorporation or by-laws or any provision of
law to be taken by the Board of Directors at a meeting or by resolution
may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the directors then in office.
3.13 Telephonic Meetings. Except as provided by this by-law, any
action required or permitted by the Articles of Incorporation or by-laws
or any provision of law to be taken by the Board of Directors at a meeting
or by resolution may be taken by a quorum of the Board of Directors at a
telephonic meeting or other meeting utilizing electronic communication of
all participating directors:
6 are informed that a meeting is taking place at which
official business may be transacted;
6 simultaneously may hear each other during the meeting;
6 immediately is able to send messages to all other
participating directors; and
6 if all communication during the meeting immediately is
transmitted to each participating director.
No meeting of the Board of Directors held pursuant to this by-law may vote
upon a plan of merger of shares exchange; or to sell, lease, exchange or
otherwise dispose of substantial property or assets of the corporation; to
dissolve voluntarily or to revoke voluntary dissolution proceedings; or to
file for bankruptcy.
3.14 Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors or a committee thereof of
which he or she is a member at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his or
her dissent shall be entered in the minutes of the meeting or unless he
or she shall file his or her written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary
of the corporation immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a director who voted in favor of such
action.
ARTICLE IV. Officers
4.01 Number. The principal officers of the corporation shall be a
President, not more than five Vice-Presidents, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors. Such
other officers and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors. Any two or more offices
may be held by the same person, except the offices of the President and
Secretary, and the offices of President and Vice-President.
4.02 Election and Term of Office. The officers of the corporation to
be elected by the Board of Directors shall be elected annually by the
Board of Directors at the first meeting of the Board of Directors held
after each Annual Meeting of the Shareholders. If the election of
officers shall not be held at such meeting, such election shall be held as
soon thereafter as conveniently may be. Each officer shall hold office
until his or her successor shall have been duly elected or until his or
her prior death, resignation or removal.
4.03 Resignation; Removal. Any officer may resign at any time by
delivering written notice to an officer of the corporation. A resignation
shall be effective when delivered unless the notice specifies a later date
which is accepted by the corporation. Any officer or agent may be removed
by the Board of Directors whenever in its judgement the best interest of
the corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment shall not of itself create contract rights.
4.04 Vacancies. A vacancy in any principal office because of death,
resignation, removal, disqualification or otherwise, shall be filled by
the Board of Directors for the unexpired portion of the term.
4.05 President. The President shall be the Chief Executive Officer
and Chief Operating Officer of the corporation. Subject to the controls
of the Board of Directors, he or she shall have the general management and
control of the business of the corporation. He or she shall have
authority, subject to such rules as may be prescribed by the Board of
Directors, to appoint such agents and employees of the corporation as he
or she shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to them. Such agents and
employees shall hold office at the discretion of the President. The
President shall have the authority to sign, execute and acknowledge on
behalf of the corporation, all deeds, mortgages, bonds, stock
certificates, contracts, leases, reports and all other documents or
instruments necessary or proper to be executed in the course of the
ordinary business of the corporation, or which shall be authorized by
resolution of the Board of Directors. Except as otherwise provided by law
or the Board of Directors, the President may authorize any Vice-President
or any other officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his or her place and stead.
In general, he or she shall have all the powers and duties usually vested
in the office of the President of the corporation.
4.06 The Vice-Presidents. In the absence of the President, or in the
event of death, inability or refusal to act, or in the event for any
reason it shall be impracticable for the President to act personally, the
Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the Board of Directors, or in
the absence of any designation, then in the order of their election) shall
perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President.
Any Vice-President may sign, with the Secretary or Assistant Secretary,
certificates for shares of the corporation; and shall perform such other
duties and have such authority as from time to time may be delegated or
assign to him or her by the President or by the Board of Directors. The
execution of any instrument of the corporation by any Vice-President shall
be conclusive evidence, as to third parties, of his or her authority to
act in the stead of the President.
