UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________
Commission File No. 0-795
BADGER PAPER MILLS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-0143840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 West Front Street
Peshtigo, Wisconsin 54157
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (715) 582-4551
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. |X| Yes. |_| No.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date: 2,028,505 as of September 30,
2002.
BADGER PAPER MILLS, INC.
INDEX
Page No.
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Interim Statement of Operations
Three Months and Nine Months Ended September 30,
2002 and 2001 3
Consolidated Balance Sheets
September 30, 2002 and December 31, 2001 4
Consolidated Interim Statements of Cash Flows
Nine Months Ended September 30, 2002 and 2001 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
Item 4. Controls and Procedures 10
Item 5. Other Information 10
PART II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES
CERTIFICATIONS
EXHIBIT INDEX
2
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED INTERIM STATEMENT OF OPERATIONS
(Unaudited)
(Dollars in thousands, For Three Months Ended For Nine Months Ended
except per share data) September 30 September 30
--------------------------------------------------------
2002 2001 2002 2001
Net Sales $ 19,402 $ 18,374 $ 57,222 $ 58,664
Cost of Sales 17,136 15,968 50,534 51,901
----------- ----------- ----------- -----------
Gross Profit 2,266 2,406 6,688 6,763
Management Severance Costs 0 0 138 0
Selling and Administrative Expenses 1,500 1,164 4,253 3,847
----------- ----------- ----------- -----------
Operating Income 766 1,242 2,297 2,916
Interest Expense (105) (209) (309) (756)
Interest Income 5 12 20 39
Gain on Sale of Non-Core Assets 0 0 1,131 1,627
Other Income, Net 11 18 43 100
----------- ----------- ----------- -----------
Income Before Income Taxes 677 1,063 3,182 3,926
Income Tax Expense 230 362 1,082 1,335
----------- ----------- ----------- -----------
Net Income $ 447 $ 701 $ 2,100 $ 2,591
=========== =========== =========== ===========
Net Earnings Per Share - Basic $ 0.22 $ 0.35 $ 1.04 $ 1.28
Average Shares Outstanding - Basic 2,027,004 2,018,551 2,025,457 2,018,551
Net Earnings Per Share - Diluted $ 0.21 $ 0.35 $ 1.01 $ 1.28
Average Shares Outstanding - Diluted 2,081,712 2,018,551 2,080,165 2,018,551
See Notes to Consolidated Financial Statements
3
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30,
(Dollars in thousands) 2002 December 31,
(Unaudited) 2001
------------------ ---------------------
ASSETS:
Current Assets:
Cash & Cash Equivalents $ 420 $ 664
Certificates of Deposit 167 164
Accounts Receivable - Net 6,890 6,107
Inventories 5,941 4,983
Refundable Income Taxes 0 170
Deferred Income Taxes 1,150 1,150
Property Held for Resale 258
Prepaid Expenses and Other 940 748
-------- --------
Total Current Assets 15,508 14,244
PROPERTY, PLANT AND EQUIPMENT, NET 26,262 25,445
OTHER ASSETS 444 591
-------- --------
TOTAL ASSETS $ 42,214 $ 40,280
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY:
Current Liabilities:
Current Portion of Long-Term Debt $ 581 $ 414
Accounts Payable 4,051 2,921
Accrued Liabilities 4,702 3,792
Income Taxes Payable 198 400
-------- --------
Total Current Liabilities 9,532 7,527
LONG-TERM DEBT 7,625 9,794
DEFERRED INCOME TAXES 1,839 1,839
OTHER LIABILITIES 638 675
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 57 54
Retained Earnings 21,313 19,213
Treasury Stock, At Cost, 131,495 and 136,415 Shares
in 2002 and 2001, Respectively (1,490) (1,522)
-------- --------
Total Shareholders' Equity 22,580 20,445
-------- --------
Total Liabilities and Shareholders' Equity $ 42,214 $ 40,280
======== ========
See Notes to Consolidated Financial Statements
4
BADGER PAPER MILLS, INC. AND SUBSIDIARY
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
For Nine Months Ended September 30
(Dollars in thousands) 2002 2001
----------- -----------
Cash Flows from Operating Activities:
Net Income $ 2,100 $ 2,591
Adjustments to Reconcile to Net Cash
Provided By (Used in) Operating Activities:
Depreciation 1,830 2,207
Directors' Fees Paid in Stock 36 93
Gain on Sale of Non-Core Assets (1,131) (1,627)
Deferred Income Taxes 1,933
Changes in Assets and Liabilities:
Increase in Accounts Receivable, Net (783) (635)
(Increase) Decrease in Inventories (958) 2,249
Increase (Decrease) in Accounts Payable 1,130 (3,688)
Increase (Decrease) in Accrued Liabilities 910 (236)
Income Taxes (Payable) Refundable (37) 138
Increase in Other (90) (60)
------- -------
Net Cash Provided By Operating Activities 3,007 2,965
------- -------
Cash Flows From Investing Activities:
Additions to Property, Plant and Equipment, Net (2,620) (817)
Proceeds From Sale of Non-Core Assets 1,371 1,760
------- -------
Net Cash (Used in) Provided By Investing Activities (1,249) 943
------- -------
Cash Flows from Financing Activities:
Payments on Long-Term Debt (2,002) (754)
Increase to (Decrease in) Revolving Credit Borrowings 0 (1,260)
------- -------
Net Cash Used in Financing Activities (2,002) (2,014)
------- -------
Net Increase in Cash and Cash Equivalents (244) 1,894
Cash and Cash Equivalents:
Beginning of Period 664 1,080
------- -------
End of Period $ 420 $ 2,974
======= =======
See Notes to Consolidated Financial Statements
