UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED JANUARY 22, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM __________ TO __________
Commission File Number: 000-24385
SCHOOL SPECIALTY, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 39-0971239
(State of Other (IRS Employer
Jurisdiction of Incorporation) Identification No.)
426 West College Avenue
Appleton, Wisconsin
(Address of Principal Executive Offices)
54911
(Zip Code)
(920) 734-2756
(Registrant's Telephone Number, including Area Code)
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 reports), and
(2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the latest
practicable date.
Outstanding at
Class February 29, 2000
Common Stock, $0.001 par value 17,437,758
<PAGE>
SCHOOL SPECIALTY, INC.
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 22, 2000
PART I - FINANCIAL INFORMATION
Page
Number
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at January 22, 2000
(Unaudited) and April 24, 1999 1
Unaudited Consolidated Statements of Operations
for the Three Months Ended January 22, 2000
and January 23, 1999 and for the Nine Months
Ended January 22, 2000 and January 23, 1999 2
Unaudited Consolidated Statements of Cash Flows
for the Nine Months Ended January 22, 2000
and January 23, 1999 3
Notes to Unaudited Consolidated Financial
Statements 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 13
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SCHOOL SPECIALTY, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)
January 22, April 24,
2000 1999
(unaudited)
ASSETS
- ----------
Current assets:
Cash and cash equivalents $ 6,945 $ 9,779
Accounts receivable, less allowance for
doubtful accounts of $1,984 and
$2,234, respectively 96,870 74,781
Inventories 58,041 78,783
Deferred taxes 8,396 8,371
Prepaid expenses and other current assets 19,892 18,673
--------- ---------
Total current assets 190,144 190,387
Property and equipment, net 47,960 42,305
Intangible assets, net 198,882 201,206
Deferred taxes and other 4,812 3,810
--------- ---------
Total assets $ 441,798 $ 437,708
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------
Current liabilities:
Current portion - long term debt $ 15,396 $ 11,594
Accounts payable 30,302 37,050
Accrued compensation 10,635 8,410
Accrued income taxes 9,847 4,193
Accrued restructuring 1,015 2,752
Other accrued liabilities 9,323 9,194
--------- ---------
Total current liabilities 76,518 73,193
Long term debt 138,549 161,691
Other 132 137
--------- ---------
Total liabilities 215,199 235,021
Stockholders' equity:
Preferred stock, $0.001 par value per
share, 1,000,000 shares authorized;
none outstanding - -
Common stock, $0.001 par value per share,
150,000,000 shares authorized
and 17,437,758 and 17,229,197 shares
issued and outstanding, respectively 17 17
Capital paid-in excess of par value 195,597 192,196
Accumulated other comprehensive loss (10) (5)
Retained earnings 30,995 10,479
--------- ---------
Total stockholders' equity 226,599 202,687
--------- ---------
Total liabilities and stockholders'
equity $ 441,798 $ 437,708
========= =========
See accompanying notes to consolidated financial statements.
<PAGE>
SCHOOL SPECIALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
January 22, January 23, January 22, January 23,
2000 1999 2000 1999
Revenues $97,244 $85,359 $523,131 $424,332
Cost of revenues 63,815 57,266 333,910 281,436
-------- -------- -------- --------
Gross profit 33,429 28,093 189,221 142,896
Selling, general and
administrative expenses 35,674 30,476 140,201 108,005
Restructuring costs - - - 5,274
-------- -------- -------- --------
Operating income (loss) (2,245) (2,383) 49,020 29,617
Other income (expense):
Interest expense (3,216) (3,879) (10,081) (8,942)
Interest income 13 37 84 114
Other (382) - (391) -
-------- -------- -------- --------
Income (loss) before
provision for (benefit
from) income taxes (5,830) (6,225) 38,632 20,789
Provision for (benefit from)
income taxes (2,798) (2,927) 18,116 10,094
-------- -------- -------- --------
Net income (loss) $(3,032) $(3,298) $ 20,516 $ 10,695
======== ======== ======== ========
Weighted average shares
outstanding:
Basic 17,434 14,579 17,417 14,625
Diluted 17,434 14,579 17,425 14,665
Net income per share:
Basic $ (0.17) $ (0.23) $ 1.18 $ 0.73
Diluted $ (0.17) $ (0.23) $ 1.18 $ 0.73
See accompanying notes to consolidated financial statements.
<PAGE>
SCHOOL SPECIALTY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Nine
Months Ended
January 22, January 23,
2000 1999
Cash flows from operating activities:
Net income $ 20,516 $ 10,695
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 9,576 6,607
Restructuring costs - 5,274
Amortization of loan fees 430 420
Loss on disposal of fixed assets 415 -
Change in current assets and liabilities
(net of assets acquired and liabilities
assumed in business combinations accounted
for under the purchase method):
Accounts receivable (19,998) (1,971)
Inventory 22,176 27,208
Prepaid expenses and other current assets (1,942) 1,722
Accounts payable (8,605) (31,924)
Accrued liabilities 6,523 11,069
--------- ---------
Net cash provided by operating activities 29,091 29,100
--------- ---------
Cash flows from investing activities:
Cash paid in acquisitions, net of cash received (1,291) (95,030)
Additions to property and equipment (10,698) (3,978)
Other (1,936) 171
--------- ---------
Net cash used in investing activities (13,925) (98,837)
Cash flows from financing activities:
Proceeds from issuance of common stock 2,225 32,735
Proceeds from bank borrowings 142,000 302,700
Repayment of bank debt and capital leases (162,225) (187,857)
Repayment of amounts due to U.S.
Office Products - (82,976)
Capital contribution by U.S. Office Products - 8,095
Capitalized loan fees - (2,960)
--------- ---------
Net cash provided by (used in) financing
activities (18,000) 69,737
--------- ---------
Net decrease in cash and cash equivalents (2,834) -
Cash and cash equivalents, beginning of period 9,779 -
--------- ---------
Cash and cash equivalents, end of period $ 6,945 $ -
========= =========
See accompanying notes to consolidated financial statements.
<PAGE>
SCHOOL SPECIALTY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Unaudited)
(In thousands)
The Company issued common stock and cash in connection
with certain business combinations accounted for under
the purchase method of accounting in the nine months
ended January 22, 2000, and January 23, 1999. The fair
values of the assets and liabilities of the acquired
companies at the dates of the acquisitions are
presented as follows:
For the Nine
Months Ended
January 22, January 23,
2000 1999
Accounts receivable $ 2,091 $ 44,153
Inventories 1,434 24,701
Prepaid expenses and other current assets 66 3,251
Property and equipment 179 17,312
Intangible assets 2,186 85,312
Other assets 13 7,223
Accounts payable (1,857) (23,621)
Accrued liabilities (760) (6,303)
Long-term debt (885) (56,998)
--------- ---------
Net assets acquired $ 2,467 $ 95,030
========= =========
Acquisitions were funded as follows:
Common stock $ 1,176 $ -
Cash paid, net of cash acquired 1,291 95,030
--------- ---------
Total $ 2,467 $ 95,030
========= =========
See accompanying notes to consolidated financial statements.
<PAGE>
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share amounts)
NOTE 1-BASIS OF PRESENTATION
The accompanying unaudited consolidated financial
statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and
footnotes required by generally accepted accounting
principles for complete financial statements. In the
opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a
fair presentation have been included. The balance
sheet at April 24, 1999, has been derived from the
Company's audited financial statements for the fiscal
year ended April 24, 1999. For further information,
refer to the consolidated financial statements and
notes thereto included in the Company's Annual Report
on Form 10-K for the year ended April 24, 1999.
NOTE 2-STOCKHOLDERS' EQUITY
Changes in stockholders' equity during the nine months
ended January 22, 2000, were as follows:
Stockholders' equity balance at April 24, 1999 $202,687
Issuance of common stock 3,401
Net income 20,516
Cumulative translation adjustment (5)
---------
Stockholders' equity balance at January 22, 2000 $226,599
=========
On May 17, 1999, the underwriters of the Company's
secondary offering, which occurred on April 16, 1999,
exercised their over allotment option for 151 shares of
Common Stock for net proceeds of approximately $2,225.
The Company issued 57 shares of Common Stock, valued at
approximately $1,176, as part of the acquisition of
Audio Graphics, which occurred during the quarter ended
July 24, 1999. 53 shares were issued during the
quarter ended July 24, 1999 and 4 shares were issued
during the quarter ended January 22, 2000.
