FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 2O549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 26, 1999
-------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------------
Commission file number 0-7166
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DOUGHTIE'S FOODS, INC.
(Exact name of Registrant as specified in its charter)
VIRGINIA 54-0903892
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
2410 WESLEY STREET, PORTSMOUTH, VIRGINIA 23707
(Address of principal executive offices)
(757) 393-6007
(Registrant's telephone number, including area code)
------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $1 par value - 1,495,023 shares as of June 26, 1999.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Unaudited) <F1>
<CAPTION>
June 26, December 26,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 16,293 $ 16,706
Accounts receivable - trade, net 7,562,538 7,651,940
Inventories 4,397,937 4,625,780
Deferred income taxes 175,179 175,179
Prepaid expenses and other
current assets 291,232 109,042
------------- ------------
Total Current Assets 12,443,179 12,578,647
------------- ------------
PROPERTY, PLANT AND EQUIPMENT -
AT COST:
Land 280,827 280,827
Buildings 3,608,055 3,608,055
Delivery equipment 236,301 251,980
Plant and refrigeration equipment 1,731,462 1,648,195
Office equipment 508,180 505,698
------------- ------------
6,364,825 6,294,755
Less - accumulated depreciation 3,881,921 3,762,874
------------- ------------
2,482,904 2,531,881
------------- ------------
OTHER ASSETS 108,326 112,289
------------- ------------
$ 15,034,409 $ 15,222,817
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 533,333 $ 533,333
Accounts payable 3,434,729 3,375,081
Income taxes payable 488,880 468,061
Accrued salaries, commissions and
bonuses 43,963 259,873
Other accrued liabilities 28,869 49,518
------------- ------------
Total Current Liabilities 4,529,774 4,685,866
LONG-TERM DEBT - less current portion 416,667 683,334
------------- ------------
Total Liabilities 4,946,441 5,369,200
------------- ------------
STOCKHOLDERS' EQUITY:
Common stock - $1 par value;
authorized 4,000,000 shares,
issued and outstanding 1,495,023
shares 1,495,023 1,495,023
Additional paid-in capital 2,807,037 2,807,037
Retained earnings 5,785,908 5,551,557
------------- ------------
Total Stockholders' Equity 10,087,968 9,853,617
------------- ------------
$ 15,034,409 $ 15,222,817
============= ============
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) <F1>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------ -----------------------------------
June 26, June 27, June 26, June 27,
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
NET SALES $ 22,082,987 $ 22,987,483 $ 41,145,782 $ 42,296,059
COST OF GOODS SOLD 18,547,017 19,349,136 34,382,668 35,407,114
------------- ------------- ------------- ------------
GROSS PROFIT 3,535,970 3,638,347 6,763,114 6,888,945
------------- ------------- ------------- ------------
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 3,118,389 3,180,396 6,151,041 6,095,256
INTEREST EXPENSE 3,176 53,655 18,235 100,255
------------- ------------- ------------- ------------
3,121,565 3,234,051 6,169,276 6,195,511
------------- ------------- ------------- ------------
INCOME BEFORE INCOME TAXES 414,405 404,296 593,838 693,434
INCOME TAX EXPENSE 217,453 151,611 314,636 260,038
------------- ------------- ------------- ------------
NET INCOME $ 196,952 $ 252,685 $ 279,202 $ 433,396
============= ============= ============= ============
EARNINGS PER SHARE:
BASIC $ .13 $ .17 $ .19 $ .29
============= ============= ============= ============
DILUTED $ .13 $ .17 $ .19 $ .29
============= ============= ============= ============
CASH DIVIDENDS PER SHARE $ .00 $ .03 $ .03 $ .06
============= ============= ============= ============
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 1,495,023 1,495,023 1,495,023 1,495,023
DILUTIVE EFFECT OF
STOCK OPTIONS 13,300 3,372 12,695 1,134
------------- ------------- ------------- ------------
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 1,508,323 1,498,395 1,507,718 1,496,157
============= ============= ============= ============
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <F1>
<CAPTION>
SIX MONTHS ENDED
-----------------------------------
June 26, June 27,
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 279,202 $ 433,396
Adjustments to reconcile net income
to net cash provided by
(used for) operations:
Depreciation 134,726 150,859
(Gain) loss on sale of property, plant
and equipment (500) 3,035
(Increase) decrease in assets:
Accounts receivable - trade, net 89,402 (141,581)
Inventories 227,843 (87,657)
Prepaid expenses and other current
assets (182,190) (150,334)
Other assets 3,963 3,964
Increase (decrease) in liabilities:
Accounts payable 59,648 46,157
Income taxes payable 20,819 (538,962)
Accrued salaries, commissions and
bonuses (215,910) (146,000)
Other accrued liabilities (20,649) (382)
----------- -----------
396,354 (427,505)
----------- -----------
Cash flows from investing activities:
Additions to property, plant and
equipment (85,749) (189,111)
Proceeds from sale of property,
plant and equipment 500 10,000
----------- -----------
(85,249) (179,111)
----------- -----------
Cash flows from financing activities:
Changes in long-term debt, including
current portion (266,667) 698,040
Cash dividends (44,851) (89,701)
----------- -----------
(311,518) 608,339
----------- -----------
Net increase (decrease) in cash (413) 1,723
Cash at beginning of period 16,706 26,929
----------- -----------
Cash at end of period $ 16,293 $ 28,652
=========== ===========
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
DOUGHTIE'S FOODS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1
- ------
The consolidated financial statements include the accounts of Doughtie's Foods,
Inc. and its wholly owned subsidiary (the "Company"). All material intercompany
accounts and transactions have been eliminated in consolidation.
Although the accompanying financial statements are unaudited, management
believes that they contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position as of June 26, 1999
, and the results of operations and cash flows for the three and six months
ended June 26, 1999 and June 27, 1998. The results of operations for the periods
cited above are not necessarily indicative of the results to be expected for the
full year.
NOTE 2
- ------
Inventories are stated at the lower of last-in, first-out (LIFO) cost or market.
Because inventory valuations under the LIFO method are based on an annual
determination, estimates must be made at interim dates of year-end costs and
levels of inventories. The possibility of variations between estimated year-end
costs and levels of LIFO inventories and the actual year-end amounts may
materially affect the results of operations as finally determined for the full
year.
NOTE 3
- ------
Cash paid for interest totaled $3,176 and $53,655 for the three months ended
June 26, 1999 and June 27, 1998 and $18,235 and $100,255 for the six months
ended June 26, 1999 and June 27, 1998, respectively.
Cash paid for income taxes totaled $200,000 and $395,000 for the three months
ended June 26, 1999 and June 27, 1998 and $200,100 and $799,000 for the six
months ended June 26, 1999 and June 27, 1998 respectively.
Note 4
- -------
On May 5, 1999, the Company and SYSCO Corporation (SYSCO) signed an Agreement
and Plan of Merger (Merger Agreement) pursuant to a Letter of Intent dated
February 17, 1999, whereby a subsidiary of SYSCO and the Company will merge (the
Merger). Under the Merger Agreement, the stockholders of the Company will
receive $17.00 per share in cash and/or shares of SYSCO common stock subject to
a minimum of approximately $3.00 per share in cash and/or shares being held back
in escrow for indemnification and other purposes. In addition, all options
outstanding will become fully vested and exercisable and shall be deemed
exercised (for the applicable exercise price) as of the closing of the Merger.
Consummation of the Merger is subject to, among other things, approval by the
Company's stockholders at a special meeting to be held on August 23, 1999.
On July 23, 1999, the Securities and Exchange Commission declared effective the
Registration Statement on Form S-4 filed by SYSCO in connection with the stock
to be distributed to the Company's stockholders pursuant to the Merger
Agreement. On July 23, 1999, the Company and SYSCO filed their proxy
statement/prospectus with the Securities and Exchange Commission in regard to
the Merger Agreement pursuant to which the Company is soliciting proxies from
its stockholders to vote in favor of the Merger Agreement at a special meeting
of the Company's stockholders to be held on August 23, 1999.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
- ---------------------
Sales for the quarter ended June 26, 1999 were $22.1 million or 3.9% lower
than sales for the prior year's second quarter of $23.0 million. Sales for the
six months ended June 26, 1999 were $41.1 million or 2.7% lower than sales of
$42.3 million for the prior year's first six months. Reduced sales to the U. S.
