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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(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 30, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-9919
PSC INC.
(Exact name of Registrant as Specified in Its Charter)
New York 16-0969362
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
675 Basket Road, Webster, New York 14580
(Address of principal executive offices) (Zip Code)
(716) 265-1600
(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 12 months preceding (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 |_|
As of August 9 , 1996 there were 11,060,265 shares of common stock outstanding.
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2
PSC Inc. AND SUBSIDIARIES
INDEX
PAGE NUMBER
PART I FINANCIAL INFORMATION
Item 1 -Financial Statements
Consolidated Balance Sheets as of
June 30, 1996 (Unaudited) and
December 31, 1995..................................3 - 4
Consolidated Statements of Operations and
Retained Earnings for the three
and six months ended:
June 30, 1996 (Unaudited) and
June 30, 1995 (Unaudited) .........................5 - 6
Consolidated Statements of Cash Flows
for the six months ended:
June 30, 1996 (Unaudited) and
June 30, 1995 (Unaudited) .............................7
Notes to Consolidated Financial
Statements (Unaudited) ............................8 - 9
Item 2 -Management's Discussion and Analysis of
Financial Condition and Results of
Operations ......................................10 - 11
PART II OTHER INFORMATION
Item 1 -Legal Proceedings.....................................12
Item 2 -Changes in Securities.................................12
Item 3 -Defaults upon Senior Securities.......................12
Item 4 - Submission of Matters to a Vote of
Security Holders ...............................12 - 13
Item 5 -Other Information.....................................13
Item 6 - Exhibits and Reports on Form 8-K.....................13
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PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
PSC Inc. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
June 30 Dec. 31
1996 1995
(Unaudited)
----------- -------
ASSETS
CURRENT ASSETS
Cash and short-term investments ................. 8,782 $ 5,538
Marketable securities ............................. -- 4,204
Accounts receivable, net of allowance
for doubtful accounts of $280
and $387, respectively .......................... 15,213 15,897
Inventories ....................................... 12,320 10,440
Prepaid expenses and other ........................ 2,633 623
----- ---
TOTAL CURRENT ASSETS ................................... 38,948 36,702
PROPERTY, PLANT AND EQUIPMENT, net
of accumulated depreciation of $5,499
and $4,112, respectively .......................... 21,772 22,157
DEFERRED TAX ASSETS .................................... 1,410 1,506
INTANGIBLE AND OTHER ASSETS, net of accumulated
amortization of $3,159 and $2,376 respectively ....... 10,888 10,872
------ ------
TOTAL ASSETS ........................................... $73,018 $71,237
======= =======
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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4
PSC Inc. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands)
(Continued)
June 30 Dec. 31
1996 1995
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt ............... $141 $131
Accounts payable ................................ 10,478 8,397
Accrued expenses ................................ 5,843 6,202
Accrued payroll and commissions ................. 589 1,237
Accrued acquisition related restructuring costs . 257 338
--- ---
TOTAL CURRENT LIABILITIES ........................ 17,308 16,305
LONG-TERM DEBT, less current maturities ............... 454 492
OTHER LONG-TERM LIABILITIES ............................ 609 1,113
SHAREHOLDERS' EQUITY
Preferred Shares, par value $.01;
10,000 authorized, none issued ................. -- --
Common shares, par value $.01;
40,000 authorized, 10,028 and 9,985
shares issued and outstanding ................ 100 100
Additional paid-in capital ...................... 46,578 45,881
Retained earnings ............................... 8,194 7,548
Cumulative translation adjustment ............... 12 35
Less treasury stock, 39 shares
repurchased, at cost ........................... (237) (237)
---- ----
TOTAL SHAREHOLDERS' EQUITY ....................... 54,647 53,327
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY .............................................. $ 73,018 $ 71,237
======== ========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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5
PSC Inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(All amounts in thousands, except per share data)
(Unaudited)
Three Months Ended June 30
1996 1995
---- ----
NET SALES .............................................. $22,052 $21,315
COST OF SALES .......................................... 13,488 12,007
------- -------
Gross profit ..................................... 8,564 9,308
OPERATING EXPENSES
Engineering, research and development ............ 1,611 1,131
Selling, general and administrative .............. 6,726 5,689
Income from operations ...................... 227 2,488
INTEREST AND OTHER INCOME .............................. 108 286
------- -------
Income before provision for income taxes .... 335 2,774
INCOME TAX PROVISION ................................... 124 1,040
------- -------
NET INCOME ............................................. $ 211 $ 1,734
======= =======
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE $ .02 $ .16
======= =======
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING:
Common shares .................................... 9,981 9,786
Common equivalent shares ......................... 441 895
--- ---
10,422 10,681
====== ======
RETAINED EARNINGS:
Retained earnings, beginning of period ........... $ 7,983 $ 3,980
Net income ....................................... 211 1,734