NOTE 3-EARNINGS (LOSS) PER SHARE
The following information presents the Company's
computations of basic earnings (loss) per share ("basic
EPS") and diluted earnings per share ("diluted EPS")
for the periods presented in the consolidated
statements of operations:
Income Share Per Share
(Numerator) (Denominator) Amount
Three months ended January 22, 2000:
Basic and Diluted EPS $(3,032) 17,434 $ (0.17)
======== ======== ========
Three months ended January 23, 1999:
Basic and Diluted EPS $(3,298) 14,579 $ (0.23)
======== ======== ========
Nine months ended January 22, 2000:
Basic and EPS $20,516 17,417 $ (1.18)
Effect of dilutive employee stock ========
options - 8
-------- --------
Diluted EPS $20,516 17,425 $ (1.18)
======== ======== ========
Nine months ended January 23, 1999:
Basic EPS $10,695 14,625 $ 0.73
Effect of dilutive employee stock ========
options - 40
-------- --------
Diluted EPS $10,695 14,665 $ 0.73
======== ======== ========
The Company had additional employee stock options
outstanding during the periods presented that were not
included in the computation of diluted EPS because they
were anti-dilutive.
<PAGE>
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share amounts)
NOTE 4-ACCOUNTING PRONOUNCEMENT
In June, 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards
("SFAS") No. 133 "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 137, which delays
the adoption date of SFAS No. 133 and was issued in
July, 1999, requires adoption of SFAS No. 133 for
annual periods beginning after June 15, 2000. SFAS No.
133 establishes standards for recognition and
measurement of derivatives and hedging activities. The
Company will implement this statement in fiscal year
2002 as required. The adoption of SFAS No. 133 is not
expected to have a material effect on the Company's
financial position or results of operations.
NOTE 5-BUSINESS COMBINATIONS
During the fiscal period ended April 24, 1999, the
Company completed five business combinations which were
accounted for under the purchase method of accounting.
In the first three months of fiscal 2000, the Company
made one insignificant acquisition, which was accounted
for under the purchase method of accounting, for an
aggregate purchase price of $2,356, resulting in
goodwill of $1,914, which will be amortized over 40
years. The results of this acquisition have been
included in the Company's results from the respective
date of acquisition. During the third quarter ended
January 22, 2000, a transaction was completed in which
the Company purchased certain assets and retained
certain employees which represented a piece of a
business. This transaction resulted in recording
goodwill of $272. The pro forma results of these
transactions are not included below as they have an
immaterial impact on the pro forma financial results.
The following presents the unaudited pro forma results
of operations of the Company for the three and nine
month periods ended January 22, 2000 and January 23,
1999, and includes the Company's unaudited consolidated
financial statements, which give retroactive effect to
the acquisitions as if all such purchase acquisitions
had been made at the beginning of fiscal 1999. The
results presented below include certain pro forma
adjustments to reflect the amortization of intangible
assets, adjustments to interest expense, and the
inclusion of a federal income tax provision on all
earnings for the periods ended January 22, 2000 and
January 23, 1999, respectively:
Three Months Ended Nine Months Ended
January 22, January 23, January 22, January 23,
2000 1999 2000 1999
Revenues $97,244 $98,150 $523,131 $528,111
Net income (3,032) (3,834) 20,509 11,298
Net income per share:
Basic $ (0.17) $ (0.26) $ 1.18 $ 0.76
Diluted $ (0.17) $ (0.26) $ 1.18 $ 0.75
The unaudited pro forma results of operations are
prepared for comparative purposes only and do not
necessarily reflect the results that would have
occurred had the acquisitions occurred at the beginning
of fiscal 1999 or the results that may occur in the
future. The pro forma results include the results from
businesses acquired, including product lines and
business segments that have been discontinued
subsequent to the Company's acquisition of the
business.
<PAGE>
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share amounts)
NOTE 6-SEGMENT INFORMATION
During the third quarter of fiscal 2000, the Company
modified its segment reporting by identifying
information for a third business segment, the Internet
business segment. This segment includes business
generated by products supplied through the Internet and
products supplied for use with the Internet. Effective
October 24, 1999, the Company began to separately track
financial information for this segment, and assign
certain management personnel the responsibility of
monitoring this information and focusing on the
expansion of the Company's Internet business. The
Company is unable to segregate information for the
Internet business segment for fiscal 1999 and the first
two quarters of fiscal 2000; therefore, results for
this segment prior to the three months ended January
22, 2000 are included in both the Traditional and
Specialty business segments.
The Company's business activities are organized around
three principal business segments, Traditional,
Specialty and Internet. Both internal and external
reporting (beginning with this quarter) conform to this
organizational structure, with no significant
differences in accounting policies applied. The
Company evaluates the performance of its segments and
allocates resources to them based on revenue growth and
profitability. While the three segments serve a
similar customer base, notable differences exist in
products, gross margin and revenue growth rate.
Products supplied within the Traditional segment
include consumables (consisting of classroom supplies,
instructional materials, educational games, art
supplies and school forms), school furniture and indoor
and outdoor equipment. Products supplied within the
Specialty segment target specific educational
disciplines, such as art, industrial arts, physical
education, sciences, library and early childhood. The
Internet segment supplies products from both the
traditional and specialty segments through the
Internet. In addition, the Internet segment includes
products supplied for use with the Internet (i.e.,
filtering software for the Internet).
The following table presents segment information (as
stated above, information for the three and nine months
ended January 23, 1999 reflects the Company's segment
information as previously reported, which did not
separately identify the Internet segment. This segment
is only separately identifiable beginning with the
third quarter of fiscal 2000. Any Internet segment
results for fiscal 1999 and the first two quarters of
fiscal 2000 are included in both the Traditional and
Specialty segments):
<PAGE>
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
January 22, January 23, January 22, January 23,
2000 1999 2000 1999
Revenues:
Traditional $ 55,300 $ 55,347 $324,658 $288,550
Specialty 40,836 30,012 197,365 135,782
Internet 1,108 - 1,108 -
--------- --------- --------- ---------
Total $ 97,244 $ 85,359 $523,131 $424,332
========= ========= ========= =========
Operating Profit (Loss) and
Pretax Profit (Loss)
Traditional $ 582 $ (1,816) $ 34,038 $ 22,752
Specialty 1,344 1,116 25,331 16,867
Internet (1,070) - (1,070) -
--------- --------- --------- ---------
Total 856 (700) 58,299 39,619
General Corporate Expense 3,101 1,683 9,279 4,728
One Time Charges - - - 5,274
Interest Expense and Other 3,585 3,842 10,388 8,828
--------- --------- --------- ---------
Income Before Taxes $ (5,830) $ (6,225) $ 38,632 $ 20,789
========= ========= ========= =========
Identifiable Assets
(at quarter end):
Traditional $237,731 $248,341 $237,731 $248,341
Specialty 171,296 119,656 171,296 119,656
Internet 4,504 - 4,504 -
--------- --------- --------- ---------
Total 413,531 367,997 413,531 367,997
Corporate Assets 28,267 10,516 28,267 10,516
--------- --------- --------- ---------
Total $441,798 $378,513 $441,798 $378,513
========= ========= ========= =========
Depreciation and
Amortization:
Traditional $ 1,475 $ 1,712 $ 4,832 $ 4,213
Specialty 1,191 722 3,705 2,029
Internet 306 - 306 -
--------- --------- --------- ---------
Total 2,972 2,434 8,843 6,242
Corporate 345 132 733 365
--------- --------- --------- ---------
Total $ 3,317 $ 2,566 $ 9,576 $ 6,607
========= ========= ========= =========
Expenditures for Property
and Equipment:
Traditional $ 1,695 $ 214 $ 4,715 $ 709
Specialty 851 1,188 3,370 2,084
Internet 356 - 356 -
--------- --------- --------- ---------
Total 2,902 1,402 8,441 2,793
Corporate 12 706 2,257 1,185
--------- --------- --------- ---------
Total $ 2,914 $ 2,108 $ 10,698 $ 3,978
========= ========= ========= =========
<PAGE>
SCHOOL SPECIALTY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share amounts)
NOTE 7-RESTRUCTURING COSTS
During the first quarter of fiscal 1999, the Company
recorded a one-time charge of $1,074, which is
discussed in the fiscal 1999 Form 10-K. This non-cash
charge related to compensation expense attributed to
the U.S. Office Product's stock option tender offer and
sale of shares of Common Stock to some of the Company's
executive management personnel, net of underwriting
discounts.
During the second quarter of fiscal 1999, the Company
recorded a $4,200 restructuring charge, which is
discussed in the fiscal 1999 Form 10-K. This charge
was for the Company's plan to consolidate existing
warehousing, customer service and sales operations.
