<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
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 0-10068
ICO, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Texas 75-1619554
- ----------------------------- ------------------------------------
(State of incorporation) (IRS Employer Identification Number)
11490 Westheimer, Suite 1000, Houston, Texas 77077
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
(281) 721-4200
------------------
(Telephone Number)
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 ___
Common stock, without par value: 19,624,845 shares
outstanding as of August 14, 1996
<PAGE> 2
ICO, INC.
INDEX TO QUARTERLY REPORT FORM 10-Q
<TABLE>
<S> <C>
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations for the Three Months
and the Nine Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 2
Consolidated Balance Sheets as of June 30, 1996 and
September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows for the Nine
Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings (no response required) . . . . . . . . . . . . . . . . . . . . . . . -
Item 2. Changes in Securities (no response required) . . . . . . . . . . . . . . . . . . . . . -
Item 3. Defaults upon Senior Securities
(no response required) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . 14
Item 5. Other Information (no response required) . . . . . . . . . . . . . . . . . . . . . . . -
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
ICO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------------
1996 1995 1996 1995
----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Exploration sales and services $ 9,186,000 $ 8,275,000 $25,872,000 $22,889,000
Production sales and services 7,895,000 7,401,000 22,818,000 22,795,000
Corrosion Control sales and services 5,346,000 5,726,000 16,288,000 15,147,000
Other sales and services 487,000 562,000 1,809,000 2,224,000
----------- ----------- ------------ ------------
Total oilfield sales and services 22,914,000 21,964,000 66,787,000 63,055,000
----------- ----------- ------------ -----------
Size reduction sales and services 6,744,000 - 6,744,000 -
----------- ----------- ------------ -----------
Total Net Revenues 29,658,000 21,964,000 73,531,000 63,055,000
----------- ----------- ------------ -----------
Cost and expenses:
Cost of sales and services 20,382,000 14,917,000 51,051,000 43,317,000
Selling, general and administrative 5,276,000 4,356,000 13,050,000 12,636,000
Depreciation and amortization 2,149,000 1,339,000 4,826,000 3,807,000
----------- ----------- ------------ ------------
27,807,000 20,612,000 68,927,000 59,760,000
----------- ----------- ------------ ----------
Operating Income 1,851,000 1,352,000 4,604,000 3,295,000
----------- ----------- ------------ -----------
Other Income (Expenses):
Equity in income (loss) of joint ventures 43,000 43,000
Interest income (expense) - net 47,000 353,000 752,000 967,000
----------- ----------- ------------ -------------
Total Income (Expenses) 90,000 353,000 795,000 967,000
----------- ----------- ------------ -------------
Income before taxes 1,941,000 1,705,000 5,399,000 4,262,000
Income taxes 513,000 254,000 697,000 432,000
----------- ----------- ------------ -------------
Net income (loss) $ 1,428,000 $ 1,451,000 $ 4,702,000 $ 3,830,000
=========== =========== ============ ===========
Earnings (loss) per common and
equivalent share:
Net income $ .06 $ .10 $ .27 $ .25
=========== =========== ============ ===========
Weighted average shares outstanding 15,912,563 8,740,463 11,241,031 8,666,143
=========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
2
<PAGE> 4
ICO, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
------------- -------------
<S> <C> <C>
Current assets:
Cash and equivalents $ 17,818,000 $ 24,991,000
Trade receivables (less allowance for
doubtful accounts of $950,000 and
$828,000, respectively) 23,268,000 18,050,000
Due from related parties - current 153,000
Inventories 7,739,000 4,873,000
Prepaid expenses and other 3,564,000 2,035,000
------------- -------------
Total current assets 52,542,000 49,949,000
------------- -------------
Property, plant and equipment, at cost 126,290,000 83,461,000
Less - accumulated depreciation and
amortization (52,808,000) (53,637,000)
-------------- --------------
73.482,000 29,824,000
------------- -------------
Other assets:
Goodwill, net 30,804,000 4,474,000
Investment in joint ventures 4,589,000
Net deferred tax asset 2,930,000 1,633,000
Other 2,170,000 2,074,000
Land 980,000
Due from related parties 704,000
Patents and licenses, net 196,000 229,000
------------- -------------
$168,397,000 $ 88,183,000
============ =============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