--- -----
Retained earnings, end of period ................. $ 8,194 $ 5,714
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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6
PSC Inc. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(All amounts in thousands, except per share data)
(Unaudited)
Six Months
Ended June 30
1996 1995
---- ----
NET SALES .................................................. $43,551 $43,577
COST OF SALES .............................................. 25,831 23,767
------- -------
Gross profit ......................................... 17,720 19,810
OPERATING EXPENSES
Engineering, research and development ................ 3,391 2,217
Selling, general and administrative .................. 13,472 11,912
------ ------
Income from operations .......................... 857 5,681
INTEREST AND OTHER INCOME .................................. 169 127
------- -------
Income before provision for income taxes ........ 1,026 5,808
INCOME TAX PROVISION ....................................... 380 2,193
------- -------
NET INCOME ................................................. $ 646 $ 3,615
======= =======
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE ................................... $ .06 $ .38
======= =======
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING:
Common shares ........................................ 9,971 8,720
Common equivalent shares ............................. 441 895
------- -------
10,412 9,615
====== =====
RETAINED EARNINGS:
Retained earnings, beginning of period ............... $ 7,548 $2,099
Net income ........................................... 646 3,615
--- -----
Retained earnings, end of period ..................... $ 8,194 $5,714
======= ======
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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PSC INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(Unaudited)
Six Months Ended
June 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income .......................................... $ 646 $ 3,615
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization ................... 2,170 1,261
Loss/(Gain) on disposition of assets 37 (161)
Deferred tax assets ............................. 128 144
Decrease (increase) in assets:
Accounts receivable ........................... 665 (1,764)
Inventories ................................... (1,880) (3,766)
Prepaid expenses and other .................... (2,132) 258
Increase (decrease) in liabilities:
Accounts payable .............................. 2,081 2,369
Accrued expenses .............................. (523) 96
Accrued payroll and commissions ............... (648) (400)
Accrued acquisition related restructuring costs (331) (536)
---- ----
Net cash provided by
operating activities ...................... 213 1,116
-------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net ......... ................. (967) (4,641)
Additions to intangible assets .... ................. (780) (507)
Proceeds from sale of investments . ................. 4,167 --
----- -----
Net cash provided by (used in) investing activities 2,420 (5,148)
===== ======
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt ......................... -- 1,199
Principal repayments of long-term debt .............. ( 63) (14,307)
Exercise of stock options and sale of common stock .. 627 24,534
Tax benefit from exercise or early disposition
of certain stock options ........................ 70 196
-- ---
Net cash provided by financing activities .... 634 11,622
--- ------
FOREIGN CURRENCY TRANSLATION ......................... (23) (8)
NET INCREASE IN CASH
AND SHORT-TERM INVESTMENTS ..................... 3,244 7,582
CASH AND SHORT-TERM INVESTMENTS:
Beginning of period ........................... 5,538 2,720
------- -------
End of period ................................. $ 8,782 $10,302
======= =======
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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8
PSC Inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED June 30, 1996 and 1995
(All amounts in thousands, except per share data)
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared by the
Company without audit. In the opinion of management, these financial
statements include all adjustments necessary to present fairly the Company's
financial position as of June 30, 1996, and the results of operations and
its cash flows for the six months ended June 30, 1996 and 1995. The results
of operations for the three months and six months ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The accompanying financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's December 31, 1995 annual report on
Form 10-K.
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common and common equivalent share is based on the weighted
average number of common and common equivalent shares (stock options
determined under the treasury stock method) outstanding during the period.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Elements of cost include materials, labor, and overhead and consist
of the following:
June 30, Dec. 31,
1996 1995
Raw materials ................. $ 8,247 $ 6,914
Work-in-process ............... 2,592 2,090
Finished goods ................ 1,481 1,436
------- -------
$12,320 $10,440
======= =======
(2) LONG-TERM DEBT
Long-term debt consists of the following:
June 30, Dec. 31,
1996 1995
Capital lease obligations ..... $ 529 $ 553
Other ......................... 66 70
---- ----
595 623
Less: current maturities ..... 141 131
---- ----
$454 $492
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9
PSC Inc. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED June 30, 1996 and 1995
(All amounts in thousands, except per share data)
(Unaudited)
(3) SHAREHOLDERS' EQUITY
During the six month period ended June 30, 1996, employees purchased
approximately 13 common shares at $7.86 per share under the provisions of
the Company's Employee Stock Purchase Plan.