Under this restructuring plan, the Company expects to
eliminate approximately 240 jobs. During the three and
nine months ended January 23, 1999, the Company
terminated 49 and 99 employees, respectively, under the
plan. During the three and nine months ended January
22, 2000, the Company terminated 13 and 36 employees,
respectively, under the plan.
During the fourth quarter of fiscal 1998, the Company
incurred restructuring costs to close redundant
facilities and related severance costs. The liability
associated with this restructuring plan was $472 as of
April 25, 1998. This restructuring plan was completed
by the end of fiscal 1999.
Selected information related to the restructuring reserve follows:
Restructuring Employee Facility Other Asset
Charge Termination Closure and Write-downs
(In Thousands) Benefits Consolidation and Costs Total
April 25, 1998
liability balance $ 214 $ - $ 258 $ 472
Additions -
restructuring charge:
Second quarter,
fiscal 1999 2,100 1,300 800 4,200
Utilizations:
First quarter,
fiscal 1999 (148) - (119) (267)
Second quarter,
fiscal 1999 (66) - (139) (205)
Third quarter,
fiscal 1999 (231) - (331) (562)
Fourth quarter,
fiscal 1999 (584) (199) (103) (886)
--------- --------- --------- ---------
April 24, 1999
liability balance $ 1,285 $ 1,101 $ 366 $ 2,752
Utilizations:
First quarter,
fiscal 2000 (351) (47) - (398)
Second quarter,
fiscal 2000 (236) (122) (54) (412)
Third quarter,
fiscal 2000 (396) (531) - (927)
--------- --------- --------- ---------
January 22, 2000
liability balance $ 302 $ 401 $ 312 $ 1,015
========= ========= ========= =========
NOTE 8-RELATED PARTY TRANSACTION
On October 1, 1999, the Company purchased a combined
warehouse and distribution facility in Appleton,
Wisconsin. Previously, the Company leased this
facility. The purchase price was $2,600, the fair
market value of the property as determined by an
independent appraisal, and was paid to the owner of the
facility (which is a corporation consisting of three
shareholders, two of whom are related to certain
executive officers of the Company).
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
The following table sets forth various items as a
percentage of revenues on a historical basis.
Three Months Ended Nine Months Ended
January 22, January 23, January 22, January 23,
2000 1999 2000 1999
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 65.6 67.1 63.8 66.3
------ ------ ------ ------
Gross profit 34.4 32.9 36.2 33.7
Selling, general and
administrative expenses 36.7 35.7 26.8 25.4
Restructuring costs - - - 1.3
------ ------ ------ ------
Operating income (loss) (2.3) (2.8) 9.4 7.0
Interest and other 3.7 4.5 2.0 2.1
------ ------ ------ ------
Income (loss) before
provision for (benefit
from) income taxes (6.0) (7.3) 7.4 4.9
Provision for (benefit
from) income taxes (2.9) (3.4) 3.5 2.4
------ ------ ------ ------
Net income (loss) (3.1)% (3.9)% 3.9% 2.5%
====== ====== ====== ======
Three Months Ended January 22, 2000 Compared to the
Three Months Ended January 23, 1999
Revenues
Revenues increased 13.9% from $85.4 million for the
three months ended January 23, 1999, to $97.2 million
for the three months ended January 22, 2000. This
increase was primarily due to internal growth on
existing business and the inclusion of revenues from
the four companies acquired in business combinations
accounted for under the purchase method of accounting
since January 1999.
Gross Profit
Gross profit improved 19.0% from $28.1 million or 32.9%
of revenues for the three months ended January 23,
1999, to $33.4 million or 34.4% of revenues for the
three months ended January 22, 2000. The increase in
gross profit as a percentage of revenues was due
primarily to (1) an increase in specialty business
revenue, where proprietary products generate higher
gross margins than the traditional business, (2) an
improvement in specialty business gross margin due
primarily to contributions from the Sportime
acquisition and a more favorable product mix and (3) a
decline in traditional gross margin, driven by a less
favorable product mix, which was weighted toward
furniture and equipment, a lower gross margin product
line than consumables.
Selling, General and Administrative Expenses
Selling, general and administrative expenses include
selling expenses (the most significant component of
which is sales wages and commissions), operations
expenses (which includes customer service, warehouse
and outbound transportation costs), catalog costs and
general administrative overhead (which includes
information systems, accounting, legal, human resources
and purchasing expense).
Selling, general and administrative expenses increased
17.1% from $30.5 million or 35.7% of revenues for the
three months ended January 23, 1999, to $35.7 million
or 36.7% of revenues for the three months ended January
22, 2000. The increase in selling, general and
administrative expenses is primarily due to the
increase in revenue. The increase in selling, general
and administrative expenses as a percent of revenues is
primarily due to (1) a shift in revenue mix to
specialty business, which has higher selling, general
and administrative expenses than the traditional
business, (2) higher amortization expense due to
goodwill amortization related to the four acquisitions
since the end of January 1999 and (3) expenses
attributable to the newly created internet segment.
These increases are offset by reduced selling, general
and administrative expenses in the traditional
business, which is primarily due to the
<PAGE>
integration of Beckley-Cardy and the restructuring of
the traditional business, which began in the second
quarter of fiscal 1999.
Net Interest Expense and Other Expenses
Interest expense, net of interest income, decreased
from $3.8 million or 4.5% of revenues for the three
months ended January 23, 1999 to $3.2 million or 3.3%
of revenues for the three months ended January 22,
2000. The decrease in interest expense is primarily
attributed to a reduction in debt outstanding, which is
primarily due to the repayment of debt with the
proceeds from our secondary offering, offset by the
debt assumed and cash paid for the four companies
acquired since the end of January 1999. Other expenses
of $382 for the quarter ended January 22, 2000
primarily represented the loss on the disposal of a
facility donated to a municipality.
Benefit from Income Taxes
Benefit from income taxes for the three months ended
January 22, 2000 and January 23, 1999 was $2.8 million
and $2.9 million, respectively, reflecting income tax
rates of 48% and 47%, respectively. The higher
effective tax rate, compared to the federal statutory
rate of 35.0%, is primarily due to state income taxes
and non-deductible goodwill amortization.
Nine Months Ended January 22, 2000 Compared to the Nine
Months Ended January 23, 1999
Revenues
Revenues increased 23.3% from $424.3 million for the
nine months ended January 23, 1999, to $523.1 million
for the nine months ended January 22, 2000. This
increase was primarily due to internal growth on
existing business and the inclusion of revenues from
the six companies acquired in business combinations
accounted for under the purchase method of accounting
since the beginning of fiscal 1999.
Gross Profit
Gross profit increased 32.4% from $142.9 million or
33.7% of revenues for the nine months ended January 23,
1999 to $189.2 million or 36.2% of revenues for the
nine months ended January 22, 2000. The increase in
gross profit as a percentage of revenues was due
primarily to (1) a shift in product mix to increased
revenue from specialty business, where proprietary
products generate higher gross margins than the
traditional business, (2) an improvement in traditional
business gross margins, driven primarily by more
favorable pricing and the elimination of less
profitable products from our product offering and (3)
an improvement in specialty business gross margin,
which was driven by a more favorable product mix and
contributions from Sportime, which was acquired in
February 1999 and has higher gross margins than our
other businesses.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased
29.8% from $108.0 million or 25.4% of revenues for the
nine months ended January 23, 1999, to $140.2 million
or 26.8% of revenues for the nine months ended January
22, 2000. The increase in selling, general and
administrative expenses is primarily due to an increase
in revenue. The increase in selling, general and
administrative expenses as a percent of revenues is
primarily due to (1) a shift in revenue mix to
specialty business, which has higher selling, general
and administrative expenses than the traditional
business and (2) higher amortization expense due to
goodwill amortization related to the six acquisitions
since the beginning of fiscal 1999. These increases
are offset by reduced selling, general and
administrative expenses in the traditional business,
which is primarily due to the integration of Beckley-
Cardy and the restructuring of the traditional
business, which began in the second quarter of fiscal
1999.
Restructuring Costs
During 1999, we recorded a restructuring charge of
$1,074 in the first quarter and $4,200 in the second
quarter, for a total of $5,274 for the nine months
ended January 23, 1999. The $1,074 related to a one-
time, non-cash charge for compensation expense
attributed to the U.S. Office Product's stock option
tender offer and sale of shares of Common Stock to some
of our executive management personnel, net of
underwriting discounts. The $4,200 charge
<PAGE>
was for our plan to consolidate existing warehousing,
customer service and sales operations. Further details
of the restructuring charge are discussed in the Notes
to consolidated financial statements.