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The accompanying condensed consolidated financial statements, in the opinion of
management, include all adjustments, which are normal and recurring in nature
and are necessary for a fair statement of results for each period shown. Some
adjustments involve estimates, which may require revision in subsequent interim
periods or at year-end. In all regards, the financial statements have been
presented in accordance with generally accepted accounting principles. Refer to
the financial statement notes in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, for the accounting policies, which are
pertinent to these statements.
Note 2. Income Taxes
The provision for income tax expense has been computed by applying an estimated
annual effective tax rate. This rate was 34% for the three-month and nine-month
periods ended September 30, 2002 and 2001.
Note 3. Earnings per Share
Net earnings per share are computed based on the weighted average number of
shares of common stock outstanding during the quarter:
2002 2001
---- ----
Basic 2,027,004 2,018,551
Diluted 2,081,712 2,018,551
Stock options to purchase 25,000 common shares in 2002 and 115,000 common shares
in 2001 were not dilutive and, therefore, have not been included in the
computations of diluted per common share amounts.
Note 4. Stock Option Plan
Badger Paper Mills, Inc. has elected to follow Accounting Principles Board
Opinion No. 25, Accounting for Stock issued to Employees (APB 25) and related
interpretations in accounting for its employee stock option plan. Under APB 25,
because the exercise price of the employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recorded. Badger Paper is subject to the disclosure rules of SFAS 123,
Accounting for Stock Based Compensation. Management has determined that the
impact of SFAS 123 on net income and shareholders' equity was not material as of
and for the quarter ended September 30, 2002.
Note 5. Inventories
The major components of inventories were as follows:
(In thousands of dollars) September 30, 2002 December 31, 2001
------------------------- ------------------ -----------------
Raw Materials $ 2,616 $ 2,333
Finished Goods and Work in Process 7,847 7,216
-------- --------
10,463 9,549
Less: LIFO Reserve (4,522) (4,566)
-------- --------
Total Inventories $ 5,941 $ 4,983
======== ========
6
Note 6. Contingencies
The Company operates in an industry that is subject to laws and regulations at
both federal and state levels relating to the protection of the environment. The
Company undergoes continued environmental testing and analysis, and the precise
cost of compliance with environmental requirements has not been determined.
Please refer to the more complete discussion of legal matters in the Company's
Form 10-K for the year ended December 31, 2001.
Note 7. Operating Segments
During the third quarter of 2002, the Company reorganized its operations into a
single business segment.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Statement Regarding Forward-Looking Information
This Form 10-Q may include one or more "forward-looking statements" within the
meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities
Exchange Act of 1934 as enacted in the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). In making forward-looking statements within the
meaning of the Reform Act, the Company undertakes no obligation to publicly
update or revise any such statement.
Forward-looking statements of the Company are based on information available to
the Company as of the date of such statements and reflect the Company's
expectations as of such date, but are subject to risks and uncertainties that
may cause actual results to vary materially. In addition to specific factors,
which may be described in connection with any of the Company's forward-looking
statements, factors that could cause actual results to differ materially
include, but are not limited to, the following:
o Increased competition from either domestic or foreign paper producers or
providers of alternatives to the Company's products, including increases
in competitive production capacity and/or weakness in demand for paper
products. As a paper manufacturer, the Company, if it wants to achieve
acceptable production costs, must operate its paper mill at a relatively
high percentage of its available production capacity. The Company's
competitors face the same or similar situations. Therefore, when the
overall market for paper products softens, the Company (and other paper
manufacturers) will generally accept lower selling prices for its products
in order to maintain acceptable production efficiencies and costs.
o Changes in the price of pulp, the Company's main raw material. The Company
purchases all of its pulp needs on the open market and price changes for
pulp have a significant impact on the Company's costs. Pulp price changes
can occur due to changes in worldwide consumption of pulp, pulp capacity
additions, expansions or curtailments affecting the supply of pulp,
inventory building or depletion at pulp consumer levels which affect
short-term demand, and pulp producer cost changes related to wood
availability, environmental issues, or other variables.
o Interruptions in the supply of, or increases and/or changes in the price
of energy (principally electricity, natural gas, and fuel oil) that the
Company needs in its manufacturing operations.