3
<PAGE> 5
ICO, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
------------ -------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt and
short term notes payable $ 2,148,000 $ 635,000
Accounts payable 12,331,000 5,622,000
Accrued expenses 3,539,000 2,117,000
Accrued salaries and wages 3,019,000 1,351,000
Accrued insurance 2,346,000 1,731,000
Income taxes payable 403,000 1,209,000
------------ -------------
Total current liabilities 23,786,000 12,665,000
------------ -------------
Long-term debt, net of current portion 15,578,000 1,047,000
Other long-term liabilities 2,225,000
------------ -------------
17,803,000 1,047,000
------------ -------------
Stockholders' equity:
Preferred stock, without par value -
500,000 shares authorized;
322,500 shares issued and outstanding
with a liquidation preference of $32,250,000 13,000 13,000
Common stock, without par value-
50,000,000 shares authorized; 19,193,019 and
8,883,911 shares issued and outstanding,
respectively 35,505,000 35,042,000
Additional paid in capital 106,706,000 56,105,000
Accumulated deficit (15,439,000) (16,642,000)
Equity adjustment for foreign currency
translation 23,000 (47,000)
------------ -------------
126,808,000 74,471,000
------------ -------------
Commitments and contingencies (see Note 5)
$168,397,000 $ 88,183,000
============ =============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
4
<PAGE> 6
ICO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
-------------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income 4,702,000 $ 3,830,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,826,000 3,807,000
Gain on disposition of property, plant, and equipment (61,000)
Equity in income of joint ventures (43,000)
Change in assets and liabilities:
(Increase) decrease in receivables 1,143,000 (1,354,000)
(Increase) decrease in inventories (1,341,000) 9,000
(Increase) decrease in prepaid expenses
& other current assets (687,000) 154,000
(Increase) decrease in other assets 308,000 (254,000)
Increase (decrease) in accounts payable 2,000,000 1,914,000
Increase (decrease) in accrued expenses (1,988,000) 768,000
Increase (decrease)in income taxes payable (1,140,000) -
Increase (decrease) in deferred tax asset (243,000) -
------------ -----------
Net cash provided by operating activities 7,476,000 8,874,000
----------- -----------
Cash flows from investing activities:
Capital expenditures (7,136,000) (5,106,000)
Acquisitions (4,518,000) (895,000)
Dispositions of property, plant and equipment 70,000 30,000
----------- -----------
Net cash used in investing activities (11,584,000) (5,971,000)
------------ ------------
Cash flows from financing activities:
Net proceeds from sale of stock 361,000 497,000
Receipt of proceeds from pre-acquisition exercise
of stock options 1,182,000
Payment of dividend on preferred stock (1,633,000) (1,632,000)
Payment of dividend on common stock (1,866,000)
Current maturities and long-term debt:
Additions 142,000
Reductions (2,054,000) (662,000)
Increase (decrease) in cash overdrafts 945,000 (1,737,000)
----------- -------------
Net cash used for financing activities (3,065,000) (3,392,000)
------------ ------------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
5
<PAGE> 7
ICO, INC.
(continued from prior page)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
------------ -------------
1996 1995
------------ -------------
<S> <C> <C>
Net increase (decrease) in cash (7,173,000) (489,000)
Cash at beginning of period 24,991,000 24,763,000
------------ -------------
Cash at end of period $ 17,818,000 $ 24,274,000
============ ============
Supplemental disclosures of Cash
Flow Information:
Cash paid (received) during the period for:
Interest $ 628,000 $ (964,000)
Income taxes (2,207,000)
</TABLE>
Non-cash investing and financing activities:
Following is a schedule of assets acquired, liabilities assumed or incurred,
and common stock issued in conjunction with the acquisition of Wedco
Technology, Inc.:
<TABLE>
<S> <C> <C>
Trade receivables $ 6,169,000
Related party receivables 849,000
Inventories 1,389,000
Prepaid expenses and other assets 2,446,000
Property, plant and equipment 41,899,000
Goodwill 26,565,000
Investments in joint ventures 4,538,000
Deferred tax asset 1,045,000
Accounts payable (3,760,000)
Accrued liabilities (8,193,000)
Long term debt (18,028,000)
Common stock issued (50,702,000)
-------------
Cash paid, net of cash acquired $ 4,217,000
=============
Other non-cash aspects of acquisitions:
Liabilities assumed or incurred $ 83,000 $ 1,153,000
Common stock issued 843,000
Assets acquired by incurring directly related liabilities $ 80,000 $ 500,000
</TABLE>
The accompanying notes are an integral part of
these financial statements.