4.07 The Secretary. The Secretary shall: (a) keep the minutes of the
meetings of the shareholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are fully given
in accordance with the provisions of these By-Laws or as required by law;
(c) be custodian of the corporate records and of the seal of the
corporation, and see that the seal of the corporation is affixed to all
documents the execution of which on behalf of the corporation under this
seal is duly authorized; (d) keep or arrange for the keeping of a register
of the post office addresses of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President, or a
Vice-President, certificates for shares of the corporation, the issuance
of which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties incident to the office
of Secretary and have such other duties an exercise such authority as from
time to time may be delegated or assigned to him or her by the President
or by the Board of Directors.
4.08 The Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for money due and payable to the corporation
from any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall
be selected in accordance with the provisions of Section 5.04; and (c) in
general perform all of the duties incident to the office of Treasurer and
have such other duties and exercise such other authority as from time to
time may be delegated or assigned to him or her by the President, or by
the Board of Directors. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his or her
duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
4.09 Assistant Secretaries and Assistant Treasurers. There shall be
such number of Assistant Secretaries and Assistant Treasurers as the Board
of Directors may from time to time authorize. The Assistant Secretaries
may sign with the President, or a Vice-President, certificates for shares
of the corporation, the issuance of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers shall
respectively, if required by the Board of Directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as
the Board of Directors shall determine. The Assistant Secretaries and
Assistant Treasurers, in general, shall perform such duties and have such
authority as shall from time to time be delegated or assigned to them by
the Secretary or the Treasurer, respectively, or by the President or the
Board of Directors.
4.10 Other Assistants and Acting Officers. The Board of Directors
shall have the power to appoint any person to act as assistant to any
officer, or as agent for the corporation in his stead, or to perform the
duties of such officer whenever for any reason it is impracticable for
such officer to act personally, and such assistant or acting officer or
other agent so appointed by the Board of Directors shall have the power to
perform all the duties of the office to which he or she is so appointed to
be assistant, or as to which he or she is so appointed to act, except as
such power may be otherwise defined or restricted by the Board of
Directors.
4.11 Salaries. The salaries of the principal officers shall be fixed
from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V. Contracts, Loans, Checks, and
Deposits; Special Corporate Accounts
5.01 Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the corporation,
and such authorization may be general or confined to specific instances.
In the absence of other designation, all deeds, mortgages and instruments
of assignment or pledge made by the corporation shall be executed in the
name of the corporation by the President or one of the Vice-Presidents and
by the Secretary, an Assistant Secretary, the Treasurer or an Assistant
Treasurer; the Secretary or an Assistant Secretary, when necessary or
required, shall affix the corporate seal thereto; and when so executed no
other party to such instrument or any third party shall be required to
make any inquiry into the authority of the signing officer or officers.
5.02 Loans. No indebtedness for borrowed money shall be contracted on
behalf of the corporation and no evidences of such indebtedness shall be
issued in its name unless authorized by or under the authority of a
resolution of the Board of Directors. Such authorization may be general
or confined to specific instances.
5.03 Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers,
agent or agents of the corporation and in such manner as shall from time
to time be determined by or under the authority of a resolution of the
Board of Directors.
5.04 Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in
such banks, trust companies or other depositaries as may be selected by or
under the authority of a resolution of the Board of Directors.
5.05 Voting of Securities Owned by This Corporation. Subject always
to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled
by this corporation may be voted at any meeting of security holders of
such other corporation by the President of this corporation, if he be
present, or in his absence by the Treasurer of this corporation, and (b)
whenever, in the judgment of the President, or in his absence, the
Treasurer, it is desirable for this corporation to execute a proxy or
written consent in respect to any shares or other securities issued by
any other corporation and owned by this corporation, such proxy or consent
shall be executed in the name of this corporation by the President, or the
Treasurer of the this Corporation, without necessity of any authorization
by the Board of Directors, affixation of corporate seal or
countersignature or attestation by another officer. Any person or persons
designated in the manner above stated as the proxy or proxies of this
corporation shall have full right, power and authority to vote the shares
or other securities issued by such other corporation and owned by this
corporation the same as such shares or other securities might be voted by
this corporation.
