PESHTIGO, Wis.--July 19, 2002--Badger Paper Mills, Inc. reported a second quarter 2002 net income of $482,000, $0.24 net earnings per share basic and $0.23 net earnings per share diluted. This compares with a second quarter 2001 net income of $997,000 and $0.49 net earnings per share basic anddiluted. Net sales for the second quarter 2002 were $19,570,000 compared to $18,886,000 for the same period last year. Results for the second quarter of 2002 included a charge for management severance costs of $138,000 pre-tax. Included in the second quarter 2001 results was a pre-tax gain on the sale of non-core assets of $316,000.. Excluding the second quarter 2002 management severance costs and the second quarter 2001 pre-tax gain on the sale of non-core assets, net income for the second quarter of 2002 was $573,000 and net income for the second quarter of 2001 was $788,000. For the six months ended June 30, 2002, net sales of $37,820,000 generated net income of $1,653,000, $0.82 net earnings per share basic and $0.80 net earnings per share diluted compared to net income of $1,890,000, $0.94 net earnings per share basic and diluted on net sales of $40,290,000 for the six months ended June 30, 2001. Included in the results is a pre-tax gain on the sale of non-core assets of $1,131,000 in 2002 and $1,627,000 and in 2001. The sale of the wastewater treatment plant in 2002 completed Badger's initiative to sell non-core assets that was implementedduring 2001. The after-tax effect of the sale of non-core assets during the first six months of 2002 and 2001 were $747,000 and $1,074,000 respectively. Net income without the effect of sales of non-core assets was $906,000 for the first six months of 2002 and $816,000 for the first six months of 2001. Mr. Robert Olah, President and Chief Executive Officer stated "During the second quarter, Badger was successful in achieving profitability in a market that continues to be very difficult. In addition, it is very encouraging to see an increase in sales during the second quarter of 2002 when compared to the same period last year and the first quarter of 2002. We believe that continued revenue growth is an indication of Badger's acceptance in the new markets that we are targeting for growth. During the second quarter of 2002, we incurred costs as a result of shifting our business focus toward more specialty grades. These costs include manufacturing costs necessary to achieve tighter specification and costs associated with changes in management necessary to achieve our stated goals in the specialty markets." Mr. Olah also reported that in early July, Badger successfully completed negotiations on a three-year contract with its labor unions. "We believe that this is a positive step for the Company and the union. Now that an agreement has been reached, both the Company and the union at Badger are able to direct their focus toward meeting customer expectations on a continuing basis." Badger Paper Mills manufactures flexible packaging and specialty papers for its customers throughout North America.