Changes in the status of options under the Company's stock option plans are
summarized as follows:
January 1, 1996 January 1, 1995
to to
June 30, 1996 December 31, 1995
------------- -----------------
Options outstanding at
beginning of period .............. 2,138 2,299
Options granted ................... 282 105
Options exercised ................. (69) (200)
Options forfeited/canceled ........ (16) (66)
------ ------
Options outstanding at
end of period ................... 2,335 2,138
====== ======
Number of options at end of period:
Exercisable .................... 1,649 1,575
Available for grant ............ 1,371 1,637
Average price of options:
Outstanding at end of period ..... $8.36 $ 8.41
Exercised ........................ $ 7.68 $ 6.52
(4) SUBSEQUENT EVENT
On July 12, 1996, the Company completed its purchase agreement with
Spectra-Physics AB of Sweden to acquire its Data Capture Group which includes
Spectra-Physics Scanning Systems, Inc., TXCOM S.A. and related businesses
("Spectra"). Spectra, which is headquartered in Eugene, Oregon, is the world's
leading manufacturer of countertop and in-counter fixed position bar code
scanners for retail point-of-sale applications. The purchase price was
approximately $140 million. The purchase was funded by $125 million in cash, $10
million in PSC Common Shares, and $5 million subordinated Installment Promissory
Note. The $125 million cash portion was funded by a combination of the Company's
cash and Senior Debt ($92.5 million) and Subordinated Debt ($30 million). The
acquisition will be accounted for as a purchase. The Company currently estimates
that it will allocate approximately $60 million of the purchase price to
acquired in-process research and development as required by generally accepted
accounting principles, resulting in a one-time charge to the Company's earnings
in the third quarter.
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Item 2: Management's Discussion and Analysis of Financial
Condition
and Results of Operations
General
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes to Consolidated Financial Statements
of the Company's December 31, 1995 annual report on Form 10-K.
Results of Operation: Three Months Ended June 30, 1996 and 1995
- - ----------------------------------------------------------------
Net Sales. Consolidated net sales during the three months ended June 30, 1996
increased $0.7 million or 3% compared with the same period in 1995. The increase
is primarily due to increased sales volume of cased handheld scanners,
particularly QuickScan products, offset by a decrease in sales volume of the
Company's scan engines and decreased sales of the LazerData product line's fixed
position scanners. Geographically, domestic net sales increased by 3% and
international net sales increased by approximately 5%. International net sales
represented approximately 22% of net sales in the second quarter of 1996 and
1995.
Gross Profit. Consolidated gross profit during the three months ended June 30,
1996 decreased $0.7 million or 8% compared with the same period in 1995. As a
percentage of sales, gross profit decreased from 43.7% to 38.8%. The decrease in
gross profit percentage is primarily due to lower average selling prices for
certain of its products and production start-up costs associated with its new
DI-1000 products.
Engineering, Research and Development. Engineering, Research and Development
(ER&D) expenses increased $480 or 42%, as compared to the same period in 1995.
As a percentage of sales, ER&D was 7.3% in the second quarter of 1996 versus
5.3% in the second quarter of 1995. The dollar increases were primarily related
to the Company's new product development for its handheld laser scanner products
and its LazerData product line's fixed position scanners.
Selling, General and Administrative. Selling, General and Administrative (SG&A)
expenses increased $1.0 million or 18%, as compared to the same period in 1995.
As a percentage of sales, SG&A was 30.5% in 1996 and 26.7% in 1995. The
increased dollar amount is primarily due to start-up costs associated with the
Company's new South American subsidiary and increased patent related expenses.
The increase in patent related expenses is due to an increase in litigation
expenses related to its patent infringement lawsuit with Symbol Technologies,
Inc. See Legal Proceedings for further discussion of the lawsuit.