Net Interest Expense and Other Expenses
Net interest expense increased $1.2 million from $8.8
million or 2.1% of revenues for the nine months ended
January 23, 1999 to $10.0 million or 1.9% of revenues
for the nine months ended January 22, 2000. The
increase in interest expense is primarily attributed to
the debt assumed and cash paid for the six companies
acquired since the beginning of fiscal 1999, partially
offset by debt repaid from the net proceeds of our
secondary offering. Other expenses of $391 for the
nine months ended January 22, 2000 primarily
represented the loss on the disposal of a facility
donated to a municipality.
Provision for Income Taxes
Provision for income taxes for the nine months ended
January 22, 2000 increased 79.5% or $8.0 million over
the nine months ended January 23, 1999, reflecting
income tax rates of 46.9% and 48.6% for the nine months
ended January 22, 2000 and January 23, 1999,
respectively. The higher effective tax rate, compared
to the federal statutory rate of 35.0%, is primarily
due to state income taxes and non-deductible goodwill
amortization.
Liquidity and Capital Resources
We have a five-year secured $350 million revolving
Senior Credit Facility with NationsBank. The Senior
Credit Facility has a $100 million term loan payable
quarterly over five years commencing in January 1999
and revolving loans which mature on September 30, 2003.
The amount outstanding as of January 22, 2000 under the
Senior Credit Facility was $153.2 million, consisting
of $63.2 million outstanding under the revolving loan
portion of the facility and $90.0 million outstanding
under the term loan portion of the facility.
Borrowings under the Senior Credit Facility are usually
significantly higher during our first and second
quarters to meet the working capital needs of our peak
selling season. On October 28, 1998, we entered into
an interest rate swap agreement with the Bank of New
York covering $50 million of the outstanding Senior
Credit Facility. The agreement fixes the 30 day LIBOR
interest rate at 4.37% per annum on the $50 million
notional amount and has a three year term that may be
canceled by the Bank of New York on the second
anniversary. Our effective interest rate for the nine
months ended January 22, 2000 was approximately 7.5%.
During the nine months ended January 22, 2000, we had
net repayments under our Senior Credit Facility of
$19.3 million, which resulted from strong cash flow
from operations offset by capital expenditures for
property and equipment and acquisitions.
On April 16, 1999, we sold 2,400,000 shares of common
stock in a secondary public offering. On May 17, 1999,
we sold an additional 151,410 shares of common stock to
cover over-allotments for approximately $2.2 million in
net proceeds. The proceeds were used to reduce
indebtedness outstanding under our Senior Credit
Facility.
At January 22, 2000, we had working capital of $113.6
million. Our capitalization at January 22, 2000 was
$379.8 million and consisted of bank debt of $153.2
million and stockholders' equity of $226.6 million.
We anticipate that our cash flow from operations and
borrowings available from our existing Senior Credit
Facility will be sufficient to meet our liquidity
requirements for our operations (including anticipated
capital expenditures) and our debt service obligations
for the remainder of the fiscal year.
During the nine months ended January 22, 2000, net cash
provided by operating activities was $29.1 million.
This net provision of cash by operating activities
during the period is indicative of the high seasonal
nature of our business, with sales occurring in the
first and second quarters of the fiscal year and cash
receipts in the second and third quarters. Net cash
used in investing activities was $13.9 million,
including $1.3 million for acquisitions, $10.7 million
for additions to property and equipment and $1.9
million for other long-term assets including a minority
investment in an Internet business. Net cash used in
financing activities was $18.0 million, which consisted
primarily of net debt repayments under our Senior
Credit Facility.
During the nine months ended January 23, 1999, net cash
provided by operating activities was $29.1 million.
Net cash used in investing activities was $98.8
million, including $95.0 million for acquisitions. Net
cash provided by
<PAGE>
financing activities was $69.7 million, and included
(1) repayment of debt to U.S. Office Products of $83.0
million, (2) borrowings under the Senior Credit Facility
of $302.7 million, offset by debt repayments of $187.9
million. Net borrowings include $16.9 million used
to fund the cash portion price of the acquisition of
Hammond and Stephens and $134.7 million used to fund
the acquisition of Beckley-Cardy (consisting of $78.1
million for the cash potion of the purchase price and
$56.6 million for debt repayment), (3) payment of loan
fees of $3.0 million, (4) $32.7 million in net proceeds
from the issuance of common stock in conjunction with
our initial public offering and sale of 250,000 shares
of common stock to management, and (5) $8.1 million of
contributed capital from U.S. Office Products under
a distribution agreement entered into in connection with
the spin-off.
In October 1999, we entered into agreements to sell and
leaseback four of our distribution facilities, subject
to certain contingencies. Due to uncertainty and
unfavorable movements in the interest rate environment,
we have decided not to proceed with this transaction at
this time.
Fluctuations in Quarterly Results of Operations
Our business is subject to seasonal influences. Our
historical revenues and profitability have been
dramatically higher in the first two quarters of our
fiscal year (May-October) primarily due to increased
shipments to customers coinciding with the start of
each school year.
Quarterly results also may be materially affected by
the timing of acquisitions, the timing and magnitude of
costs related to such acquisitions, variations in the
costs for the products we sell, the mix of products
sold and general economic conditions. Moreover, the
operating margins of companies acquired by us may
differ substantially from our own margins, which could
contribute to further fluctuation in our quarterly
operating results. Therefore, results for any quarter
are not indicative of the results that we may achieve
for any subsequent fiscal quarter or for a full fiscal
year.
Inflation
Inflation has and is expected to have only a minor
affect on our results of operations and our internal
and external sources of liquidity.
Year 2000
Our systems, as well as those of our third party
suppliers, made an uneventful transition from 1999 to
2000. No material disruptions occurred and operations
continued without interruption in the new year. While
initial indications suggest that Year 2000 issues will
not adversely affect operations, we will continue to
monitor our systems, as well as those of our third
party suppliers, to ensure Year 2000 compliance.
Forward-Looking Statements
Statements in this report which are not strictly
historical are "forward looking." In accordance with
the Private Securities Litigation Reform Act of 1995,
we can obtain a "safe-harbor" for forward-looking
statements by identifying those statements and by
accompanying those statements with cautionary
statements which identify factors that could cause
actual results to differ materially from those in the
forward-looking statements. Accordingly, the foregoing
"Management's Discussions and Analysis of Financial
Condition and Results of Operations" contains certain
forward-looking statements relating to growth plans and
projected revenues, earnings and costs. Our actual
results may differ materially from those contained in
the forward-looking statements herein. Factors which
may cause such a difference to occur include those
factors identified in Item 1, "Business - Forward
Looking Statements," contained in the Company's Form
10-K for the year ended April 24, 1999, which factors
are incorporated herein by reference to such Form 10-K.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For information as to our Quantitative and Qualitative
Disclosures about Market Risk, please see our Annual
Report on Form 10-K for the fiscal year ended April 24,
1999. There have been no material changes in our
quantitative or qualitative exposure to market risk
since the end of fiscal 1999.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
The following information is furnished as to securities
of School Specialty sold during the three months ended
January 22, 2000 that were not registered under the
Securities Act:
In January 2000, we issued 4,332 shares of our common
stock to the principal shareholder of Audio Graphic
Systems as a post-closing adjustment to the purchase
price of the company in connection with our acquisition
of such company which closed in May 1999. These shares
were issued at an aggregate price of $89,269 (or $20.61
per share). The sale of these shares was exempt from
registration pursuant to Section 4(2) of the Securities
Act.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit No. Description
3.1 Amended and Restated By-Laws
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
We did not file any reports on Form 8-K during the
quarter covered by this report.
<PAGE>
SIGNATURES
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.
SCHOOL SPECIALTY, INC.
(Registrant)
March 6, 2000 /s/ Daniel P. Spalding
- ------------------ --------------------------
Date Daniel P. Spalding
Chairman of the Board and Chief Executive
Officer (Principal Executive Officer)
March 6, 2000 /s/ Mary M. Kabacinski
- ------------------ --------------------------
Date Mary M. Kabacinski
Executive Vice President and Chief Financial
Officer (Principal Financial and Accounting
Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Amended and Restated By-Laws
27.1 Financial Data Schedule
Exhibit 3.1
AMENDED AND RESTATED BY-LAWS OF
SCHOOL SPECIALTY, INC.