Military under the Department of Defense Contract was the primary cause of the
decrease.
The Company's gross profit margin (gross profit as a percentage of net
sales) increased from 15.83% in the quarter ended June 27, 1998, to 16.01% for
the quarter ended June 26, 1999. The gross profit margin for the six months
increased from 16.29% in 1998 to 16.44% in 1999. This increase was due to the
reduced lower profit margin sales under the Department of Defense contract.
The Company's selling, general and administrative expenses, expressed as a
percentage of net sales, increased from 13.84% for the second quarter of 1998 to
14.12% for the quarter ended June 26, 1999 and increased from 14.41% for the
first six months of 1998 to 14.95% for the six months ended June 26, 1999. The
increase was primarily due to expenses associated with the proposed merger with
SYSCO of approximately $199,000 and $245,000, for the three months and six
months ended June 26, 1999, respectively.
Interest expense for the quarter ended June 26, 1999 decreased to .01% of
sales compared to .23% of sales for the second quarter of 1998 and decreased to
.04% of sales for the six months ended June 26, 1999 compared to .24% of sales
for the first six months of 1998. Decreased borrowing levels were the cause of
the decreased expense for the six month period. As the interest on the Company's
debt is both London Interbank Offered Rates (LIBOR) and prime related, interest
expense will increase or decrease in subsequent periods based on fluctuations in
these rates and the borrowing levels of the Company.
Income tax expense was $315,000 for the six months ended June 26, 1999
compared to $260,000 for the corresponding period of 1998. The increase in
income tax expense and the effective tax rate relates to the nondeductible
expenses associated with the proposed merger with SYSCO.
The Company reported net income of $279,000 or $.19 per basic and diluted share
for the first six months of 1999 compared to net income of $433,000 or $.29 per
basic and diluted share in the first six months of 1998.
Liquidity
- ---------
The Company uses a number of liquidity indicators for internal evaluation
purposes. Certain of these measures as of June 26, 1999 and December 26, 1998
are set forth below:
June 26, December 26,
1999 1998
------------ ------------
Total Debt to Total Debt Plus
Stockholders' Equity .09 .11
Current Assets to Current
Liabilities 2.75 2.68
Inventory Turnover (The
Annualized Cost of Goods
Sold to Ending Inventory) 15.64 15.79
The total debt to total debt plus stockholders' equity ratio improved from
.11 on December 26, 1998 to .09 on June 26, 1999 due to decreased borrowing
levels.
The current assets to current liabilities and inventory turnover ratios
remained relatively unchanged from December 26,1998 to June 26, 1999.
Capital Resources
- -----------------
The Company's debt financing at June 26, 1999, consisted of the following:
A $7,500,000 revolving bank note at LIBOR plus 1.50%. The LIBOR rate at
June 26, 1999 was 4.94%. The note is due three years after the annual renewal
date, currently July, 2001, subject to annual renewal. As of June 26, 1999, and
August 6, 1999, the Company had no borrowing against this credit line.
A $2,000,000 Industrial Revenue Bond from a bank for the purpose of
expanding the Company's plant and office facilities in Portsmouth, Virginia at
an annual interest rate of 91.50% of prime. The prime rate at June 26, 1999 was
7.75%. As of June 26, 1999, the Company had fully utilized the Industrial
Revenue Bond and the outstanding balance was $400,000.
A $1,750,000 bank term loan at LIBOR plus 1.50%. The loan is to be repaid
in quarterly installments of $100,000. As of June 26, 1999, the outstanding
balance was $550,000. The funds were used to finance the increased inventory and
accounts receivable required to service a one-year contract awarded to the
Company in January 1996 by the United States Department of Defense to furnish
food items to various military installations. The contract contains three yearly
renewal options and was renewed for 1999. The current contract expires in
February 2000. The United States Department of Defense had estimated annual
sales volume to be approximately $19 million. Actual sales volume for fiscal
1998 was $11.5 million.
While the Company does not anticipate a material increase in its capital
requirements in the near future, such an increase, if it occurs, is likely to be
met through additional long-term debt financing.