Acquisition Related Restructuring and Other Costs. During the 1994 fourth
quarter, the Company recognized a one-time pre-tax restructuring charge of $3.0
million. The charge related to the integration of the Company's existing fixed
position scanner product lines with those of LazerData, which was acquired in
December 1994. The restructuring program in part, provided for employee
severance and benefit costs for the elimination of approximately 12
manufacturing and engineering support positions. As of June 30, 1996, all
positions targeted in the restructuring program have been eliminated. The amount
of the restructuring accrual at June 30, 1996 was approximately $0.5 million.
Restructuring actions are substantially complete as of June 30, 1996. There have
been no re-allocations and/or re-estimates to date.
Provision for Income Taxes. Provision for income tax dollar amounts was down
$0.9 million due to the reduction in pre-tax net income. The Company's effective
tax rate was 37.0% in 1996, compared with 37.5% in 1995. The Company expects to
record income tax expense at or about the combined federal and state statutory
tax rate in 1996.
Results of Operation: Six Months Ended June 30, 1996 and 1995
- - --------------------------------------------------------------
Net Sales. Consolidated net sales during the six months ended June 30, 1996 were
flat compared with the same period in 1995. Geographically, domestic net sales
decreased by 2% and international net sales increased by approximately 6%.
International net sales represented approximately 22% of net sales in the first
six months of 1996 versus 21% of net sales in the first six months of 1995.
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11
Gross Profit. Consolidated gross profit during the six months ended June 30,
1996 decreased $2.1 million or 11% compared with the same period in 1995. As a
percentage of sales, gross profit decreased from 45.5% to 40.7%. The decrease in
gross profit percentage is primarily due to lower average selling prices for
certain of its products and production start-up costs associated with its new
DI-1000 products.
Engineering, Research and Development. Engineering, Research and Development
(ER&D) expenses increased $1.2 million or 53%, as compared to the same period in
1995. As a percentage of sales, ER&D was 7.8% in the first six months of 1996
versus 5.1% in the first six months of 1995. The dollar increases were primarily
related to the Company's new product development for its handheld laser scanner
products and its LazerData product line's fixed position scanners.
Selling, General and Administrative. Selling, General and Administrative (SG&A)
expenses increased $1.6 million or 13%, as compared to the same period in 1995.
As a percentage of sales, SG&A was 30.9% in 1996 and 27.3% in 1995. The
increased dollar amount is primarily due to start-up costs associated with the
Company's new South American subsidiary and increased patent related expenses.
The increase in patent related expenses is due to an increase in litigation
expenses related to its patent infringement lawsuit with Symbol Technologies,
Inc. See Legal Proceedings for further discussion of the lawsuit.
Provision for Income Taxes. Provision for income tax dollar amounts was down
$1.8 million due to the reduction in pre-tax net income. The Company's effective
tax rate was 37.0% in 1996, compared with 37.8% in 1995. The Company expects to
record income tax expense at or about the combined federal and state statutory
tax rate in 1996.
Liquidity and Capital Resources:
The Company utilizes a number of measures of liquidity, including the following:
June 30, December 31,
1996 1995
---- ----
Cash provided by operations ................... $ 213 $ 2,897
Working capital ............................... $21,640 $ 20,397
Long-term debt to capital
(Long-term debt to long-term debt plus equity) 0.8% 0.9%
Cash provided by operations decreased $2.7 million versus the second quarter of
1995 primarily due to the decreased net income. Working capital increased $1.2
million from December 31, 1995 primarily due to an increase in inventories,
prepaids and other current assets offset by a smaller increase in current
liabilities.
Property, plant and equipment expenditures totaled $1.0 million for the six
months ended June 30, 1996 compared with $4.6 million for the six months ended
June 30, 1995. The 1995 expenditures primarily related to the construction costs
of the Company's headquarters, manufacturing and engineering facility.
The long-term debt to capital percentage was 0.8% at June 30, 1996 versus 0.9%
at December 31, 1995.
At June 30, 1996, liquidity immediately available to the Company consisted of
cash and short-term investments of approximately $8.8 million. In addition, the
Company had a revolving loan agreement with Manufacturers and Traders Trust
Company pursuant to which the bank had agreed to provide a line of credit
totaling $20.0 million. As of June 30, 1996, the Company had no outstanding
borrowings under this agreement.