ARTICLE I
Stockholders
SECTION 1. Annual Meeting; Special Notice
Requirements. The annual meeting of the stockholders of
the Corporation shall be held on such date, at such
time and at such place within or without the State of
Delaware as may be designated by the Board of
Directors, for the purpose of electing Directors and
for the transaction of such other business as may be
properly brought before the meeting. For nominations
or other business to be properly brought before an
annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the
secretary of the Corporation and such business must be
a proper subject for stockholder action under the
Delaware General Corporation Law (the "DGCL"). To be
timely, a stockholder's notice shall be delivered to
the secretary of the Corporation at the principal
executive office of the Corporation not less than sixty
days nor more than ninety days prior to the first
anniversary of the preceding year's annual meeting
provided, however, that in the event that the date of
the annual meeting is advanced by more than 30 days, or
delayed by more than 30 days, from such anniversary
date, notice by the stockholder to be timely must be so
delivered not earlier than the ninetieth day prior to
such annual meeting and not later than either the close
of business on (a) the tenth day following the day on
which notice of the date of such meeting was mailed or
(b) the tenth day following the day on which public
announcement of the date of such meeting is first made,
whichever first occurs in (a) or (b). Such
stockholder's notice shall set forth (x) as to each
person whom the stockholder proposes to nominate for
election or reelection as a director all information
relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
including such person's written consent to being named
in the proxy statement as a nominee and to serving as a
director if elected; (y) as to any other business that
the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought
before the meeting, the reasons for conducting such
business at the meeting and material interest in such
business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; and (z)
as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address
of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and
(ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such
stockholder and such beneficial owner.
SECTION 2. Special Meetings; Special Notice
Requirements. Special meetings shall be called in the
manner provided in the Certificate of Incorporation.
Only such business shall be conducted at a special
meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice
of meeting and in accordance with these By-Laws. For
nominations or other business to be properly brought
before a special meeting by a stockholder, the
stockholder must have given timely notice thereof in
writing to the secretary of the Corporation and such
business must be a proper subject for stockholder
action under the DGCL. To be timely, a stockholder's
notice shall be delivered to the secretary of the
<PAGE>
Corporation at the principal executive office of the
Corporation not less than sixty days nor more than
ninety days prior to the special meeting, or the tenth
day following the day on which public announcement of
the date of such special meeting is first made. Such
stockholder's notice shall set forth (x) as to each
person whom the stockholder proposes to nominate for
election or reelection as a director all information
relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
including such person's written consent to being named
in the proxy statement as a nominee and to serving as a
director if elected; (y) as to any other business that
the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought
before the meeting, the reasons for conducting such
business at the meeting and any material interest in
such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made,
and (z) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address
of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and
(ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such
stockholder and such beneficial owner.
SECTION 3. Notice of Meetings. Except as
otherwise provided in these By-Laws or by law, a
written notice of each meeting of the stockholders
shall be given not less than ten (10) nor more than
sixty (60) days before the date of the meeting to each
stockholder of the Corporation entitled to vote at such
meeting at his address as it appears on the records of
the Corporation. The notice shall state the place, date
and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting
is called.
SECTION 4. Quorum. At any meeting of the
stockholders, the holders of a majority in number of
the total outstanding shares of stock of the
Corporation entitled to vote at such meeting, present
in person or represented by proxy, shall constitute a
quorum of the stockholders for all purposes, unless the
representation of a larger number of shares shall be
required by law, by the Certificate of Incorporation or
by these By-Laws, in which case the representation of
the number of shares so required shall constitute a
quorum; provided that at any meeting of the
stockholders at which the holders of any class of stock
of the Corporation shall be entitled to vote separately
as a class, the holders of a majority in number of the
total outstanding shares of such class, present in
person or represented by proxy, shall constitute a
quorum for purposes of such class vote unless the
representation of a larger number of shares of such
class shall be required by law, by the Certificate of
Incorporation or by these By-Laws.
SECTION 5. Adjourned Meetings. Whether or not
a quorum shall be present in person or represented at
any meeting of the stockholders, the holders of a
majority in number of the shares of stock of the
Corporation present in person or represented by proxy
and entitled to vote at such meeting may adjourn from
time to time; provided, however, that if the holders of
any class of stock of the Corporation are entitled to
vote separately as a class upon any matter at such
meeting, any adjournment of the meeting in respect of
action by such class upon such matter shall be
determined by the holders of a majority of the shares
of such class present in person or represented by proxy
and entitled to vote at such meeting. When a meeting is
adjourned to another time or place, notice need not be
given of the adjourned meeting if the time
<PAGE>
and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the
stockholders, or the holders of any class of stock
entitled to vote separately as a class, as the case may
be, may transact any business which might have been
transacted by them at the original meeting. If the
adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
SECTION 6. Organization. The Chairman of the
Board or, in his absence, the President or any Vice
President shall call all meetings of the stockholders
to order, and shall act as Chairman of such meetings.
In the absence of the Chairman of the Board, the
President and all of the Vice Presidents, the holders
of a majority in number of the shares of stock of the
Corporation present in person or represented by proxy
and entitled to vote at such meeting shall elect a
Chairman.
The Secretary of the Corporation shall act as
Secretary of all meetings of the stockholders; but in
the absence of the Secretary, the Chairman may appoint
any person to act as Secretary of the meeting. It shall
be the duty of the secretary to prepare and make, at
least ten days before every meeting of stockholders, a
complete list of stockholders entitled to vote at such
meeting, arranged in alphabetical order and showing the
address of each stockholder and the number of shares
registered in the name of each stockholder. Such list
shall be open, either at a place within the city where
the meeting is to be held, which place shall be
specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be
held, for the ten days next preceding the meeting, to
the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours,
and shall be produced and kept at the time and place of
the meeting during the whole time thereof and subject
to the inspection of any stockholder who may be
present.
SECTION 7. Voting. Except as otherwise
provided in the Certificate of Incorporation or by law,
each stockholder shall be entitled to one vote for each
share of the capital stock of the Corporation
registered in the name of such stockholder upon the
books of the Corporation. Each stockholder entitled to
vote at a meeting of stockholders or to express consent
or dissent to corporate action in writing without a
meeting may authorize another person or persons to act
for him by proxy, but no such proxy shall be voted or
acted upon after three years from its date, unless the
proxy provides for a longer period. When directed by
the presiding officer or upon the demand of any
stockholder, the vote upon any matter before a meeting
of stockholders shall be by ballot. Except as
otherwise provided by-law or by the Certificate of
Incorporation, Directors shall be elected by a
plurality of the votes cast at a meeting of
stockholders by the stockholders entitled to vote in
the election and, whenever any corporate action, other
than the election of directors is to be taken, it shall
be authorized by a majority of the votes cast at a
meeting of stockholders by the stockholders entitled to
vote thereon.
Shares of the capital stock of the
Corporation belonging to the Corporation or to another
corporation, if a majority of the shares entitled to
vote in the election of directors of such other
corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be
counted for quorum purposes.
<PAGE>
SECTION 8. Inspectors. When required by law
or directed by the presiding officer or upon the demand
of any stockholder entitled to vote, but not otherwise,
the polls shall be opened and closed, the proxies and
ballots shall be received and taken in charge, and all
questions touching the qualification of voters, the
validity of proxies and the acceptance or rejection of
votes shall be decided at any meeting of the
stockholders by two or more Inspectors who may be
appointed by the Board of Directors before the meeting,
or if not so appointed, shall be appointed by the
presiding officer at the meeting. If any person so
appointed fails to appear or act, the vacancy may be
filled by appointment in like manner.
SECTION 9. No Stockholder Action by Written
Consent. Subject to the rights of the holders of any
series of preferred stock or any other series or class
of stock (excluding common stock) set forth in the
Certificate of Incorporation to elect additional
directors under specified circumstances or to consent
to specific actions taken by the Corporation, any
action required or permitted to be taken by the
stockholders of the Corporation must be taken at an
annual or special meeting of the stockholders and may
not be taken by any consent in writing by such
stockholders.
ARTICLE II
Board of Directors
SECTION 1. Number and Term of Office. The
business and affairs of the Corporation shall be
managed by or under the direction of a Board of
Directors, none of whom need be stockholders of the
Corporation. The number of Directors constituting the
Board of Directors shall be fixed from time to time by
resolution passed by a majority of the Board of
Directors. The Directors shall, except as hereinafter
otherwise provided for filling vacancies, be elected at
the annual meeting of stockholders, and shall hold
office until their respective successors are elected
and qualified or until their earlier resignation or
removal.