7
o Changes in demand for the Company's products due to overall economic
activity affecting the rate of consumption of the Company's paper
products, growth rates of the end markets for the Company's products,
technological or consumer preference changes or acceptance of the
Company's products by the markets it serves.
o Unforeseen operational problems at any of the Company's facilities causing
significant lost production and/or higher operating costs.
o Changes in laws or regulations affecting the Company, particularly
environmental laws and regulations affecting air quality and wastewater
discharges.
o The Company's profitability may be adversely affected by increases in
interest rates because a significant portion of the Company's debt bears
interest at variable interest rates.
Results of Operations
Net Sales
Net sales for the third quarter of 2002 were $19,402,000 compared to $18,374,000
for the same period last year, an increase of $1,028,000 and 5.6%. During the
third quarter, the Company realized increased shipment volume on certain
specialty grades as a result of management's strategy to focus marketing efforts
on niche markets. After three quarters, net sales were $57,222,000 compared to
$58,664,000 for the same period last year, a decrease of $1,442,000 and 2.5%.
During the first three quarters of 2002, the Company was able to increase sales
of certain specialty paper products but also realized a reduction in overall
printed products during 2002 when compared to 2001.
Gross Profit
Gross profit during the third quarter of 2002 was $2,266,000 compared to
$2,406,000 during the third quarter last year. After three quarters of 2002,
gross profit was $6,688,000 compared to $6,763,000 last year. During the first
three quarters of 2002, gross profit was consistent with prior year's
performance. During the third quarter of 2002, gross profit relative to net
sales eroded slightly as a result of costs associated with increasing market
position in certain specialty products.
Selling & Administrative Expense
Selling and administrative expenses during the third quarter were $1,500,000
compared to $1,164,000 last year, an increase of $336,000 and 28.9%. After three
quarters of 2002, selling and administrative expenses were $4,253,000 compared
to $3,847,000 last year, an increase of $406,000 and 10.6%.
Other Income and Expense
Interest expense during the third quarter of 2002 was $105,000 compared to
$209,000 for the same period last year. After three quarters of 2002, interest
expense was $309,000 compared to $756,000
8
last year. The reduction in interest expense is the combined effect of the
reduction in debt and lower interest rates as a result of refinancing the
Company's debt during the fourth quarter of 2001.
During the first three quarters of 2002, the Company realized a gain on the sale
of non-core assets of $1,131,000. The Company recognized a gain on the sale of
non-core assets of $1,627,000 during the first three quarters of 2001. The gains
recognized by the Company are a result of selling the wastewater treatment
facility in the first quarter of 2002 and the sale of timberland property last
year. With the sale of the wastewater treatment facility, the Company has
completed its strategic initiative that began in 2001 to liquidate non-core
assets. The proceeds from the sale of non-core assets were used to reduce debt.
Net Income
Net income for the third quarter was $447,000 compared to $701,000 for the same
period last year. The reduction in net income in 2002 as compared to 2001 is a
result of lower operating income in the current year. After three quarters, net
income was $2,100,000 compared to $2,591,000 last year. Net income during the
first three quarters includes a gain on sale of non-core assets of $1,131,000 in
2002 and $1,627,000 in 2001. Differences in gains on sales of non-core assets
combined with lower operating income in 2002 account for the difference in net
income during the first three quarters of 2002 when compared to 2001.
Capital Resources and Liquidity
At September 30, 2002, the Company had cash resources of $420,000 and an unused
credit availability of $7,885,000 under its revolving credit facility to fund
ongoing operations. During the first three quarters of 2002, the Company made
scheduled principal payments on long-term debt of $377,000. At September 30,
2002, the Company was in compliance with all credit facility covenants.
Capital Expenditures
Capital expenditures during the third quarter were $995,000 compared to $200,000
for the third quarter of 2001. After three quarters, capital expenditures were
$2,620,000 compared to $817,000 last year. During the first quarter of 2002, the
Company approved the purchase of new machinery to increase the production of
certain paper grades. The total cost of the equipment was $2,800,000. During the
first three quarters of 2002, the Company invested $1,913,000 in this project.