On July 12, 1996, in connection with the acquisition of Spectra, the Company
terminated its existing revolving credit facility and simultaneously replaced it
with new credit facilities. The new facilities provide credit totaling $130
million. They consist of senior term loans of $80 million, a senior revolving
credit facility of $20 million and a subordinated term loan of $30 million. The
Company borrowed and has outstanding $122.5 million on these facilities.
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12
Part II: OTHER INFORMATION
Item 1: Legal Proceedings:
Legal proceedings incorporated by reference to Item 1 of Part II of
the registrant's quarterly report on Form 10-Q for the quarter ended
March 31, 1996.
On May 31, 1996, PSC filed an amended complaint adding claims under
the federal antitrust laws and seeking declaratory relief under
additional Symbol patents. The amended complaint alleges five federal
antitrust law claims and several claims for unfair trade practices
under federal and state law. In addition, the amended pleading seeks
declarations of non-infringement and/or invalidity with respect to
37 Symbol patents.
Symbol has answered certain claims in the amended complaint, generally
denying liability, and has moved to dismiss from the amended complaint
claims for declaratory relief that relate to certain Symbol patents.
Symbol also has moved to sever and stay proceedings with respect to
all of PSC's antitrust and unfair competition claims. A hearing date
for both the motion to dismiss claims relating to certain Symbol
patents and to sever and stay is scheduled for September 4, 1996.
On June 19, 1996, the United States District Court for the Southern
District of New York granted PSC's motion and transferred Symbol's
suit in that district to the Western District. Symbol's action, which
alleges infringement of 19 Symbol patents by PSC and PSC's customer
Data General Corporation, and alleges breach of contract against PSC,
has since been consolidated with PSC's pending action against Symbol,
with the effect that the cases will be conducted together through
discovery and trial. PSC has moved to dismiss Symbol's claims for
breach of contract. A hearing on PSC's motion is scheduled for
September 4, 1996.
Other legal proceedings incorporated by reference to Item 3 of the
Annual Report on Form 10K for the fiscal period ended December 31,
1995.
Item 2: Changes in Securities: None
Item 3: Defaults upon Senior Securities: None
Item 4: Submission of Matters to a Vote of Security Holders:
(a) The Annual Meeting of Shareholders was held on April 30, 1996.
(b) The names of the directors elected at the Annual Meeting for a three
year term are as follows:
Jay M. Eastman
James W. Henry
Thomas J. Morgan
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13
The name of each other director whose term of office as a director
continued after the Annual Meeting is as follows:
Robert S. Ehrlich
Donald K. Hess
L. Michael Hone
James O'Shea
Jack E. Rosenfeld
Justin L. Vigdor
(c) (i) At the Annual Meeting, the tabulation of votes with respect to
each nominee for director was as follows:
Nominee Votes FOR Authority Withheld
------- ---------- ------------------
Jay M. Eastman 9,017,590 395,111
James W. Henry 9,016,316 396,385
Thomas J. Morgan 9,004,184 408,517
(ii) At the Annual Meeting, the shareholders voted upon two other matters.
The description of each other matter voted upon and the tabulation of votes
with respect to each such matter are as follows:
Votes Votes Votes
FOR AGAINST ABSTAINING
------ --------- -----------
(a) Proposal to amend the
Certificate of Incorporation
to increase the number of
authorized Common Shares .......... 8,673,178 698,120 41,403
(b) Proposal to amend the
Certificate of Incorporation
to authorize a new class of
Series B Preferred Shares ......... 5,026,191 1,199,104 60,725
Item 5: Other Information: None
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits: Certificate of Amendment..................15-21
(b) Reports on Form 8-K:
Report on Form 8-K, dated May 20, 1996.
<PAGE>
14
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.
PSC Inc.
DATE: August 9, 1996 By: /s/ L. Michael Hone
L. Michael Hone, Chairman,
Chief Executive Officer, and
President
DATE: August 9, 1996 By: /s/ William J. Woodard
William J. Woodard
Vice President, Finance and
Treasurer
(Principal Financial Officer)
DATE: August 9, 1996 By: /s/ Scott D. Deverell
Scott D. Deverell
(Principal Accounting Officer)
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
PHOTOGRAPHIC SCIENCES CORPORATION
Under Section 807 of the
Business Corporation Law
The undersigned, being the President and Secretary, respectively, of
Photographic Sciences Corporation, pursuant to Section 807 of the Business
Corporation Law of the State of New York, do hereby certify and set forth:
1. The name of the Corporation is Photographic Sciences Corporation.
2. The Certificate of Incorporation of the Corporation was filed by the
Department of State on December 8, 1969. Amendments to the Certificate of
Incorporation were filed with the Department of State on December 2, 1970,
September 19, 1972, September 7, 1977, October 29, 1980, March 12, 1985, and
August 3, 1988, respectively.