SECTION 2. Removal, Vacancies and Additional
Directors. The stockholders may, at any special meeting
the notice of which shall state that it is called for
that purpose, remove any Director for cause and fill
the vacancy; provided that whenever any Director shall
have been elected by the holders of any class of stock
of the Corporation voting separately as a class under
the provisions of the Certificate of Incorporation,
such Director may be removed and the vacancy filled
only by the holders of that class of stock voting
separately as a class. Vacancies caused by any such
removal and not filled by the stockholders at the
meeting at which such removal shall have been made, or
any vacancy caused by the death or resignation of any
Director or for any other reason, and any newly created
directorship resulting from any increase in the
authorized number of Directors, may be filled by the
affirmative vote of a majority of the Directors then in
office, although less than a quorum, and any Director
so elected to fill any such vacancy or newly created
directorship shall hold office until his successor is
elected and qualified or until his earlier resignation
or removal.
When one or more Directors shall resign
effective at a future date, a majority of the Directors
then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or
resignations shall
<PAGE>
become effective, and each Director
so chosen shall hold office as herein provided in
connection with the filling of other vacancies.
SECTION 3. Place of Meeting. The Board of
Directors may hold its meetings in such place or places
in the State of Delaware or outside the State of
Delaware as the Board from time to time shall
determine.
SECTION 4. Regular Meetings. Regular meetings
of the Board of Directors shall be held at such times
and places as the Board from time to time by resolution
shall determine. No notice shall be required for any
regular meeting of the Board of Directors; but a copy
of every resolution fixing or changing the time or
place of regular meetings shall be mailed to every
Director at least five days before the first meeting
held in pursuance thereof.
SECTION 5. Special Meetings. Special meetings
of the Board of Directors shall be held whenever called
by direction of the Chairman of the Board, the
President or by any two of the Directors then in
office.
Notice of the day, hour and place of holding
of each special meeting shall be given by mailing the
same at least two days before the meeting or by causing
the same to be transmitted by telegraph, cable or
wireless at least one day before the meeting to each
Director. Unless otherwise indicated in the notice
thereof, any and all business other than an amendment
of these By-Laws may be transacted at any special
meeting, and an amendment of these By-Laws may be acted
upon if the notice of the meeting shall have stated
that the amendment of these By-Laws is one of the
purposes of the meeting. At any meeting at which every
Director shall be present, even though without any
notice, any business may be transacted, including the
amendment of these By-Laws.
SECTION 6. Quorum. Subject to the provisions
of Section 2 of this Article II, a majority of the
members of the Board of Directors in office (but in no
case less than one-third of the total number of
Directors nor less than two Directors) shall constitute
a quorum for the transaction of business and the vote
of the majority of the Directors present at any meeting
of the Board of Directors at which a quorum is present
shall be the act of the Board of Directors. If at any
meeting of the Board there is less than a quorum
present, a majority of those present may adjourn the
meeting from time to time.
SECTION 7. Organization. The Chairman of the
Board shall preside at all meetings of the Board of
Directors. In the absence of the Chairman of the Board,
an acting Chairman shall be elected from the Directors
present to preside at such meeting. The Secretary of
the Corporation shall act as Secretary of all meetings
of the Directors; but in the absence of the Secretary,
the Chairman may appoint any person to act as Secretary
of the meeting.
SECTION 8. Committees. The Board of Directors
may, by resolution passed by a majority of the whole
Board, designate one or more committees, each committee
to consist of one or more of the Directors of the
Corporation. The Board may designate one or more
Directors as alternate members of any committee, who
may replace any absent or disqualified member at any
meeting of the committee. In the absence or
disqualification of a member of a committee, the
<PAGE>
member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting
in the place of any such absent or disqualified member.
Any such committee, to the extent provided by
resolution passed by a majority of the whole Board,
shall have and may exercise all the powers and
authority of the Board of Directors in the management
of the business and the affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed
to all papers which may require it; but no such
committee shall have the power or authority in
reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or
exchange of all or substantially all of the
Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these By-Laws;
and unless such resolution, these By-laws, or the
Certificate of Incorporation expressly so provide, no
such committee shall have the power or authority to
declare a dividend or to authorize the issuance of
stock.
SECTION 9. Conference Telephone Meetings.
Unless otherwise restricted by the Certificate of
Incorporation or by these By-Laws, the members of the
Board of Directors or any committee designated by the
Board, may participate in a meeting of the Board or
such committee, as the case may be, by means of
conference telephone or similar communications
equipment by means of which all persons participating
in the meeting can hear each other, and such
participation shall constitute presence in person at
such meeting.
SECTION 10. Consent of Directors or Committee
in Lieu of Meeting. Unless otherwise restricted by the
Certificate of Incorporation or by these By-Laws, any
action required or permitted to be taken at any meeting
of the, Board of Directors, or of any committee
thereof, may be taken without a meeting if all members
of the Board or committee, as the case may be, consent
thereto in writing and the writing or writings are
filed with the minutes of proceedings of the Board or
committee, as the case may be.
ARTICLE III
Officers
SECTION 1. Officers. The officers of the
Corporation shall be a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary and
a Treasurer, and such additional officers, if any, as
shall be elected by the Board of Directors pursuant to
the provisions of Section 7 of this Article III. The
Chairman of the Board, the President, one or more Vice
Presidents, the Secretary and the Treasurer shall be
elected by the Board of Directors at its first meeting
after each annual meeting of the stockholders. The
failure to hold such election shall not of itself
terminate the term of office of any officer. All
officers shall hold office at the pleasure of the Board
of Directors. Any officer may resign at any time upon
written notice to the Corporation. Officers may, but
need not, be Directors. Any number of officers may be
held by the same person.
All officers, agents and employees shall be
subject to removal, with or without cause, at any time
by the Board of Directors. The removal of an officer
without cause shall be without prejudice to his
contract rights, if any. The election or appointment of
an officer shall not of itself create contract rights.
All agents and employees other than officers elected by
the Board of Directors shall also be subject to
removal, with or without cause, at any time by the
officers appointing them.
Any vacancy caused by the death of any
officer, his resignation, his removal, or otherwise,
may be filled by the Board of Directors, and any
officer so elected shall hold office at the pleasure of
the Board of Directors.
In addition to the powers and duties of the
officers of the Corporation as set forth in these By-
Laws, the officers shall have such authority and shall
perform such duties as from time to time may be
determined by the Board of Directors.
Notwithstanding anything to the contrary in
this Section 1, the President and/or the Chief
Executive Officer of the Corporation shall have the
right, without approval by the Board of Directors, to
remove or elect Assistant Secretaries and Assistant
Treasurers of the Corporation. As required under
Section 7 of this Article, the powers of such Assistant
Secretaries and Assistant Treasurers shall be those as
have been historically performed by holders of such
offices for the Corporation. Such duties shall include
the certification of officer signatures and the
entering into of forms which have been approved by
other properly authorized officers of the Corporation.
SECTION 2. Powers and Duties of the Chairman
of the Board. The Chairman of the Board shall be
subject to the control of the Board of Directors, and
shall have such powers and shall perform such duties as
may be assigned to him from time to time by these By-
Laws or by the Board of Directors. In addition, he
shall preside at all meetings of the stockholders and
at all meetings of the Board of Directors and shall
have such other powers and perform such other duties as
may from time to time be assigned to him by these By-
Laws or by the Board of Directors. All actions
heretofore taken by the Chairman of the Board in the
name or on behalf of the Corporation, including the
execution and delivery in the name and on behalf of the
Corporation of agreements, bonds, contracts, deeds,
mortgages, certificates for shares of stock of the
Corporation and other instruments, documents and
certificates are in all respects ratified, approved,
confirmed and adopted as of the date of such action,
execution or delivery, with the same effect as if
expressly authorized by the By-laws of the Corporation
on the date thereof.
SECTION 3. Powers and Duties of the
President. Unless otherwise specified by the Board of
Directors, the President shall be the Chief Executive
Officer of the Corporation and, subject to the control
of the Board of Directors, shall have general charge
and control of all the Corporation's business and
affairs, and shall have all powers and perform all
duties incident to the office of President. In the
absence of the Chairman of the Board, he shall preside
at all meetings of the stockholders and at all meetings
of the Board of Directors and shall have such other
powers and perform such other duties as may from time
to time be assigned to him by these By-Laws or by the
Board of Directors.
SECTION 4. Powers and Duties of the Vice
Presidents. Each Vice President shall have all powers
and shall perform all duties incident to the office of
Vice President and shall
<PAGE>
have such other powers and perform such other duties as
may from time to time be assigned to him by these By-Laws
or by the Board of Directors or the President.
