Chapter 126

126.43(3) (3) Insurance coverage; misrepresentation. No milk contractor may misrepresent any of the following to the department or to any milk producer or producer agent:

126.43(3)(a) (a) That the milk contractor is insured.

126.43(3)(b) (b) The nature, coverage, or material terms of the milk contractor’s insurance policy.

126.43 History History: 2001 a. 16.

126.44 126.44 Milk contractors; financial statements.

126.44(1) (1) Required annual financial statement.

126.44(1)(a) (a) A milk contractor shall file an annual financial statement with the department, before the department first licenses the milk contractor under s. 126.41 (1), if the milk contractor’s license application shows any of the following:

126.44(1)(a)1. 1. That the amount of producer milk reported under s. 126.41 (6) (bg) exceeds 150,000 hundredweight.

126.44(1)(a)2. 2. Any deferred payment contract obligations under s. 126.41 (6) (ar) to a milk producer or producer agent that has not, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the milk contractor.

126.44(1)(b) (b) Except as provided in par. (d), a milk contractor licensed under s. 126.41 (1) shall file an annual financial statement with the department during each license year if the milk contractor’s license application for that year shows any of the following:

126.44(1)(b)1. 1. That the amount of producer milk reported under s. 126.41 (6) (bg) exceeds 150,000 hundredweight and the milk contractor is not a contributing milk contractor who procures milk in this state solely as a producer agent.

126.44(1)(b)2. 2. Any deferred payment contract obligations under s. 126.41 (6) (ar) to a milk producer or producer agent that has not, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the milk contractor.

126.44(1)(cm) (cm) A milk contractor shall file an annual financial statement under par. (b) by the 15th day of the 4th month following the close of the milk contractor’s fiscal year. The department may extend the filing deadline for up to 30 days if the milk contractor, or the accountant preparing the financial statement, files a written extension request at least 10 days before the filing deadline.

126.44(1)(d) (d) Rather than filing an annual financial statement under par. (b), a milk contractor who is disqualified under s. 126.45 (3) (a) may file, during each fiscal year, a compilation of financial information that is satisfactory to the department. The milk contractor shall file the financial information by the 15th day of the 4th month following the close of the milk contractor’s fiscal year. The department may extend the filing deadline for up to 30 days if the milk contractor, or an accountant preparing the financial information, files a written extension request at least 10 days before the filing deadline.

126.44(1)(e) (e)

126.44(1)(e)1. 1. Except as provided in subd. 2., a milk contractor licensed under s. 126.41 may not incur any obligations under a deferred payment contract for milk procured in this state unless the contractor first notifies the department and files an annual financial statement with the department.

126.44(1)(e)2. 2. A milk contractor licensed under s. 126.41 is not required to notify the department or file an annual financial statement with the department under subd. 1. for an obligation incurred under a deferred payment contract, for milk procured in this state, with a milk producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the milk contractor.

126.44(2) (2) Voluntary annual financial statement. A milk contractor licensed under s. 126.41 (1) who is not required to file a financial statement under sub. (1) may file an annual financial statement with the department for any of the following reasons:

126.44(2)(a) (a) To avoid being required to contribute to the fund under s. 126.45 (1) (a).

126.44(2)(b) (b) To qualify for a lower fund assessment under s. 126.46.

126.44(3) (3) Quarterly financial statements. A milk contractor licensed under s. 126.41 (1) who is not a contributing milk contractor shall file quarterly financial statements with the department for the first 3 quarters in each of the milk contractor’s fiscal years. The milk contractor shall file each quarterly financial statement no later than 60 days after the end of the fiscal quarter to which the financial statement pertains.

126.44(5) (5) Reviewed or audited financial statement. A milk contractor filing a financial statement under sub. (1) or (2) may file either a reviewed financial statement or an audited financial statement, except that if the milk contractor reports more than 2,500,000 hundredweight of milk under s. 126.41 (6) (bg), the milk contractor shall file an audited financial statement.

126.44(6) (6) Accounting period. A milk contractor filing an annual financial statement under sub. (1) or (2) shall file a financial statement that covers the milk contractor’s last completed fiscal year unless the milk contractor has been in business for less than one year.

126.44(6m) (6m) Interim financial statement. The department may, at any time, require a milk contractor licensed under s. 126.41 (1) to file an interim financial statement with the department. An interim financial statement need not be a reviewed financial statement or an audited financial statement.

126.44(7) (7) Generally accepted accounting principles.

126.44(7)(a) (a) Except as provided in par. (b), a milk contractor filing an annual financial statement under this section shall file a financial statement that is prepared according to generally accepted accounting principles.

126.44(7)(b) (b) If a milk contractor is a sole proprietor and the milk contractor’s financial statement is not audited, the milk contractor shall file a financial statement that is prepared on a historical cost basis.

126.44(8) (8) Financial statement contents.