3. The Certificate of Incorporation of the Corporation, as amended
heretofore, is hereby further amended to effect the following amendments
authorized by the Business Corporation Law: (a) to provide that the size of the
Board of Directors (the "Board") shall not be less than nine nor more than
twenty directors, with the exact number of directors to be determined from time
to time by the By-laws and to classify the Board into three classes, as nearly
equal in number as possible, each of which after an interim period, will serve
for three years, with one class being elected each year, (b) to provide that
directors may be removed only for cause and only with the approval of 66-2/3% of
the voting power of the Company entitled to vote generally in the election of
directors, (c) to provide that any vacancy on the Board shall be filled by the
remaining directors then in office, (d) to provide that special meetings of
shareholders may be called only by the Board, and (e) to provide that the
shareholder vote required to amend or repeal the foregoing amendments and
related amendments to the Company's By-laws, or to adopt any provision
inconsistent herewith, shall be 66-2/3% of the voting power of the Company. The
Certificate of Incorporation is hereby further changed to effect a change in the
post office address to which the Secretary of State shall mail a copy of any
process against the Corporation served upon him.
<PAGE>
4. The text of the Restated Certificate of Incorporation of the Corporation
is hereby restated as amended to read as herein set forth in full:
"1.The name of the Corporation is Photographic Sciences Corporation.
2. The purposes for which it is to be formed are as follows:
To engage in the business of manufacturing, designing, creating,
developing, formulating, inventing, patenting, owning, acquiring, producing,
processing, constructing, storing, applying, assembling, adapting, conducting,
operating, using, preparing for market, exhibiting, distributing, installing,
disposing, leasing, exploiting, licensing, exchanging, repairing, importing,
exporting, and generally dealing in and with photographic films and plates, of
every type and description including, without limitation, those involving the
production of microimages with the use of precision cameras, and related
equipment, devices, appliances and chemicals and all other accessories and
supplies necessary for the production of photographic film and plates by means
of cameras and related equipment and dealing in and with audio-visual equipment
and apparatus of every kind and description;
To engage in applied photographic research and development; and
To manufacture, purchase or otherwise acquire, invest in, own, mortgage,
pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and
deal with goods, wares, and merchandise and personal property of every class and
description; and
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, maintain, develop, employ, use
and otherwise deal in and with real property, or any interest therein, or any
right, license or privilege appurtenant thereto, wherever situated and to sell,
convey, lease, exchange, transfer or otherwise dispose of, or mortgage or
pledge, all or any of the Corporation's property and assets, or any interest
therein, or any right, license or privilege appurtenant thereto, wherever
situated.
The foregoing clauses shall be construed both as objects and powers, in
furtherance, and not in limitation, of the general powers conferred by the laws
of the State of New York, and it is hereby expressly provided that the
enumeration herein of specific objects and powers shall not be held to limit
or restrict in any way the general powers of the Corporation.
<PAGE>
3. The office of the corporation shall be located in the Town of Webster,
County of Monroe, State of New York.
4. The aggregate number of shares which the corporation shall have the
authority to issue is Fifteen Million (15,000,000) shares of common stock with a
par value of $.01 per share, all of which are to be of one class.
5. The Secretary of State of the State of New York is hereby designated as
the agent of the corporation upon whom process of any action or proceeding
against it may be served. The address to which the Secretary of State shall mail
copy of process in any action or proceeding against the corporation which may be
served upon him is:
770 Basket Road, Webster, New York 14580.
6. No holder of any shares of any class of stock of this Corporation shall,
by reason of holding such shares, have preemptive or preferential right to
purchase, receive or subscribe to any shares of any class of this Corporation,
now or hereafter to be authorized, or any notes, debentures, bonds or other
securities convertible into or carry options or warrants to purchase shares of
any class now or hereafter to be authorized (whether or not the issuance of any
such shares, or of such notes, debentures, bonds or other securities would
adversely affect the dividends or voting rights of such a shareholder) other
than such rights, if any, as the Board of Directors, in its discretion, from
time to time may grant, and on such terms as the Board of Directors may fix.