Year 2000 Compliance
- --------------------
Many computer systems, programs, components, and other hardware with
embedded microcontrollers currently record years in a two-digit format. Such
systems, if not modified, will be unable to recognize properly dates beyond 1999
- - -- the so-called "Year 2000 Problem." The Company relies on its computer
systems, applications and devices in operating and monitoring various aspects of
its business. The Company also relies, directly and indirectly, on systems of
customers, suppliers, and financial institutions. Management has divided this
issue into three sections: its own computer systems, its own embedded systems,
and the computer systems of third party suppliers and customers.
With respect to the Company's computer systems, Management believes all
critical hardware and third party software to be "Year 2000 Compliant." The
Company's custom software has been modified. Testing of the computer system
began in 1998 and was completed in March 1999. Management believes its computer
systems are "Year 2000 Compliant". The Company estimates the total cost of
modifying its computers and software to be about $50,000. About $40,000 has been
expended to date, approximately $10,000 of which was in the first quarter of
1999. The remaining $10,000 of the Company's estimate is for contingencies. The
Company has funded and expects to continue to fund any additional costs of Year
2000 compliance through operating cash flows.
The Company uses several time-sensitive non-computer systems. The Company
has completed an inventory of these systems and related components. Based upon
information received from suppliers, Management believes that all significant
non-computer equipment is compliant. The Company is accepting no new equipment
of any type that does not meet standards of compliance for the Year 2000.
The Company relies on the computer systems of third party suppliers and
customers. While the Company queried major suppliers and customers regarding
their readiness for the Year 2000, Management cannot guarantee the accuracy of
the representations. The Company contacted all of its significant suppliers and
customers in March 1999, and will summarize and review the responses and follow
up with suppliers' and customers' assessments. The Company purchases its
inventory from numerous vendors and believes that the failure of a limited
number of suppliers to be Year 2000 Compliant would not materially affect the
Company's operations given the number of alternative suppliers. The Company has
also considered the possibility of one or more major customers being temporarily
unable to meet its financial obligations because of the Year 2000 Problem and
believes that the Company's existing lines of credit are sufficient to
compensate for such potential temporary shortfall in cash flow.
There are numerous uncertainties relating to addressing Year 2000 issues,
including the actual cost and effort of implementing corrective measures, the
degree to which outside parties appropriately address their Year 2000 issues,
and other factors, some of which are beyond the Company's control, and all of
which may cause results to be different from those currently anticipated by the
Company. Doughtie's has developed contingency plans to cover minor failure due
to supplier or customer problems. Management believes that the internal systems
will work properly due to the extensive analysis and testing that was completed
in March 1999.
Recent Developments
- --------------------
In January 1999, the Company announced that in response to certain
recent inquiries by outside third parties, the Board of Directors of the Company
had engaged the investment banking firm of Mann, Armistead & Epperson, Ltd.,
Richmond, Virginia, for the purpose of attempting to maximize shareholder value,
and had directed Mann, Armistead & Epperson, Ltd. to examine the Company's
options, including the possible sale of the Company.
On May 5, 1999, the Company and SYSCO Corporation (SYSCO) signed an
Agreement and Plan of Merger (Merger Agreement) pursuant to a Letter of Intent
dated February 17, 1999, whereby a subsidiary of SYSCO and the Company will
merge (the Merger). Under the Merger Agreement, the stockholders of the Company
will receive $17 per share in cash and/or shares of SYSCO common stock subject
to a minimum of approximately $3.00 per share in cash and/or shares being held
back in escrow for indemnification and other purposes. In addition, all options
outstanding will become fully vested and exercisable and shall be deemed
exercised (for the applicable exercise price) as of the closing of the Merger.
Consummation of the Merger is subject to, among other things, approval by the
Company's stockholders at a special meeting to be held on August 23, 1999.
On July 23, 1999, the Securities and Exchange Commission declared
effective the Registration Statement on Form S-4 filed by SYSCO in connection
with the stock to be distributed to the Company's stockholders pursuant to the
Merger Agreement. On July 23, 1999, the Company and SYSCO filed their proxy
statement/prospectus with the Securities and Exchange Commission in regard to
the Merger Agreement pursuant to which the Company is soliciting proxies from
its stockholders to vote in favor of the Merger Agreement at a special meeting
of the Company's stockholders to be held on August 23, 1999.