5.06 Indemnification. Indemnification by the corporation shall be
provided pursuant to Wisconsin Statute Section 180.0859 et. seq. Such
indemnification shall be provided to directors, officers, employees, and
agents of the corporation. Directors and officers eligible for
indemnification shall include:
(a) A natural person who is or was a director or officer of the
corporation.
(b) A natural person who, while a director or officer of the
corporation is or was serving at the request of the corporation
as a director, officer, partner, trustee, member of any
governing or decision making committee, employee or agent of
another corporation or foreign corporation, partnership, joint
venture, trust or other enterprise.
(c) A natural person who, while a director or officer of the
corporation, is or was serving an employee benefit plan because
his or her duties to the corporation also imposed duties on, or
otherwise involved services by, the person to the plan or to
participants in or beneficiaries of the plan.
(d) And, unless the context requires otherwise, the estate or
personal representative of a director or officer.
The corporation shall indemnify a director, officer, employee or agent
to the extent he or she has been successful on the merits or otherwise in
the defense of a proceeding for all reasonable expenses incurred in the
proceeding if the director, officer, employee, or agent was a party
because he or she is a member or officer of the corporation.
In cases not included under the above paragraph, the corporation shall
indemnify a director, officer, employee or agent against liability
incurred by that person in a proceeding to which that person was a party
because he or she is or was a director, officer, employee, or agent of the
corporation, unless liability was incurred because that person breached or
failed to perform a duty he or she owed to the corporation and the breach
or failure to perform constitutes any of the following:
(a) A willful failure to deal fairly with the corporation or
its shareholders in connection with a matter in which the person
has a material conflict of interest.
(b) A violation of criminal law unless the person had a
reasonable cause to believe his or her conduct was lawful or no
reasonable cause to believe his or her conduct was unlawful.
(c) A transaction from which the person derived an improper
personal profit.
(d) Willful misconduct.
For purposes of this Article, "expenses" shall be defined to include
fees, costs, charges, disbursements, attorneys fees and other expenses
incurred in connection with the proceeding. "Liability" includes an
obligation to pay a judgment, settlement, penalty, assessment, forfeiture
or fine, including an excess tax assessment with respect to an employee
benefit plan, and reasonable expenses. "Party" includes a natural person
who was, or is threatened to be made, a named defendant or respondent in a
proceeding. "Proceeding" means any threatened, pending or completed
civil, criminal, administrative or investigative action, suit, arbitration
or other proceeding, whether formal or informal, which involves foreign,
federal, state or local law and which is brought by or in the right of the
corporation or by any other person.
The termination of a proceeding by judgment, order, settlement or
conviction, or upon a plea of no contest or an equivalent plea, does not,
by itself, create a presumption that indemnification of the director or
officer is not required.
The director, officer, employee, or agent seeking indemnification shall
select one of the following means for determining his or her right to
indemnification:
(a) By a majority vote of a quorum of the Board of Directors
consisting of directors not at the time parties to the sale or
related proceedings. If a quorum of disinterested directors
cannot be obtained, by majority vote of a committee duly
appointed by the Board of Directors and consisting solely of two
or more directors not at the same parties to the same or related
proceedings. Directors who are parties to the same or related
proceedings may participate in the designation of members of the
committee.
(b) By independent legal counsel selected by a quorum of the
Board of Directors or its committee in the manners prescribed in
paragraph (a) above, or, if unable to obtain such quorum or
committee, by a majority vote of the full Board of Directors,
including directors who are parties to the same or related
proceedings.