It is anticipated that the remaining balance of approximately $887,000 will be
invested during the fourth quarter of 2002. The Company financed the purchase of
this equipment with funds borrowed under its revolving credit facility, but is
currently in the process of finalizing a term loan to replace this temporary
short-term borrowing.
Cash Flow
Cash flow from operations during the first three quarters was $3,007,000
compared to $2,965,000 for the same period last year. The Company believes that
with cash provided from operations, availability of unused available credit
under the revolving credit facility and the availability of long-term debt to
fund capital expenditures, there is adequate liquidity for the Company to meet
its future financial obligations.
9
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company is exposed to market risk from changes in interest on its debt. The
revolving credit facility provides for borrowings up to $15,000,000 and extends
to November 2004. An annual commitment fee of 1/4% is payable for unused
amounts. The Company's interest rate floats, based on the lender's prime rate.
As of September 30, 2002, the Company was paying interest at a 4.75% annual rate
on amounts borrowed against this line.
A majority of the Company's debt is at variable interest rates, and a
hypothetical 1% (100 basis point) change in interest rates would cause an
estimated increase in annual interest expense of $82,000.
The Company does not use financial instruments for trading purposes and is not a
party to any leveraged derivatives.
Item 4. Controls and Procedures
a. Within the 90 days prior to the date of this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Executive Officer along
with its Chief Financial Officer of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Rule 13a - 14
under the Securities Exchange Act of 1934. Based on our evaluation, the
Company's President and Chief Executive Officer along with the Chief Financial
Officer concluded that our disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company (including
its consolidated subsidiary) required to be included in its periodic SEC
filings.
b. There have been no significant changes in the Company's internal controls or
in any other factors that could significantly affect internal controls
subsequent to the date the Company carried out this evaluation.
Item 5. Other Information
Effective November 1, 2002, Michael Bekes, the Company's Vice
President-Operations, terminated his employment with the Company.
10
PART II-OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
4.1 Second Amendment to Revolving Credit and Security Agreement, dated
September 19, 2002, by and between the Company and PNC Bank, National
Association.
4.2 Promissory Note in favor of Wisconsin Community Bank, Wisconsin
Business Bank - Branch, dated September 19, 2002.
4.3 Second Amendment to Business Loan Agreement and Related Documents,
dated September 19, 2002, by and between the Company and Wisconsin
Community Bank, Wisconsin Business Bank - Branch.
4.4 Mortgage, dated September 19, 2002, made and executed between the
Company and Wisconsin Community Bank, Wisconsin Business Bank -
Branch.
99.1 Written Statement of President, Chairman of the Board, and Chief
Executive Officer, pursuant to 18 U.S.C.ss.1350, dated November 14,
2002.
99.2 Written Statement of Vice President and Chief Financial Officer,
pursuant to 18 U.S.C.ss.1350, dated November 14, 2002.
(b) Reports on Form 8-K:
None.
11
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BADGER PAPER MILLS, INC.
(Registrant)
/s/ Robert A. Olah
-------------------------------
DATE: November 14, 2002 By: Robert A. Olah
President, Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
/s/ William H. Peters
---------------------------------
DATE: November 14, 2002 By: William H. Peters
Vice President and Chief Financial Officer
(Principal Financial Officer)
12
CERTIFICATION
I, Robert A. Olah, President, Chairman of the Board and Chief Executive Officer
of Badger Paper Mills, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Badger Paper Mills,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 14, 2002 /s/ Robert A. Olah
---------------------------------
Robert A. Olah
President, Chairman of the Board,
Chief Executive Officer
13
CERTIFICATION
I, William H. Peters, Vice President and Chief Financial Officer of Badger Paper
Mills, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Badger Paper Mills,
Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 14, 2002 /s/ William H. Peters
------------------------------------
William H. Peters
Vice President and
Chief Financial Officer
14
BADGER PAPER MILLS, INC.
EXHIBIT INDEX
Number Description
4.1 Second Amendment to Revolving Credit and Security Agreement, dated
September 19, 2002, by and between the Company and PNC Bank, National
Association.
4.2 Promissory Note in favor of Wisconsin Community Bank, Wisconsin Business
Bank - Branch, dated September 19, 2002.
4.3 Second Amendment to Business Loan Agreement and Related Documents, dated
September 19, 2002, by and between the Company and Wisconsin Community
Bank, Wisconsin Business Bank - Branch.
4.4 Mortgage, dated September 19, 2002, made and executed between the Company
and Wisconsin Community Bank, Wisconsin Business Bank - Branch.
99.1 Written Statement of President, Chairman of the Board, and Chief
Executive Officer, pursuant to 18 U.S.C.ss.1350, dated November 14, 2002.
99.2 Written Statement of Vice President and Chief Financial Officer, pursuant
to 18 U.S.C.ss.1350, dated November 14, 2002.
15