---------------------------
Forward-Looking Information
---------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward- looking statements. This Form 10-Q, the Company's Annual
Report to Shareholders, any Form 10-K or any Form 8-K of the Company or any
other written or oral statements made by or on behalf of the Company may include
forward-looking statements which reflect the Company's current views with
respect to future events and financial performance. Forward-looking statements
are inherently subject to the uncertainties of future events, so that actual
results could differ materially from expectations which are stated or implied
in, or could be inferred from such forward-looking statements. Among the kinds
of uncertainties that can affect and should be considered in evaluating the
Company's forward-looking statements are uncertainties related to economic
conditions, government and regulatory policies, customer plans and commitments,
changes in the capital markets affecting the Company's capital structure and
cost of capital, and the Company's competitive environment. Readers are
therefore cautioned not to place undue reliance on any forward-looking
statement, which speaks only as of the date such statement is made.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's bank revolving credit line and Industrial Development
Bonds bear interest at variable rates which expose the Company to risk from
interest rate fluctuations. If interest rates were to increase or decrease by
10%, the effect on net income and cash flows would not be material.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company or its
subsidiary is a party or to which any of their property is the subject.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
On May 5, 1999, the Company and SYSCO Corporation (SYSCO) signed an
Agreement and Plan of Merger (Merger Agreement) pursuant to a Letter of Intent
dated February 17, 1999, whereby a subsidiary of SYSCO and the Company will
merge (the Merger). Under the Merger Agreement, the stockholders of the Company
will receive $17 per share in cash and/or shares of SYSCO common stock subject
to a minimum of approximately $3.00 per share in cash and/or shares being held
back in escrow for indemnification and other purposes. In addition, all options
outstanding will become fully vested and exercisable and shall be deemed
exercised (for the applicable exercise price) as of the closing of the Merger.
Consummation of the Merger is subject to, among other things, approval by the
Company's stockholders at a special meeting to be held on August 23, 1999.
On July 23, 1999, the Securities and Exchange Commission declared
effective the Registration Statement on Form S-4 filed by SYSCO in connection
with the stock to be distributed to the Company's stockholders pursuant to the
Merger Agreement. On July 23, 1999, the Company and SYSCO filed their proxy
statement/prospectus with the Securities and Exchange Commission in regard to
the Merger Agreement pursuant to which the Company is soliciting proxies from
its stockholders to vote in favor of the Merger Agreement at a special meeting
of the Company's stockholders to be held on August 23, 1999.
The Company's Annual Meeting of Stockholders, normally held in May of each
year, will not be held if the Merger is approved by the Company's stockholders
at a special meeting to be held on August 23, 1999. If the Merger is not
approved by the Company's stockholders, the Annual Meeting will be scheduled and
held thereafter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a). Articles of Incorporation of the Company (incorporated by reference
to Exhibit 3(a) to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 27, 1998).
3(b). Bylaws of the Company, as amended.
27. Financial Data Schedule.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended June 26,
1999.
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.
DOUGHTIE'S FOODS, INC.
/s/ Marion S. Whitfield, Jr.
-----------------------------------------
August 9, 1999 By: Marion S. Whitfield, Jr.
(Signature)
Senior Vice President
(Principal Financial and
Accounting Officer)
EXHIBIT 3(b)
BY LAWS
OF
DOUGHTIE'S FOODS, INC.
ARTICLE I - OFFICES
The office of the Corporation shall be located in the City, County and State
designated in the Certificate of Incorporation. The Corporation may also
maintain offices at such other places within or without the United States as the
Board of Directors may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2 - Special Meeting:
Special meetings of the shareholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of twenty-five percent (25%) of
the shares then outstanding and entitled to vote thereat, or as otherwise
required by law.