(c) By a panel of three arbitrators consisting of one
arbitrator selected by those directors entitled under paragraph
(b) to select independent legal counsel, one arbitrator selected
by the director or officer seeking indemnification, and one
arbitrator selected by the two arbitrators previously selected.
(d) By an affirmative vote of shares as provided in Wisconsin
Statutes Sections 180.0725 through 180.0727. Shares owned by,
or voted under the control of, persons who are at the time
parties to the same or related proceedings, whether as
plaintiffs or defendants or in any other capacity, may not be
voted in making the determination.
(e) By a Court under Wisconsin Statutes Section 180.0854.
(f) By any other method provided for and any additional right
to indemnification permitted under Wisconsin Statutes Section
180.0858.
Upon written request by a person who is a party to a proceeding, a
corporation may pay or reimburse his or her reasonable expenses as
incurred if the person provides the corporation with a written affirmation
of his or her good faith belief that he or she has not reached or failed
to perform his or her duties to the corporation. A bond or undertaking
need not be required prior to the advancement of such expenses.
Indemnification additional to that set forth in this Article may be
provided by resolution of the Board of Directors except as restricted by
law.
ARTICLE VI. Certificates for Shares and Their Transfer
6.01 Certificates for Shares. Certificates representing shares of the
corporation shall be in such form, consistent with law, as shall be
determined by the Board of Directors. Such certificates shall be signed
by the President, a Vice-President, and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and date
of issue, shall be entered on the stock transfer books of the corporation.
All certificates surrendered to the corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificates for a like number of shares shall have been surrendered and
cancelled, except as provided in Section 6.06.
6.02 Facsimile Signatures and Seal. The seal of the corporation on
any certificates for shares may be a facsimile. The signatures of the
President, a Vice-President, and the Secretary or Assistant Secretary upon
a certificate may be facsimiles if the certificate is manually signed on
behalf of a transfer agent, other than the corporation itself.
6.03 Transfer of Shares. Prior to due presentment of a certificate
for shares for registration of transfer the corporation may treat the
registered owner of such shares as the person exclusively entitled to
vote, to receive notifications and otherwise to have and exercise all the
rights and power of an owner. Where a certificate for shares is presented
to the corporation with a request to register for transfer, the
corporation shall not be liable to the owner or any other person suffering
loss as a result of such registration of transfer if (a) there were on or
with the certificate the necessary endorsements, and (b) the corporation
had no duty to inquire into adverse claims or has discharged any such
duty. The corporation may require reasonable assurance that said
endorsements are genuine and effective and compliance with such other
regulations as may be prescribed by or under the authority of the Board of
Directors.
6.04 Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.05 Lost, Destroyed or Stolen Certificates. Where the owner claims
that his or her certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if
the owner (a) so requests before the corporation has notice that such
shares have been acquired by a bona fide purchaser, and (b) files with the
corporation a sufficient indemnity bond, and (c) satisfies such other
reasonable requirements as may be prescribed by or under the authority of
the Board of Directors.
6.06 Consideration for Shares. The shares of the corporation may be
issued for such consideration as shall be fixed from time to time by the
Board of Directors. The consideration to be paid for shares may be paid
in whole or in part, in money, in other property, tangible or intangible,
or in labor or services actually performed for the corporation. When
payment of the consideration for which shares are to be issued shall have
been received by the corporation, such shares shall be deemed to be fully
paid and nonassessable by the corporation. No certificate shall be issued
for any share until such share is fully paid.
6.07 Stock Regulations. The Board of Directors shall have the power
and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE VII. Mergers, Consolidations, Sales,
Reorganizations of the Corporation
Except as otherwise expressly provided in this Article VII: (i) any
merger or consolidation of the corporation with or into any other
corporation; or (ii) any sale, lease, exchange or other disposition of all
or substantially all of the assets of the corporation to, or with any
other corporation, person or other entity, shall require the affirmative
vote of the holders of at least two-thirds of the outstanding shares of
capital stock of the corporation issued and outstanding and entitled to
vote if, as of the record date for the determination of shareholders
entitled to notice thereof and to vote thereon, such other corporation,
person or entity is the beneficial owner, directly or indirectly, of five
percent or more of the outstanding shares of capital stock of the
corporation issued and outstanding and entitled to vote.
