SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended December 31, 2001
or
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 0-795
A. Full title of the plan and address of the plan, if different from
that of the issuer named below:
BADGER PAPER MILLS, INC.
PROFIT SHARING PLAN AND TRUST FOR UNION EMPLOYEES
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
BADGER PAPER MILLS, INC.
200 West Front Street
Peshtigo, Wisconsin 54157
REQUIRED INFORMATION
The following financial statements and schedules of the Badger Paper
Mills, Inc. Profit Sharing Plan and Trust for Union Employees, prepared in
accordance with the financial reporting requirements of the Employee Retirement
Income Security Act of 1974, as amended, are filed herewith.
2
Financial statements and report of independent certified public accountants
Badger Paper Mills, Inc. Profit Sharing Plan and Trust for Union Employees
December 31, 2001 and 2000
3
C O N T E N T S
Page
Report Of Independent Certified Public Accountants 5
Financial Statements
Statements Of Net Assets Available For Benefits 6
Statements Of Changes In Net Assets Available For Benefits 7
Notes To Financial Statements 8
Supplementary Information
Report Of Independent Certified Public Accountants
On Supplementary Information 14
Schedule H, Line 4(i) - Schedule Of Assets Held At End Of Year 15
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Trust Administrative Committee
Badger Paper Mills, Inc. Profit Sharing Plan
and Trust For Union Employees
We have audited the accompanying statements of net assets available for benefits
of Badger Paper Mills, Inc. Profit Sharing Plan and Trust for Union Employees as
of December 31, 2001 and 2000, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe 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 net assets available for benefits of Badger Paper
Mills, Inc. Profit Sharing Plan and Trust for Union Employees as of December 31,
2001 and 2000, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
/s/ Grant Thornton LLP
Appleton, Wisconsin
May 21, 2002
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
ASSETS 2001 2000
------------------- -------------------
Investments, at fair value
Common trust funds $ 11,049,177 $ 5,808,877
Mutual funds 20,109,670 29,036,883
Common stock 62,114 23,059
------------------- -------------------
31,220,961 34,868,819
Employer contributions receivable 445,451 310,133
Accrued income 29 5
------------------- -------------------
Total assets 31,666,441 35,178,957
------------------- -------------------
LIABILITIES
Miscellaneous payable 30,636 9,364
------------------- -------------------
Total liabilities 30,636 9,364
------------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS $ 31,635,805 $ 35,169,593
=================== ===================
The accompanying notes are an integral part of these statements.
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31,
2001 2000
------------------- -------------------
Additions to net assets available for benefits:
Investment income:
Interest income and dividends $ 184,104 $ 368,536
Contributions
Employee contributions 488,958 532,572
Employer contributions 445,451 310,133
------------------- -------------------
934,409 842,705
------------------- -------------------
Total additions 1,118,513 1,211,241
------------------- -------------------
Deductions from net assets available for benefits:
Net depreciation in fair value of investments 2,344,550 1,408,584
Benefits paid to participants 2,147,836 2,201,477
Trust and other fees 34,075 32,712
------------------- -------------------
Total deductions 4,526,461 3,642,773
------------------- -------------------
DECREASE IN NET ASSETS (3,407,948) (2,431,532)
AVAILABLE FOR BENEFITS
Net assets available for benefits:
Beginning of year 35,169,593 37,644,812
Transfer to Badger Paper Mills, Inc. Profit Sharing
Plan and Trust for Non-Union Employees (125,840) (43,687)
------------------- -------------------
Net assets available for benefits at end of year $ 31,635,805 $ 35,169,593
=================== ===================
The accompanying notes are an integral part of these statements.
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
NOTES TO FINANCIAL STATEMENTS
December 31, 2001 and 2000
NOTE A - PLAN DESCRIPTION
The following brief description of Badger Paper Mills, Inc. Profit Sharing
Plan and Trust for Union Employees (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan agreement
for more complete information.
1. General
The Plan is a defined contribution pension plan that covers substantially
all union employees of Badger Paper Mills, Inc. (the "Company") at the
Paper Products division that have attained the age of 18. Employees who
have completed at least ninety days of service with the company are
eligible to make 401(K) contributions. Employees are eligible to receive an
allocation of the company's contribution after the completion of one year
of service. It is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA) and subsequent legislation.