126.44(8)(a) (a) Except as provided in par. (b), a milk contractor filing a financial statement under this section shall file a financial statement that consists of a balance sheet, income statement, equity statement, statement of cash flows, notes to those statements, and any other information required by the department. If the milk contractor is a sole proprietor, the milk contractor shall file his or her business and personal financial statements.

126.44(8)(b) (b) If a milk contractor has been in business for less than one year, the milk contractor may file an annual financial statement under sub. (1) or (2) consisting of a balance sheet and notes. A milk contractor may file a quarterly financial statement under sub. (3) consisting of a balance sheet and income statement.

126.44(8)(c) (c) A milk contractor filing a financial statement under this section shall include in the financial statement, or in an attachment to the financial statement, calculations of all of the following:

126.44(8)(c)1. 1. The milk contractor’s current ratio, excluding any items required to be excluded under sub. (9).

126.44(8)(c)2. 2. The milk contractor’s debt to equity ratio, excluding any items required to be excluded under sub. (9).

126.44(9) (9) Items excluded. A milk contractor may not include any of the following items in the calculations under sub. (8) (c), unless the department specifically approves their inclusion:

126.44(9)(a) (a) A nontrade note or account receivable from an officer, director, employee, partner, or stockholder, or from a member of the family of any of those individuals, unless the note or account receivable is secured by a first priority security interest in real or personal property.

126.44(9)(b) (b) A note or account receivable from a parent organization, a subsidiary, or an affiliate other than an employee.

126.44(9)(c) (c) A note or account that has been receivable for more than one year, unless the milk contractor has established an equal offsetting reserve for uncollectible notes and accounts receivable.

126.44(9)(d) (d) A liability and the corresponding impact to equity resulting from the recording of a loss as a component of other comprehensive income due to the recognition of the funding status of a defined benefit pension plan.

126.44(9)(e) (e) An asset and the corresponding liability that represent an amount that is collectible from and owed to the milk contractor itself, as proven by the milk contractor.

126.44(10) (10) Entity covered. A person filing a financial statement under this section may not file, in lieu of that person’s financial statement, the financial statement of the person’s parent organization, subsidiary, predecessor, or successor.

126.44(11) (11) Department review. The department may analyze a financial statement submitted under this section and may reject a financial statement that fails to comply with this section.

126.44 History History: 2001 a. 16; 2003 a. 238; 2009 a. 296; 2013 a. 20; 2017 a. 155.

126.45 126.45 Contributing milk contractors; disqualification.

126.45(1) (1) Required contributors.

126.45(1)(a) (a) Except as provided in sub. (3), a licensed milk contractor shall pay fund assessments under s. 126.46 if the milk contractor does not file annual and quarterly financial statements under s. 126.44.

126.45(1)(b) (b) Except as provided in sub. (3), a licensed milk contractor shall pay fund assessments under s. 126.46 if the milk contractor files an annual, quarterly, or interim financial statement under s. 126.44 that shows a current ratio of less than 1.25 to 1.0, a debt to equity ratio of more than 2.0 to 1.0, or negative equity. The milk contractor shall continue to pay fund assessments until the milk contractor files 2 consecutive annual financial statements under s. 126.44 that show a current ratio of at least 1.25 to 1.0, positive equity, and a debt to equity ratio of not more than 2.0 to 1.0.

126.45(2) (2) Voluntary contributors. Except as provided in sub. (3), a licensed milk contractor who is not required to pay fund assessments under s. 126.46 may elect to do so.

126.45(3) (3) Disqualified contractors.

126.45(3)(a) (a) A milk contractor who is required to file security under s. 126.47 (1) (a) is disqualified from the fund until the department releases that security under s. 126.47 (7) (a).

126.45(3)(b) (b) A milk contractor is disqualified from the fund if the department does any of the following:

126.45(3)(b)1. 1. Denies, suspends, or revokes the milk contractor’s license.

126.45(3)(b)2. 2. Issues an order under s. 126.85 disqualifying the milk contractor from the fund.

126.45(4) (4) Effect of disqualification.

126.45(4)(a) (a) A milk contractor disqualified under sub. (3) (b) 2. may not engage in any activities for which a license is required under s. 126.41 (1) (a) if the milk contractor files an annual, quarterly, or interim financial statement under s. 126.44 that shows a current ratio of less than 1.25 to 1.0, a debt to equity ratio of more than 2.0 to 1.0, or negative equity.

126.45(4)(b) (b) The department may not return, to a disqualified milk contractor, any fund assessments that the milk contractor paid as a contributing milk contractor.

126.45(4)(c) (c) A disqualified milk contractor remains liable for any unpaid fund installment under s. 126.46 that became due while the milk contractor was a contributing milk contractor. A disqualified milk contractor is not liable for any fund installment that becomes due after the milk contractor is disqualified under sub. (3).