This provision of this Article VII shall not apply to any transaction
described in clauses (i) or (ii) of this Article, (a) with another
corporation person or other entity if the Board of Directors of the
corporation by resolution shall 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 became the beneficial
owner, directly or indirectly of five percent or more of the outstanding
shares of capital stock of the corporation entitled to vote; or (b) which
has been approved by resolution unanimously adopted by the whole Board of
Directors of the corporation at any time prior to the consummation
thereof.
For the purpose of this Article VII, a corporation, person or other
entity shall be deemed to be the beneficiary owner of any shares of
capital stock of the corporation (i) which it has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants
or options, or otherwise, or (ii) which are beneficially owned, directly
or indirectly [including shares deemed owned through application of clause
(i) of this paragraph above], by any other corporation, person or entity
(a) with which it or its "affiliate" or Associate" (as reference below)
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of capital stock of the
corporation or (b) which is its "affiliate" or "Associate" as those terms
were defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect on April 21, 1981. For the
purposes of this Article VII, the outstanding shares of capital stock of
the corporation shall include shares deemed owned through he application
of clauses (i) and (ii) of this paragraph 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.
The Board of Directors of the corporation shall have the power and duty
to determine for the purposes of this Article VII on the basis of
information then known to it, whether (a) any corporation, person or other
entity beneficially owns, directly or indirectly five percent or more of
the outstanding shares of capital stock of the corporation entitled to
vote; (b) any sale lease, exchange or other disposition of part of the
assets of the corporation; and (c) the memorandum of understanding
referred to above is substantially consistent with the transaction to
which it relates. Any such determination by the Board shall be conclusive
and binding for all purposes of this Article VII.
This Article VII may not be amended or rescinded except by the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of capital stock of the corporation issued and outstanding and
entitled to vote at any regular meeting of the shareholders, if notice of
the proposed alteration or amendment be contained in the notice of the
meeting.
ARTICLE VIII. Reports Concerning Mergers or Acquisitions
If the corporation shall receive from any person or entity any written
notice of an intention to acquire the corporation or all, or substantially
all, of its assets, or to merge the corporation into such entity or a
business organization associated with such person or entity, the Board of
Directors promptly shall review and assess the social and economic effects
of such intended acquisition or merger. The review and assessment shall
include, but shall not be limited to, the effects on shareholders, the
effects on employees, including their health and safety, and the effects
on customers and suppliers of the corporation on the Peshtigo community
and the environment. The review and assessment shall be completed within
ninety days of receipt by the corporation of such written notice of intent
to acquire or merge. A written report of such review and assessment shall
be prepared and distributed promptly to the shareholders.
This Article VIII may not be amended or rescinded except by the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of capital stock of the corporation issued and outstanding and
entitled to vote at any regular or special meeting of the shareholders, if
notice of the proposed alteration or amendment be contained in the notice
of the meeting.
ARTICLE IX. Seal
9.01 The Board of Directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words, "Corporate
Seal."
ARTICLE X. Amendments
10.01 By Shareholders. These By-Laws may be altered, amended or
repealed and new By-Laws may be adopted by the shareholders by affirmative
vote of not less than a majority of the shares present or represented at
any annual or special meeting of the shareholders at which a quorum is in
attendance, except as otherwise provided by any By-Law.
10.02 By Directors. These By-Laws also may be altered, amended or
repealed and new By-Laws may be adopted by the Board of Directors by
affirmative vote of a majority of the number of directors present at any
meeting at which a quorum is in attendance; but no By-Law adopted by the
shareholders shall be amended or repealed by the Board of Directors if bye
By-Law so adopted provides for altering amendment or repeal only upon the
vote of the shareholders.