2. Contributions
The company contributes to the Plan each year under the addition of two
methods. In the first method, the company contributes the greater of (1)
25% of its adjusted net income, as defined in the Plan, for the year, (2)
25% of its adjusted net income, as defined in the Plan, for the year,
calculated solely with reference to the Paper Product division or (3) 4% of
the total compensation paid to Plan participants during the year plus 4% of
the excess compensation over the social security wage base. Under the
second method, the Company contributes to the Plan an additional
contribution of one percent bonus for each three percent EBIT the Company
earns, up to a maximum contribution of 6% at 15% EBIT. The percent EBIT is
calculated by dividing the earnings before interest and taxes by net sales.
The EBIT calculation will be determined by Paper Products sales and
earnings and will not include the Badger Flexible Packaging Division's
numbers. The maximum contribution to the profit sharing accounts on a
yearly basis is 10% in total.
A cash or deferred arrangement plan, known as CODA, as authorized by
Section 401(k) of the Internal Revenue Code (IRC), allows employees to
defer a portion of their compensation up to the applicable IRC limits by
having it contributed by the Company to their individual account in the
Plan.
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000
NOTE A - PLAN DESCRIPTION - Continued
3. Vesting
Participants are at all times fully vested in the value of their accounts
attributable to their voluntary contributions.
In 2001 and 2000, participants become 20% vested in the Company's profit
sharing contribution following three years of service and are additionally
vested at 20% for each year of additional service up to seven years of
service, at which time participants are fully vested. Upon death,
disability or retirement, participants are automatically 100% vested
regardless of years of service.
Effective January 1, 2002, vesting is in accordance with the following
graduated vesting schedule:
Years of service Nonforfeitable percentage
---------------- -------------------------
Less than 1 0%
1 33
2 66
3 or more 100
4. Benefits
On termination of service due to death, disability or retirement, the
participant or beneficiary is entitled to receive the full value of the
participant's account. Upon a participant's termination from employment
with the Company for a reason other than death, disability or retirement,
the participant is entitled to the vested balance in their account.
The method of distribution for account balances exceeding $5,000 will be
determined by an election made by the Plan participant. The methods
available are lump sum, direct rollover, installment payments or part
installments and lump sum. The standard method for account balances less
than $5,000 is lump sum payments.
5. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. Participants will
become fully vested upon termination of the Plan.
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000
NOTE A - PLAN DESCRIPTION - Continued
6. Participant Accounts
Each participant's account is credited with the participant's contribution,
an allocation of the Company's profit sharing contribution, Plan earnings
and forfeitures of terminated participants' nonvested accounts. The
participants share in the Company's contributions and forfeitures on the
basis of allocated shares. Shares are determined through a formula based
upon each participant's earnings and number of years of service with the
Company.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan have been prepared in conformity with
accounting principles generally accepted in the United States of America as
applied to profit sharing plans.
A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows.
1. Use of Estimates
In preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America, management
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported period. Actual results
could differ from those estimates.
2. Basis of Accounting
The financial statements of the Plan are prepared on an accrual basis.
3. Valuation of Investments
The Plan's investments are held by Wells Fargo Bank Minnesota, N.A. (the
"Trustee"). Plan investments are stated at market value as reported by
the Plan Trustee.
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the
year; securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued at the
mean between the last reported bid and asked prices. Investments in mutual
funds are stated at a value based upon the per unit allocation of the
funds' net assets, stated at fair value on the last business day of the
year.
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000
NOTE C - INVESTMENTS
The following schedule presents the investments held by the Trustee in each
fund at December 31, 2001 and 2000. Investments that represent 5% or more
of the Plan's net assets are separately identified.