126.45(5) (5) Notice to producers. A milk contractor who is disqualified under sub. (3) shall immediately give written notice of the disqualification to all milk producers and producer agents to whom the milk contractor has unpaid milk payment obligations. The department may by rule or order specify the form and content of the notice.

126.45 History History: 2001 a. 16; 2003 a. 38; 2009 a. 296.

126.46 126.46 Contributing milk contractors; fund assessments.

126.46(1) (1) General. A contributing milk contractor shall pay an annual fund assessment for each license year, including an assessment for deferred payment contracts entered into under s. 126.485, in the amount specified by the department by rule.

126.46(5m) (5m) Reduced assessment for certain milk contractors filing security. If a contributing milk contractor files security under s. 126.47 (1) (b), the contributing milk contractor’s fund assessment is the amount specified under sub. (1) reduced by an amount determined as follows:

126.46(5m)(a) (a) Divide the amount of security that the milk contractor is required to file under s. 126.47 (3) (b) by the amount of the milk contractor’s estimated default exposure.

126.46(5m)(b) (b) Multiply the amount specified under sub. (1) by the amount determined under par. (a).

126.46(6) (6) Quarterly installments.

126.46(6)(a) (a) A contributing milk contractor shall pay the milk contractor’s annual fund assessment in equal quarterly installments that are due as follows:

126.46(6)(a)1. 1. The first installment is due on June 1 of the license year.

126.46(6)(a)2. 2. The 2nd installment is due on September 1 of the license year.

126.46(6)(a)3. 3. The 3rd installment is due on December 1 of the license year.

126.46(6)(a)4. 4. The 4th installment is due on March 1 of the license year.

126.46(6)(b) (b) A contributing milk contractor may prepay any of the quarterly installments under par. (a).

126.46(6)(c) (c) A contributing milk contractor who applies for an annual license after the beginning of a license year shall pay the full annual fund assessment required under this section. The milk contractor shall pay, with the first quarterly installment that becomes due after the day on which the department issues the license, all of the quarterly installments for that license year that were due before that day.

126.46(6)(d) (d) If s. 126.45 (1) (b) requires a licensed milk contractor to become a contributing milk contractor during the license year, the milk contractor shall pay only those quarterly installments that become due after the requirement takes effect.

126.46(6)(e) (e) A contributing milk contractor who fails to pay the full amount of any quarterly installment when due shall pay, in addition to that installment, a late payment penalty of $50 or 10 percent of the overdue installment amount, whichever is greater.

126.46(7) (7) Notice of annual assessment and quarterly installments. When the department issues an annual license to a contributing milk contractor, the department shall notify the milk contractor of all of the following:

126.46(7)(a) (a) The amount of the milk contractor’s annual fund assessment under this section.

126.46(7)(b) (b) The amount of each required quarterly installment under sub. (6) and the date by which the milk contractor must pay each installment.

126.46(7)(c) (c) The penalty that applies under sub. (6) (e) if the milk contractor fails to pay any quarterly installment when due.

126.46 History History: 2001 a. 16; 2003 a. 38; 2009 a. 296; 2017 a. 155.

126.47 126.47 Milk contractors; security.

126.47(1) (1) Security required.

126.47(1)(a) (a) A milk contractor shall file security with the department, and maintain that security until the department releases it under sub. (7), if all of the following apply when the department first licenses the milk contractor under s. 126.41 (1):

126.47(1)(a)1. 1. The milk contractor reports more than 150,000 hundredweight of milk under s. 126.41 (6) (bg).

126.47(1)(a)2. 2. The milk contractor files an annual financial statement under s. 126.44 (1) and that financial statement shows negative equity.

126.47(1)(ae) (ae) A milk contractor who reports any deferred payment contract obligations under s. 126.41 (6) (ar) or 126.44 (1) (e) 1., other than deferred payment contract obligations to a milk producer or producer agent that has, under s. 126.70 (1) (b), permanently waived eligibility to file a default claim against the milk contractor, shall file security with the department, and maintain that security until the department releases it under sub. (7) (ae), unless the milk contractor’s annual financial statement under s. 126.44 (1) shows that the milk contractor has positive equity and a debt to equity ratio of not more than 4.0 to 1.0.

126.47(1)(b) (b) A milk contractor shall file security with the department, and shall maintain that security until the department releases it under sub. (7) (am), if all of the following apply:

126.47(1)(b)1. 1. The milk contractor’s last annual financial statement under s. 126.44 (1) shows negative equity, a current ratio of less than 1.25 to 1.0, or a debt to equity ratio of more than 2.0 to 1.0.

126.47(1)(b)2. 2. The milk contractor’s estimated default exposure exceeds $20,000,000.

126.47(3) (3) Amount of security.

126.47(3)(a) (a) A milk contractor who is required to file or maintain security under sub. (1) (a) shall at all times maintain security in an amount at least equal to the milk contractor’s estimated default exposure.