SECTION 5. Powers and Duties of the
Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors and the minutes of
all meetings of the stockholders in books provided for
that purpose; he shall attend to the giving or serving
of all notices of the Corporation; he shall have
custody of the corporate seal of the Corporation and
shall affix the same to such documents and other papers
as the Board of Directors or the President shall
authorize and direct; he shall have charge of the stock
certificate books, transfer books and stock ledgers and
such other books and papers as the Board of Directors
or the President shall direct, all of which shall at
all reasonable times be open to the examination of any
Director, upon application, at the office of the
Corporation during business hours; and shall have all
powers and shall perform all duties incident to the
office of Secretary and shall also have such other
powers and shall perform such other duties as may from
time to time be assigned to him by these By-Laws or by
the Board of Directors or the President.
SECTION 6. The Powers and Duties of the
Treasurer. The Treasurer shall have custody of, and
when proper shall pay out, disburse or otherwise
dispose of, all funds and securities of the Corporation
which may have come into his hands; he may endorse on
behalf of the Corporation for collection checks, notes
and other obligations and shall deposit the same to the
credit of the Corporation in such bank or banks or
depositary or depositaries as the Board of Directors
may designate; he shall sign all receipts and vouchers
for payments made to the Corporation; he shall enter or
cause to be entered regularly in the books of the
Corporation kept for the purpose full and accurate
accounts of all moneys received or paid or otherwise
disposed of by him and whenever required by the Board
of Directors or the President shall render statements
of such accounts; he shall, at all reasonable times,
exhibit his books and accounts to any Director of the
Corporation upon application at the office of the
Corporation during business hours; and he shall have
all powers and he shall perform all duties incident to
the office of Treasurer and shall also have such other
powers and shall perform such other duties as may from
time to time be assigned to him by these By-Laws or by
the Board of Directors or the President.
SECTION 7. Additional Officers. The Board of
Directors may from time to time elect such other
officers (who may but need not be Directors), including
a Controller, Assistant Treasurers, Assistant
Secretaries and Assistant Controllers, as the Board may
deem advisable and such officers shall have such
authority and shall perform such duties as may from
time to time be assigned to them by the Board of
Directors or the President.
The Board of Directors may from time to time
by resolution delegate to any Assistant Treasurer or
Assistant Treasurers any of the powers or duties herein
assigned to the Treasurer; and may similarly delegate
to any Assistant Secretary or Assistant Secretaries any
of the powers or duties herein assigned to the
Secretary.
SECTION 8. Giving of Bond by Officers. All
officers of the Corporation, if required to do so by
the Board of Directors, shall furnish bonds to the
Corporation for the faithful performance of their
duties, in such penalties and with such conditions and
security as the Board shall require.
<PAGE>
SECTION 9. Voting Upon Stocks. Unless
otherwise ordered by the Board of Directors, the
President or any Vice President shall have full power
and authority on behalf of the Corporation to attend
and to act and to vote, or in the name of the
Corporation to execute proxies to vote, at any meeting
of stockholders of any corporation in which the
Corporation may hold stock, and at any such meeting
shall possess and may exercise, in person or by proxy,
any and all rights, powers and privileges incident to
the ownership of such stock. The Board of Directors may
from time to time, by resolution, confer like powers
upon any other person or persons.
SECTION 10. Compensation of Officers. The
officers of the Corporation shall be entitled to
receive such compensation for their services as shall
from time to time be determined by the Board of
Directors.
ARTICLE IV
Indemnification of Directors and Officers
SECTION 1. Nature of Indemnity. The
Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was
or has agreed to become a Director or officer of the
Corporation, or is or was serving or has agreed to
serve at the request of the Corporation as a Director
or officer of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any
action alleged to have been taken or omitted in such
capacity, and may indemnify any person who was or is a
party or is threatened to be made a party to such an
action, suit or proceeding by reason of the fact that
he is or was or has agreed to become an employee or
agent of the Corporation, or is; or was serving or has
agreed to serve at the request of the Corporation as an
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with
such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful; except that in the
case of an action or suit by or in the right of the
Corporation to procure a Judgment in its favor (1) such
indemnification shall be limited to expenses (including
attorneys' fees) actually and reasonably incurred by
such person in the defense or settlement of such action
or suit, and (2) no indemnification shall be made in
respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such
action or suit was brought shall determine upon
application that, despite the adjudication of liability
but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity
for such expenses which the Delaware Court of Chancery
or such other court shall deem proper.
The termination of any action, suit or
proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which
he reasonably
<PAGE>
believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
SECTION 2. Successful Defense. To the extent
that a Director, officer, employee or agent of the
Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in Section 1 of this Article IV or in
defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in
connection therewith.
SECTION 3. Determination that Indemnification
is Proper. Any indemnification of a Director or officer
the Corporation under Section 1 of this Article IV
(unless ordered by a court) shall be made by the
Corporation unless a determination is made that
indemnification of the Director or officer is not
proper in the circumstances because he has not met the
applicable standard of conduct set forth in Section 1.
Any indemnification of an employee or agent of the
Corporation under Section 1 (unless ordered by a court)
may be made by the Corporation upon a determination
that indemnification of the employee or agent is proper
in the circumstances because he has met the applicable
standard of conduct set forth in Section 1. Any such
determination shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum its not obtainable,
or, even if obtainable a quorum of disinterested
Directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
SECTION 4. Advance Payment of Expenses.
Unless the Board of Directors otherwise determines in a
specific case, expenses incurred by a Director or
officer in defending a civil or criminal action, suit
or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on
behalf of the Director or officer to repay such amount
if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as
authorized in this Article IV. Such expenses incurred
by other employees and agents may be so paid upon such
terms and conditions, if any, as the Board of Directors
deems appropriate. The Board of Directors may authorize
the Corporation's legal counsel to represent such
Director, officer, employee or agent in any action,
suit or proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
SECTION 5. Survival: Preservation of Other
Rights. The foregoing indemnification provisions shall
be deemed to be a contract between the Corporation and
each Director, officer, employee and agent who serves
in any such capacity at any time while these provisions
as well as the relevant provisions of the Delaware
General Corporation Law are in effect and any repeal or
modification thereof shall not affect any right or
obligation then existing with respect to any state of
facts then or previously existing or any action, suit,
or proceeding previously or thereafter brought or
threatened based in whole or in part upon any such
state of facts. Such a contract right may not be
modified retroactively without the consent of such
Director, officer, employee or agent.
The indemnification provided by this Article
IV shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any by-
law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his
official capacity
<PAGE>
and as to action in another capacity while holding
such office, and shall continue as to a person who
has ceased to be a Director, officer, employee or
agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
The corporation may enter into an agreement with any of
its Directors, officers, employees or agents providing
for indemnification and advancement of expenses,
including attorneys fees, that may change, enhance,
qualify or limit any right to indemnification or
advancement of expenses created by this Article IV.
SECTION 6. Severability. Article IV or any
portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director
or officer and may indemnify each employee or agent of
the Corporation as to costs, charges and expenses
(including attorneys' fees), judgment, fines and
amounts paid in settlement with respect to any action,
suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by
or in the right of the Corporation, to the fullest
extent permitted by any applicable portion of this
Article IV that shall not have been invalidated and to
the fullest extent permitted by applicable law.
SECTION 7. Subrogation. In the event of
payment of indemnification to a person described in
Section 1 of this Article IV, the Corporation shall be
subrogated to the extent of such payment to any right
of recovery such person may have and such person, as a
condition of receiving indemnification from the
Corporation, shall execute all documents and do all
things that the Corporation may deem necessary or
desirable to perfect such right of recovery, including
the execution of such documents necessary to enable the
Corporation effectively to enforce any such recovery.
SECTION 8. No Duplication of Payments. The
Corporation shall not be liable under this Article IV
to make any payment in connection with any claim made
against a person described in Section 1 of this Article
IV to the extent such person has otherwise received
payment (under any insurance policy, by-law or
otherwise) of the amounts otherwise indemnifiable
hereunder.
ARTICLE V
Stock-Seal-Fiscal Year
SECTION 1. Certificates For Shares of Stock.
The certificates for shares of stock of the Corporation
shall be in such form, not inconsistent with the
Certificate of Incorporation, as shall be approved by
the Board of Directors. All certificates shall be
signed by the Chairman of the Board, the President or a
Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer,
and shall not be valid unless so signed.
In case any officer or officers who shall
have signed any such certificate or certificates shall
cease to be such officer or officers of the
Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates
shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued
and delivered as through the person or persons who
signed such certificate or certificates had not ceased
to be such officer or officers of the corporation.