Section 3 - Place of Meeting:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
Bylaws - 1
<PAGE>
Section 4 - Notice of Meetings:
(a) Except as otherwise provided by Statute, written notice of each meeting of
shareholders, whether annual or special, stating the time when and place where
it is to be held, shall be served either personally or by mail, not less than
ten or more than fifty days before the meeting, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state, the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle shareholders to receive payment for their share
pursuant to Statute, the notice of such meeting shall include a statement of
that purpose and to that effect. If mailed, such notice shall be directed to
each such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to some other address, in which case, it shall be mailed to the address
designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
waiver of notice either before or after such meeting. Notice of any adjourned
meeting of shareholders need not be given, unless otherwise required by statute.
Section 5 - Quorum:
(a) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any shareholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes case by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.
Section 6 - Voting:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors, to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
Bylaws - 2
<PAGE>
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy; provided; however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the person executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same force and effect as if the same had been duly
passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.
ARTICLE III - BOARD OF DIRECTORS
Section 1 - Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall be seven (7), unless
and until otherwise determined by vote of a majority of the entire Board of
Directors. The number of Directors shall not be less than three, unless all of
the outstanding shares are owned beneficially and of record by less than three
shareholders, in which even the number of directors shall not be less than the
number of shareholders permitted by statute.
(b) Except as may otherwise, be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares, present or by proxy, entitled
to vote in the election.
(c) Each director shall hold office until the annual meeting of the shareholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.
Bylaws - 3
<PAGE>
Section 2 - Duties and Powers:
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.
Section 3 - Annual and Regular Meetings Notice:
(a) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) Section 4 of this Article III, with respect to special meeting,
unless such notice shall be waived in the manner set forth in paragraph (c) of
such Section 4.
Section 4 - Special Meetings; Notice:
(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by one of the directors, at such time and place as may be
specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meetings shall be
mailed directly to each director, addressed to him at his residence or usual
place of business, at least two (2) days before the day on which the meeting is
to be held, or shall be sent to him at such place by telegram, radio or cable,
or shall be delivered to him personally or given to him orally, not later than
the day before the day on which the meeting is to be held. A notice, or waiver
of notice, except as required by Section 8 of this Article III, need not specify
the purpose of the meeting.
Bylaws - 4
<PAGE>
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5 - Chairman:
At all meetings of the Board of Directors, the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
Section 6 - Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.
Section 7 - Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these By-Laws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized, in writing, by all off the directors
entitled to vote thereon and filed with the minutes of the Corporation shall be
the act of the Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the Board.
Section 8 - Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless a vacancy created by the removal of a director by the
shareholders shall be filled by the shareholders at the meeting at which the
removal was effected) or inability to act of any director, or otherwise, shall
be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Bylaws - 5
<PAGE>
Section 9 - Resignation:
Any director may resign at any time by giving written notice to the Board of
Directors, the president or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance of
such resignation shall not be necessary to make it effective.
Section 10 - Removal:
Any director may be removed with or without cause at any time by the affirmative
vote of shareholders holding of record in the aggregate at least a majority of
the outstanding shares of the Corporation at a special meeting of the
shareholders called for that purpose, and may be removed for cause by action of
the Board.
Section 11 - Salary:
No stated salary shall be paid to directors, as such, for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 12 - Contracts:
(a) Any contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other Corporation, provided that such facts are
disclosed or made known to the Board of Directors.
Bylaws - 6
<PAGE>
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors, and provided
that the board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
be construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
Section 13 - Committees:
The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its embers an executive committee and
such other committees, and alternate members thereof, as they may deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV - OFFICERS
Section 1 - Number, Qualifications, Election
and Term of Office:
(a) The officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, and such other officers, including a Chairman of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may from
time to time deem advisable. Any officer other than the Chairman of the Board of
Directors may be, but is not required to be, a director of the Corporation. Any
two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Such officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
Section 2 - Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or by such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
Section 3 - Removal:
Any officer may be removed, either with or without cause, and a successor
elected by a majority vote of the Board of Directors at any time.
Bylaws - 7
<PAGE>
Section 4 - Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by a majority vote of the Board of Directors.
Section 5 - Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be sent forth in
these by-laws, or may from time to time be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive officer of
the Corporation.
Section 6 - Sureties and Bonds:
In case the Board of Directors shall require, any officer, employee or agent of
the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for al property, funds or
securities of the Corporation which may come into his hands.