2001 2000
----------------- ----------------
Common Trust Funds:
Wells Fargo Stable Return Fund $ 10,668,891 $ 5,575,211
Other 380,286 233,666
Mutual Funds:
Wells Fargo Growth Balanced Fund 5,927,723 7,879,403
Wells Fargo Growth Equity Fund 2,905,872 4,721,807
Wells Fargo Diversified Equity Fund 2,916,188 4,489,943
Janus Overseas Fund 933,882 2,631,883
Wells Fargo Large Company Growth Fund 1,937,666 3,078,149
Wells Fargo Small Cap Opportunities Fund 3,902,583 4,749,986
Other 1,585,756 1,485,712
Other 62,114 23,059
---------------- -----------------
$ 31,220,961 $ 34,868,819
================ =================
The Plan's investments (including investments bought, sold and held during
the year) appreciated (depreciated) in value as follows for the years ended
December 31,
2001 2000
-------------------- ---------------------
Common trust funds $ 456,735 $ 312,314
Mutual funds (2,810,212) (1,697,220)
Common stock 8,927 (23,678)
-------------------- ---------------------
$ (2,344,550) $ (1,408,584)
==================== =====================
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2001 and 2000
NOTE D - ADMINISTRATIVE EXPENSES
All administrative expenses in connection with the operation of the Plan
are paid from Plan earnings.
NOTE E - INCOME TAX STATUS
The Plan obtained its latest determination letter on February 25, 1999, in
which the Internal Revenue Service stated that the Plan was designed in
accordance with applicable requirements of the IRC. Since receiving the
determination letter, the Plan has been amended. However, the plan
administrator and the Plan's tax counsel believe that the amended Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC.
NOTE F - RECLASSIFICATIONS
Certain reclassifications have been made to the 2000 balances to conform to
the presentation adopted in the current fiscal year.
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SUPPLEMENTARY INFORMATION
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON SUPPLEMENTARY INFORMATION
Trust Administrative Committee
Badger Paper Mills, Inc. Profit Sharing Plan
and Trust for Union Employees
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole of Badger Paper Mills, Inc. Profit Sharing
Plan and Trust for Union Employees as of December 31, 2001 and 2000 and for the
years then ended, which are presented in the preceding section of this report.
The supplementary schedule is presented for the purpose of additional analysis
and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Grant Thornton LLP
Appleton, Wisconsin
May 21, 2002
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Badger Paper Mills, Inc.
Profit Sharing Plan and Trust for Union Employees
SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS HELD AT END OF YEAR
Employer ID # 39-0143840 - Plan # 001
December 31, 2001
(c) Description of investment
including maturity date,
(b) Identity of issuer, borrower, rate of interest, collateral,
(a) lessor or similar party par or maturity value (e) Current value
- ---------- ------------------------------------- ------------------------------------ --------------------
* Wells Fargo Bank, N.A. Stable Return Fund $ 10,668,891
Short-Term Investment Fund 35,831
S & P 500 Collective Fund 344,455
--------------
11,049,177
* Wells Fargo Bank, N.A. Growth Balanced Fund 5,927,723
Growth Equity Fund 2,905,872
Large Company Growth Fund 1,937,666
Strategic Income Fund 1,417,914
Diversified Equity Fund 2,916,188
Small Cap Opportunities Fund 3,902,583
* Janus Overseas Fund 933,882
* MSIF Trust Mid Cap Growth Portfolio Fund 167,842
--------------
20,109,670
* Badger Paper Mills, Inc. Common Stock 62,114
--------------
$ 31,220,961
* Indicates party-in-interest investment.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Profit Sharing Trust Committee for Union Employees, which administers the Plan,
has duly caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Peshtigo, and State of
Wisconsin, on this 26th day of June, 2002.
BADGER PAPER MILLS, INC. PROFIT
SHARING PLAN AND TRUST FOR UNION
EMPLOYEES
By: /s/ Michael J. Bekes
---------------------------------
Michael J. Bekes
By: /s/ Michael E. Staffeldt
---------------------------------
Michael E. Staffeldt
By: /s/ Kenneth W. Berman
---------------------------------
Kenneth W. Berman
The foregoing persons are all of the members of the Profit Sharing Trust
Committee for Union Employees which is the administrator of the Badger Paper
Mills, Inc. Profit Sharing Plan and Trust for Union Employees.
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EXHIBIT INDEX
BADGER PAPER MILLS, INC.
PROFIT SHARING PLAN AND TRUST FOR UNION EMPLOYEES
FORM 11-K
Exhibit No. Exhibit Page No.
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(23.1) Consent of Grant Thornton LLP 18
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