7. No director of this Corporation shall be personally liable to this
Corporation or its shareholders for monetary damages for any breach of duty in
such capacity, provided that this provision shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty to this
Corporation if a judgment or other final adjudication adverse to such director
establishes that such director's acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or that such director
personally gained in fact a financial profit or other advantage to which such
director was not legally entitled or that such director's acts violated Section
719 of the New York Business Corporation Law or (ii) for any breach of the
director's duty under circumstances where the liability of such director for any
act or omission which occurred prior to the adoption of this Article.
8. Board of Directors.
(a) Number, Election and Terms. The business and affairs of the Corporation
shall be managed and controlled by a Board of Directors consisting of not less
than nine (9) nor more than twenty (20) persons. The exact number of directors
within the minimum limitations specified in the preceding sentence shall be
fixed from time to time by the by-laws pursuant to a resolution adopted by a
majority of the entire Board of Directors. At the 1989 Annual Meeting of
Shareholders, the directors shall be divided into three classes, as nearly equal
in number as possible, with the term of office of the first class to expire at
the 1990 Annual Meeting of Shareholders, the term of office of the second class
to expire at the 1991 Annual Meeting of Shareholders, and the term of office of
the third class to expire at the 1992 Annual Meeting of Shareholders. At each
Annual Meeting of Shareholders following such initial classification and
election, directors elected to succeed those directors whose terms expire shall
be elected for a term of office to expire at the third succeeding Annual Meeting
of Shareholders after their election.
<PAGE>
(b) Newly Created Directorships and Vacancies. Subject to the rights of the
holders of any series of Preferred Stock the outstanding , newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be filled
by a majority vote of the directors then in office, and directors so chosen
shall hold office for a term expiring at the next Annual Meeting of Shareholders
and until his successor is elected and qualified. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
(c) Removal. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least 66-2/3% of the voting power
of all of the shares of the Corporation entitled to vote for the election of
directors.
(d) Special Meetings of Shareholders. Special meetings of shareholders of
the Corporation may be called only by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors.
(e) Amendment, Repeal, Etc. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 66-2/3% of the voting power of all of the shares of the
Corporation entitled to vote for the election of directors shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article 8."
5. This restatement of the Certificate of Incorporation of Photographic
Sciences Corporation was authorized by a vote of the Board of Directors of the
Corporation followed by a vote of the holders of two-thirds of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 23rd day of
June, 1989.
/s/ L. Michael Hone
L. Michael Hone, President
/s/ David A. Kostizak
David A. Kostizak, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PSC INC.
Under Section 805 of the Business Corporation Law
The undersigned, being the President and Secretary, respectively, of PSC
Inc., do hereby certify and set forth:
1. The name of the Corporation is PSC Inc.
2. The Certificate of Incorporation was originally filed
with the Department of State on the 8th day of December, 1969, under the
original name of Photographic Sciences Corporation.
3. The Certificate of Incorporation is hereby amended to effect an
increase in the aggregate number of shares which the Corporation shall have
authority to issue from Twenty-Five Million (25,000,000) shares of common stock
having a par value of $.01 per share to Fifty Million (50,000,000) shares of
which Forty Million (40,000,000) shares shall be Common Shares, having a par
value of $.01 per share and Ten Million (10,000,000) shares shall be Preferred
Shares, having a par value of $.01 per share.
4. Paragraph 4 of the Certificate of Incorporation is
hereby amended to read as follows:
"4. The aggregate number of shares of which the Corporation shall
have authority to issue is Fifty Million (50,000,000) shares of which Forty
Million (40,000,000) shares shall be Common Shares, having a par value of $.01
per share and Ten Million (10,000,000) shares shall be Preferred Shares, having
a par value of $.01 per share.
Subject to the limitations and in the manner provided by law,
Preferred Shares may be issued from time to time in series, and the Board of
Directors of the Corporation is hereby expressly empowered and authorized to
establish and designate series, to fix the number of shares constituting each
series, and to fix the designations and the relative rights, preferences and
limitations of the shares of each series."
<PAGE>
5. The above amendment to the Certificate of Incorporation was authorized
by vote of the Board of Directors followed by vote of the holders of a majority
of all outstanding shares entitled to vote thereon at a meeting of shareholders.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this 30th day of
April, 1996.
/s/ L. Michael Hone
-------------------
L. Michael Hone, President
/s/ Martin S. Weingarten
------------------------
Martin S. Weingarten, Secretary
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