Section 7 - Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other Corporation, any
right or power of the Corporation as such shareholder (including the attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of the Corporation by
the President, any Vice President, or such other person as the Board of
Directors may authorize.
ARTICLE V - SHARES OF STOCK
Section 1 - Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the Board of Directors, and shall be numbered and
registered in the order issued. They shall bear the holder's name and the number
of shares, and shall be signed by (i) the Chairman of the Board or the President
or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, an shall bear the corporate seal.
Bylaws - 8
<PAGE>
(b) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share which shall entitle the holder
to exercise voting rights, receive dividends and participate in liquidating
distributions, in proportion to the fractional holdings; or it may authorize the
payment in cash of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined: or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of shareholder, except as therein
provided.
Section 2 - Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the owner of the lost or destroyed
certificate, or his legal representatives, to give the Corporation a bond in
such sum as the Board may direct, and with such surety or sureties as may be
satisfactory to the Board, to indemnify the Corporation against any claims,
loss, liability or damage it may suffer on account of the issuance of the new
certificate. A new certificate may be issued without requiring any such evidence
or bond when, in the judgment of the Board of Directors, it is proper so to do.
Section 3 - Transfer of Shares:
(a) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature an of authority to transfer and of payment of the
transfer taxes as the Corporation or its agents may require.
Bylaws - 9
<PAGE>
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize, any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4 - Record Date:
In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the record date for the determination of shareholders entitled to receive
notice, of, or to vote at, any meeting of shareholders, or to consent to any
proposal without a meeting, or for the purpose of determining shareholders
entitled to receive payment of any dividends, or allotment of any rights, or for
the purpose of any other action. If no record ate is fixed, the record date for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders shall be a the close of business on the day next preceding the
day on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or to vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of directors may determine.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE IX - AMENDMENTS
Section 1 - By Shareholders:
Bylaws - 10
<PAGE>
All by-laws of the Corporation shall be subject to alteration or repeal, and new
by-laws may be made, by the affirmative vote of shareholders holding of record
in the aggregate at least a majority of the outstanding shares entitled to vote
in the election of directors at any annual or special meeting of shareholders,
provided that the notice or waiver of notice of such meeting shall have
summarized or set forth in full therein, the proposed amendment.
Section 2 - By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, by-laws of the Corporation; provided, however, that the
shareholders entitled to vote with respect thereto as in the Article IX above
provided may alter, amend or repeal by-laws made by the Board of Directors,
except that the Board of Directors shall have no power to change the quorum for
meetings of shareholders or of the Board of Directors, or to change any
provisions of the by-laws with respect to the removal of directors or the
filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating any impending election of directors is
adopted, amended or repeals by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the elections directors,
the by-laws so adopted, amended or repealed, together with a concise statement
of the changes made.
ARTICLE X - INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of the
fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation, shall be
indemnified by the Corporation against the reasonable expenses, including
attorney's fees, actually and necessarily incurred by him in connection with any
appeal therein, except in relation to matters as to which it shall be adjudged
in such action, suit or proceeding, or in connection with any appeal therein
that such officer, director or employee is liable for negligence or misconduct
in the performance of his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of any
other rights to which any officer or director or employee may be entitled apart
from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be entitled
shall be fixed by the Board of Directors, except hat in any case where there is
no disinterested majority of the Board available, the amount shall be fixed by
arbitration pursuant to the then existing rules of the American Arbitration
Association.
<PAGE>
Amendment Adopted February 20, 1975
RESOLVED, that Section 13 of Article III of the Bylaws of the
Corporation is hereby amended by deleting the present such Section 13, and
substituting therefor, the following:
"Section 13 - Committees: An Executive Committee consisting of at least
three (3) or more directors may be designated by a resolution adopted by a
majority of the number of directors fixed by these By-Laws. To the extent
provided in such resolution, such Executive Committee shall have an may exercise
all of the authority of the Board of Directors except to approve an amendment to
the Articles of Incorporation of a plan of merger or consolidation.
"Other committees with limited authority may be designated by
resolution adopted by a majority of the directors present at a meeting at which
a quorum is present.