6
<PAGE> 8
ICO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been prepared
in accordance with Rule 10-01 of Regulation S-X, "Interim Financial
Statements," and accordingly do not include all information and footnotes
required under generally accepted accounting principles for complete financial
statements. The financial statements have been prepared in conformity with the
accounting principles and practices as disclosed in the ICO, Inc. (the Company)
Annual Report on Form 10-K for the year ended September 30, 1995. In the
opinion of management, these interim financial statements contain all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the Company's financial position as of June 30, 1996, the
results of its operations for the three months and nine months ended June 30,
1996 and 1995 and the changes in its cash position for the nine months ended
June 30, 1996 and 1995. Results of operations for the three month and nine
month periods ended June 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending September 30, 1996. For additional
information, refer to the consolidated financial statements and footnotes
included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1995.
NOTE 2. EARNINGS (LOSS) PER SHARE AND STOCKHOLDERS' EQUITY
During fiscal year 1995, the Company made three acquisitions which included:
R.J. Dixon, Inc. - "Spinco" (June 1995), the operating assets of Kebco Pipe
Inspection, Inc. (March 1995), and B&W Equipment Sales and Mfg., Inc. (October
1994). During fiscal year 1996, the Company acquired the operating assets of
Rainbow Inspection Company of Mississippi, Inc. (March 1996). The above
acquisitions were accounted for under the purchase method of accounting. The
pro forma effects of these acquisitions are not material and, as such, are not
presented.
On April 30, 1996 the Company acquired, via merger, Wedco Technology, Inc.
Wedco serves the petrochemical industry by providing plastics grinding services
and related machinery. The consideration paid consisted of 10,132,609 ICO
common shares, approximately $2,157,000 in cash (exclusive of transaction fees
and expenses) and the assumption of approximately $29,981,000 in total
liabilities. The acquisition was accounted for as a purchase.
Earnings per share is based on earnings applicable to common shareholders and
is calculated using the weighted-average number of common and equivalent shares
outstanding including stock options and warrants which have a dilutive effect.
At June 30, 1996 and 1995 outstanding options and warrants had no dilutive
effect.
7
<PAGE> 9
ICO, INC.
NOTE 3. CONDENSED PRO FORMA FINANCIAL INFORMATION
The following condensed unaudited pro forma combined results of operations have
been presented as if the acquisition of Wedco had occurred on the first day of
the indicated period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1996
------------------ -----------------
<S> <C> <C>
Revenues 32,761,000 97,431,000
Net Income 1,008,000 3,254,000
Net Income per Common Share .02 .09
Weighted Average Shares Outstanding 19,141,637 19,080,860
</TABLE>
NOTE 4. INVESTMENT IN JOINT VENTURES
The following table summarizes the status and results of the Company's
investment in joint ventures for the two month period ended June 30, 1996.
These joint venture investments were acquired as a result of the April 30, 1996
Wedco transaction.
<TABLE>
<CAPTION>
Micronyl-
WedTech, Inc. Wedco S.A. Total
------------- ---------- ----------
<S> <C> <C> <C>
Balance, April 30, 1996 (date of acquisition) 2,714,000 1,824,000 4,538,000
Equity in income (loss) n/a 43,000 43,000
Adjustment due to foreign currency translation - 8,000 8,000
---------- ---------- ----------
Balance, June 30, 1996 $2,714,000 $1,875,000 $4,589,000
========== ========== ==========
</TABLE>
On February 16, 1996, Wedco commenced legal action against WedTech, Inc., a
Canadian corporation, which is owned 50% by Wedco and 50% by Polyvector
Corporation, a Canadian corporation, which is also a defendant in the action.
The Company alleges, among other things, that the various defendants have
breached the terms of the shareholders' agreement among Wedco and the
defendants. The defendants have also filed counterclaims in the action
alleging that ICO and Wedco have breached the shareholders' agreement. Due to
the circumstances, including this current litigation, management no longer
exercises significant influence over WedTech and, accordingly, the equity
method has not been applied for the three months ended June 30, 1996. The
application of the equity method will be further reviewed as the circumstances
surrounding this joint venture investment change.