All certificates for shares of stock shall be
consecutively numbered as the same are issued. The name
of the person owning the shares represented thereby
with the number of such shares and the date of issue
thereof shall be entered on the books of the
corporation.
Except as hereinafter provided, all
certificates surrendered to the Corporation for
transfer shall be canceled, and no new certificates
shall be issued until former certificates for the same
number of shares have been surrendered and canceled.
SECTION 2. Lost, Stolen or Destroyed
Certificates. Whenever a person owning a certificate
for shares of stock of the Corporation alleges that it
has been lost, stolen or destroyed, he shall file in
the office of the Corporation an affidavit setting
forth, to the best of his knowledge and belief, the
time, place and circumstances of the loss, theft or
destruction, and, if required by the Board of
Directors, a bond of indemnity or other indemnification
sufficient in the opinion of the Board of Directors to
indemnify the Corporation and its agents against any
claim that may be made against it or them on account of
the alleged loss, theft or destruction of any such
certificate or the issuance of a new certificate in
replacement therefor. Thereupon the Corporation may
cause to be issued to such person a new certificate in
replacement for the certificate alleged to have been
lost, stolen or destroyed. Upon the stub of every new
certificate so issued shall be noted the fact of such
issue and the number, date and the name of the
registered owner of the lost, stolen or descried
certificate in lieu of which the new certificate is
issued.
SECTION 3. Transfer of Shares. Shares of
stock of the Corporation shall be transferred on the
books of the Corporation by the holder thereof, in
person or by his attorney duly authorized in writing,
upon surrender and cancellation of certificates for the
number of shares of stock to be transferred, except as
provided in Section 2 of this Article.
SECTION 4. Regulations. The Board of
Directors shall have power and authority to make such
rules and regulations as it may deem expedient
concerning the issue, transfer and registration of
certificates for shares of stock of the Corporation.
SECTION 5. Record Date. In order that the
Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to
corporate action in writing without a meeting or to
receive payment of any dividend or other distribution
or allotment, of any rights, or to exercise any rights
in respect of any change, conversion or exchange of
stock; or for the purpose of any other lawful action,
as the case may be, the Board of Directors may fix, in
advance, a record date, which shall not be (i) more
than sixty (60) nor less than ten (10) days before the
date of such meeting, or (ii) in the case of corporate
action to be taken by consent in writing without a
meeting, prior to, or more than ten (10) days after,
the date upon which the resolution fixing the record
date is adopted by the Board of Directors, or (iii)
more than sixty (60) days prior to any other action.
If no record date is fixed, the record date
for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on
which notice is given or, if notice is waived, at the
close of business on the
<PAGE>
day next preceding the day on which the meeting is held;
the record date for determining stockholders entitled to
express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors
is necessary, shall be the day on which the first written
consent is delivered to the Corporation and the record date
for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board
of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 6. Dividends. Subject to the
provisions of the Certificate of Incorporation, the
Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, but
only out of funds available for the payment of
dividends as provided by law.
Subject to the provisions of the Certificate
of Incorporation, any dividends declared upon the stock
of the Corporation shall be payable on such date or
dates as the Board of Directors shall determine. If the
date fixed for the payment of any dividend shall in any
year fall upon a legal holiday, then the dividend
payable on such date shall be paid on the next day not
a legal holiday.
SECTION 7. Corporate Seal. The Board of
Directors shall provide a suitable seal containing the
name of the Corporation, which seal shall be kept in
the custody of the Secretary and/or any Assistant
Secretary. A duplicate of this seal may be kept and
used by any Secretary, Assistant Secretary, Vice-
President, President, or Chief Executive Officer of the
Corporation in conjunction with properly authorized
actions without further action by the Board of
Directors.
SECTION 8. Fiscal Year. The fiscal year of
the Corporation shall be such fiscal year as the Board
of Directors from time to time by resolution shall
determine.
ARTICLE VI
Miscellaneous Provisions.
SECTION 1. Checks, Notes, Etc. All checks,
drafts, bills of exchange, acceptances, notes or other
obligations or orders for the payment of money shall be
signed and, if so required by the Board of Directors,
countersigned by such officers of the Corporation
and/or other persons as the Board of Directors from
time to time shall designate.
Checks, drafts, bills of exchange,
acceptances, notes, obligations and orders for the
payment of money made payable to the Corporation may be
endorsed for deposit to the credit of the Corporation
with a duly authorized depository by the Treasurer
and/or such other officers or persons as the Board of
Directors from time to time may designate.
SECTION 2. Loans. No loans and no renewals of
any loans shall be contracted on behalf of the
Corporation except as authorized by the Board of
Directors. When authorized to do so, any officer or
agent of the Corporation may effect loans and advances
for the Corporation from any bank, trust company or
other institution or from any firm, corporation or
individual,
<PAGE>
and for such loans and advances may make,
execute and deliver promissory notes, bonds or other
evidences of indebtedness of the Corporation. When
authorized so to do, any officer of the Corporation may
pledge, hypothecate or transfer, as security for the
payment of any and all loans, advances, indebtedness
and liabilities of the corporation, any and all stocks,
securities and other personal property at any time held
by the Corporation, and to that end may endorse, assign
and deliver the same. Such authority may be general or
confined to specific instances.
SECTION 3. Contracts. Except as other wise
provided in these By-Laws or by law or as otherwise
directed by the Board of Directors, the Chairman of the
Board, the President or any Vice President shall be
authorized to execute and deliver, in the name and on
behalf of the corporation, all agreements, bonds,
contracts, deeds, mortgages, and other instruments,
either for the Corporation's own account or in a
fiduciary or other capacity, and the seal of the
corporation, if appropriate, shall be affixed thereto
by any of such officers or the Secretary or an
Assistant Secretary. The Board of Directors, the
Chairman of the Board, the President or any Vice
President designated by the Board of Directors, the
Chairman of the Board or the President may authorize
any other officer, employee or agent to execute and
deliver, in the name and on behalf of the Corporation,
agreements, bonds, contracts, deeds, mortgages, and
other instruments, either for the Corporation's own
account or in a fiduciary or other capacity, and, if
appropriate, to affix the seal of the Corporation
thereto. The grant of such authority by the Board or
any such officer may be general or confined to specific
instances.
SECTION 4. Waivers of Notice. Whenever any
notice whatever is required to be given by law, by the
Certificate of Incorporation or by these By-Laws to any
person or persons, a waiver thereof in writing, signed
by the person or persons entitled to the notice,
whether before or after the time stated therein, shall
be deemed equivalent thereto.
SECTION 5. Offices Outside of Delaware.
Except as otherwise required by the laws of the State
of Delaware, the Corporation may have an office or
offices and keep its books, documents and papers
outside of the State of Delaware at such place or
places as from time to time may be determined by the
Board of Directors or the Chairman of the Board.
ARTICLE VII
Amendments
These By-Laws and any amendment thereof may
be altered, amended or repealed, or new By-Laws may be
adopted, by the Board of Directors at any regular or
special meeting by the affirmative vote of a majority
of all of the members of the Board, provided in the
case of any special meeting at which all of the members
of the Board are not present, that the notice of such
meeting shall have stated that the amendment of these
By-Laws was one of the purposes of the meeting; but
these By-Laws and any amendment thereof may be altered,
amended or repealed or new By-Laws may be adopted by
the holders of 66b% of the total outstanding stock of
the Corporation entitled to vote at any annual meeting
or at any special meeting, provided, in the case of any
special meeting, that notice of such proposed
alteration, amendment, repeal or adoption is included
in the notice of the meeting.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from the unaudited consolidated financial
statements of the Company included in the Report on
Form 10-Q and is qualified in its entirety by
reference to such financial statements.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-29-2000
<PERIOD-START> APR-25-1999
<PERIOD-END> JAN-22-2000
<CASH> 6,945
<SECURITIES> 0
<RECEIVABLES> 98,854
<ALLOWANCES> (1,984)
<INVENTORY> 58,041
<CURRENT-ASSETS> 190,144
<PP&E> 64,483
<DEPRECIATION> (16,523)
<TOTAL-ASSETS> 441,798
<CURRENT-LIABILITIES> 76,518
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 226,582
<TOTAL-LIABILITY-AND-EQUITY> 441,798
<SALES> 523,131
<TOTAL-REVENUES> 523,131
<CGS> 333,910
<TOTAL-COSTS> 333,910
<OTHER-EXPENSES> 140,201
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,081
<INCOME-PRETAX> 38,632
<INCOME-TAX> 18,116
<INCOME-CONTINUING> 20,516
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,516
<EPS-BASIC> 1.18
<EPS-DILUTED> 1.18
</TABLE>