"Regular meetings of any committee may be held without notice at such
time and place as shall be fixed by a majority of the committee. Special
meetings of any committee may be called at the request of the President of any
member of the committee. Notice of such special meetings shall be given by the
President or any member of any such committee and shall be deemed duly given, or
may be waived, as provided in Section III and IV of Article III. A majority of
any such committee shall constitute a quorum, and the act of a majority present
at any meeting at which a quorum is present shall be the act of the committee,
unless otherwise provided by the Board of Directors. "
<PAGE>
Amendment Adopted August 10, 1976
RESOLVED, that Section 1(a) of Article III of the By-Laws of this
Corporation is hereby amended by deleting the first sentence thereof and
substituting therefor the following sentence:
"The number of directors of the Corporation shall be six."
<PAGE>
Amendment Adopted April 21, 1986
RESOLVED, that Section 1(a) of Article III of the By-Laws of this
Corporation is hereby amended by deleting the first sentence thereof and
substituting therefor the following sentence:
"The number of directors of the Corporation shall be seven."
<PAGE>
Amendment Adopted November 12, 1986
RESOLVED, that Section 1(a) of Article III of the By-Laws of this
Corporation is hereby amended by deleting the first sentence thereof and
substituting therefor the following sentence:
"The number of directors of the Corporation shall be eight."
<PAGE>
Amendment Adopted April 21, 1987
RESOLVED, that Section 1(a) of Article III of the By-Laws of this
Corporation is hereby amended, such amendment to be effective as of the date of
the 1987 Annual Meeting of Stockholders, by deleting the first sentence thereof
and substituting therefor the following sentence:
"The number of directors of the Corporation shall be seven (7)."
<PAGE>
Amendment Adopted August 20, 1987
RESOLVED, that Section 1(a) of Article III of the By-Laws of this
Corporation is hereby amended by deleting the first sentence thereof and
substituting therefor the following sentence:
"The number of directors of the Corporation shall be eight (8)."
<PAGE>
Amendment Adopted November 20, 1991
RESOLVED, that Section 1(a) of Article III of the Bylaws of this
Corporation is hereby amended by deleting the first sentence thereof and
substituting therefor the following sentence:
"The number of directors of the Corporation shall be nine (9)."
<PAGE>
Amendment Adopted February 18, 1993
RESOLVED, that Section 1(a) of Article III of the Bylaws of this
Corporation is hereby amended by deleting the first sentence thereof and
substituting therefor the following sentence:
"The number of directors of the Corporation shall be eight (8)."
<PAGE>
Amendment Adopted February 22, 1996
RESOLVED, that Section 1(a) of Article III of the Bylaws of this
Corporation is hereby amended by deleting the first sentence thereof and
substituting therefor the following sentence:
"The number of directors of the Corporation shall be seven(7)".
<PAGE>
Amendment Adopted April 28, 1999
RESOLVED, that Article II, Section I of the By-laws of this corporation
is hereby amended to read as follows:
"The annual meeting of the shareholders of the Corporation shall be
held within five months after the close of the fiscal year of the Corporation,
or at such other time as the Board elects, for the purpose of electing
directors, and transacting such other business as may properly come before the
meeting. "
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OF DOUGHTIE'S FOODS, INC. FOR THE
SIX MONTHS ENDED JUNE 26, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-27-1998
<PERIOD-END> JUN-26-1999
<CASH> 16
<SECURITIES> 0
<RECEIVABLES> 8,032
<ALLOWANCES> 469
<INVENTORY> 4,398
<CURRENT-ASSETS> 12,443
<PP&E> 6,364
<DEPRECIATION> 3,882
<TOTAL-ASSETS> 15,034
<CURRENT-LIABILITIES> 4,530
<BONDS> 417
<COMMON> 1,495
0
0
<OTHER-SE> 8,593
<TOTAL-LIABILITY-AND-EQUITY> 15,034
<SALES> 41,146
<TOTAL-REVENUES> 41,146
<CGS> 34,383
<TOTAL-COSTS> 40,534
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 594
<INCOME-TAX> 315
<INCOME-CONTINUING> 279
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279
<EPS-BASIC> .19
<EPS-DILUTED> .19
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