10.03 Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent
with the By-Laws then in effect but is taken or authorized by affirmative
vote of not less than the number of shares or the number of directors
required to amend the By-Laws so that the By-Laws would be consistent with
such action, shall be given the same effect as though the By-Laws had been
temporarily amended or suspended so far, but only so far, as is necessary
to permit the specific action so be taken or authorized.
10.04 Procedures for Shareholder Amendments and Nominations.
Proposals by shareholders for amendment of these By-Laws or the Articles
of Incorporation of the corporation, and nominations by shareholders of
directors for the Board of Directors, shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid, to
the Secretary of the corporation not less than 120 days prior to the date
of release of annual meeting proxy materials tot he shareholders. The
date of release for any year shall be scheduled to provide the same period
of notice to shareholders as was provided to them for the next preceding
annual shareholders meeting; provided, however, that if a special meeting
of shareholders is called for any purpose such notice shall be delivered
or mailed to the Secretary, as prescribed, not later than the seventh day
following the day on which notice of such meeting was mailed to
shareholders.
10.05 Procedures for Amendments and Nominations by the Board of
Directors. Notice of proposals by the Board of Directors for Amendment of
these By-Laws or the Articles of Incorporation of the Corporation where
shareholder approval is required by these By-Laws or by the Articles of
Incorporation, and nominations of directors by the Board of Directors
shall be made by affirmative vote of the number of directors present at
any meeting at which a quorum is in attendance, except as otherwise
provided by these By-Laws.
10.06 Form of Notices of Amendments and Nominations.
(a) Each notice of a proposal to amend these By-Laws or the
Articles of Incorporation of the corporation shall set forth the
exact wording of the proposed amendment and a brief explanation
of the purpose and possible effect of the proposed amendment.
(b) Each notice of nomination of a director to the Board of
Directors shall set forth: (i) the name, age, business address
and, if known, residence address of such nominee; (ii) his or
her principal occupation or employment; (iii) the number of
shares of stock of the corporation owned by such nominee; and
(iv) a brief statement of such other facts as may be relevant to
the election of such nominee to the Board of Directors of the
corporation.
(c) If the corporation shall oppose any proposal received from
a shareholder for amendment of these By-Laws or the Articles of
Incorporation, or for nomination of a director, upon the request
of the shareholder it shall include in the notice of such
proposal a statement by the proponent in support of the
proposal. Any such statement shall be limited to not more than
200 words unless the Board of Directors otherwise provides.
10.07 Action on Defective Proposals and Nominations. If the Chairman
of any meeting of the shareholders at which a proposal to amend these By-
Laws or the Articles of Incorporation of the corporation, or the
nomination of a director to the Board of Directors, is to be considered
for action shall determine that such proposal or nomination has not been
made according to the procedures prescribed by these By-Laws it shall be
so stated to such meeting and the said proposal or nomination shall not be
considered for action at that meeting or any adjournment thereof.
EXHIBIT 10(v)
HEALTH INSURANCE RETIREMENT BENEFIT AGREEMENT
AGREEMENT MADE January 1, 1996, between BADGER PAPER MILLS, INC.
("Badger") and CLAUDE L. VAN HEFTY ("Van Hefty").
1. Recitals.
A. Van Hefty has provided exemplary service to Badger
throughout his years of employment.
B. Van Hefty's services have assisted the development and
expansion of Badger's business with conspicuous success.
C. Badger wishes to recognize the value of Van Hefty's
services by providing comprehensive major medial benefits after his
retirement, provided retirement occurs after he has attained the age of 55
years.
2. Comprehensive Major Medical Benefits.
Upon the effective date set forth below, Badger shall furnish to
Van Hefty and his spouse the same comprehensive major medical benefits
plan then offered to Badger's full-time employees. The plan shall be
furnished without residency requirements. Badger shall provide the plan
to Van Hefty and his spouse until Van Hefty's date of death. Upon Van
Hefty's death, his surviving spouse shall receive the same comprehensive
major medical benefits plan until her death or remarriage, whichever first
occurs.
3. Effective Date.
Badger shall provide Van Hefty a comprehensive major medical
benefits plan upon Van Hefty's retirement, provided retirement occurs
after he has attained the age of 55 years.
4. Premium Payment.
Van Hefty is responsible for the annual premium as established
by Badger, and payable at least as frequently as once a month in advance.
Upon Badger receiving the total annual premium payment, Badger will then
reimburse Van Hefty.
5. Tax Consequences.
Van Hefty understands the provision of this comprehensive major
medical benefits plan to him is a taxable event. Van Hefty will receive
an IRS for 1099 from badger for each tax year. Van Hefty shall be
responsible for payment of any taxes due as a result of his receipt of
this comprehensive major medical benefits plan.
6. Survival of Agreement.
If Badger shall at any time be merged or consolidated into or
with any other corporation, or if substantially all of Badger's assets are
transferred to another corporation, the provisions of this Agreement shall
be binding upon and inure to the benefit of the corporation resulting from
such merger or consolidation or to which such assets shall be transferred.
This provision shall apply in the event of any subsequent merger,
consolidation or transfer.
7. Non-assignability.
Van Hefty's rights and benefits under this Agreement are
personal to him, and no such right or benefit shall be subject to
voluntary or involuntary alienation, assignment or transfer.
8. Entire Agreement.
This Agreement supersedes all other agreements previously made
between other parties relating to its subject matter. There are no other
understandings or agreements.
9. Non Waiver.
No delay or failure by either party to exercise any right under
this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right.
10. Headings.
Headings in this Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
11. Governing Law.
This Agreement shall be construed in accordance with and
governed by the laws of the State of Wisconsin.
IN WITNESS WHEREOF the parties have signed this Agreement.
BADGER PAPER MILLS, INC.
By: /s/ E. A. Meyer, Jr.,
E. A. Meyer, Jr., Chairman
By: /s/ Miles L. Kresl, Jr.
Miles L. Kresl, Jr.
Vice President/Administration,
Corporate Secretary & Treasurer
By: /s/ Claude L. Van Hefty
Claude L. Van Hefty
Consent of Independent Accountants
We consent to the incorporation by reference in the registration
statements of Badger Paper Mills, Inc. and Subsidiary on Form S-8 (File
Nos. 333-01671 and 333-01673) of our reports dated February 4, 1997, on
our audits of the consolidated financial statements and financial
statement schedule of Badger Paper Mills, Inc. and Subsidiary as of
December 31, 1996 and 1995, and for each of the three years in the period
ended December 31, 1996, which reports are included in this Annual Report
on Form 10-K.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF BADGER PAPER MILLS, INC. FOR THE YEAR ENDED
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 4,079
<SECURITIES> 1,800
<RECEIVABLES> 4,556
<ALLOWANCES> 0
<INVENTORY> 6,837
<CURRENT-ASSETS> 20,913
<PP&E> 62,252
<DEPRECIATION> 35,157
<TOTAL-ASSETS> 51,952
<CURRENT-LIABILITIES> 10,990
<BONDS> 18,617
2,700
0
<COMMON> 0
<OTHER-SE> 178
<TOTAL-LIABILITY-AND-EQUITY> 51,952
<SALES> 76,276
<TOTAL-REVENUES> 76,276
<CGS> 72,411
<TOTAL-COSTS> 76,547
<OTHER-EXPENSES> 7,430<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 894
<INCOME-PRETAX> (3,446)
<INCOME-TAX> (1,234)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,212)
<EPS-PRIMARY> (1.14)
<EPS-DILUTED> 0
<FN>
<F1>Pulp Mill closure charge.
</FN>
</TABLE>