NOTE 5. COMMITMENTS & CONTINGENCIES
In conjunction with the sale of real estate owned by a former subsidiary, the
New Jersey Department of Environmental Protection and Energy (D.E.P.E.) issued
an Administrative Consent Order (A.C.O.) to the Company, under the
Environmental Clean-up Responsibility Act (E.C.R.A.). Inspections have shown
that the site contains contaminates which must be removed. The Company has
provided accruals of $1,400,000 for the total estimated costs related to
cleanup activities, of which approximately $1,172,368 has been paid as of June
30, 1996. Recent sampling results indicate that the Company's groundwater
remediation program is working effectively to reduce the level of groundwater
contamination. The Company believes that its reserve is sufficient to satisfy
current D.E.P.E. requirements.
The accompanying notes are an integral part of
these financial statements.
8
<PAGE> 10
ICO, INC.
NOTE 6. SEGMENT AND FOREIGN OPERATIONS INFORMATION
The Company operates in two industry segments. Through Wedco Technology, Inc.
(a subsidiary acquired April 30, 1996), the Company serves the petrochemical
industry by providing customers with size reduction and other related services
for heat sensitive thermo-plastic materials and also manufactures certain
machinery used for those services. The Company's second business segment
serves the energy and steel industries by providing testing, inspection,
reconditioning, and coating services and equipment. Transactions between the
two business segments do not materially affect the information presented below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ---------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET REVENUES
Oilfield services and sales $22,914,000 $21,964,000 $66,787,000 $63,055,000
Size reduction services and sales 6,744,000 - 6,744,000 -
----------- ----------- ----------- -----------
Total Consolidated $29,658,000 $21,964,000 $73,531,000 $63,055,000
______________________________________________________________________________________________________________________________
OPERATING INCOME, as defined below
Oilfield services and sales $3,275,000 $2,793,000 $8,804,000 $7,612,000
Size reduction services and sales 641,000 - 641,000 -
----------- ----------- ----------- -----------
Total operations 3,916,000 2,793,000 9,445,000 7,612,000
General Corporate expenses (2,065,000) (1,441,000) (4,841,000) (4,317,000)
----------- ----------- ----------- -----------
Total Consolidated $1,851,000 $1,352,000 $4,604,000 $3,295,000
______________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS June 30, 1996 September 30, 1995
------------- ------------------
<S> <C> <C>
Oilfield services and sales $ 69,140,000 $63,192,000
Size reduction services and sales 81,439,000 -
Corporate assets 17,818,000 24,991,000
------------ -----------
Total Consolidated $168,397,000 $88,183,000
______________________________________________________________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of
these financial statements.
9
<PAGE> 11
ICO, INC.
Information regarding the Company's operations in different geographical areas
is presented below. The European Operations consist entirely of size reduction
services and sales of Wedco Technology, Inc.'s various European subsidiaries.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------- ---------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C>
NET REVENUES
Europe $ 3,761,000 $ 3,761,000
United States 24,484,000 $20,240,000 65,053,000 $57,757,000
Other 1,413,000 1,724,000 4,717,000 5,298,000
----------- ----------- ----------- -----------
Total Consolidated $29,658,000 $21,964,000 $73,531,000 $63,055,000
______________________________________________________________________________________________________________________________
OPERATING INCOME, as defined below
Europe $ 606,000 $ 751,000
United States 3,148,000 $ 2,554,000 8,065,000 $ 6,843,000
Other 162,000 239,000 629,000 769,000
----------- ----------- ----------- -----------
Total Operations 3,916,000 2,793,000 9,445,000 7,612,000
General Corporate expenses (2,065,000) (1,441,000) (4,841,000) (4,317,000)
----------- ----------- ----------- -----------
Total Consolidated $ 1,851,000 $ 1,352,000 $ 4,604,000 $ 3,295,000
______________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
IDENTIFIABLE ASSETS June 30, 1996 September 30, 1995
------------- ------------------
<S> <C> <C>
Europe $ 28,384,000
United States 117,162,000 $59,035,000
Other 5,033,000 4,157,000
Corporate Assets 17,818,000 24,991,000
------------ -----------
Total Consolidated $168,397,000 $88,183,000
______________________________________________________________________________________________________________________________
</TABLE>
Operating income reflected above includes net revenues, less cost and expenses
of operations. In computing operating income, other income (expenses),
including interest, and income taxes on the Consolidated Statements of Income
have been excluded. Corporate identifiable assets consist of cash and cash
equivalents.
The accompanying notes are an integral part of
these financial statements.
10
<PAGE> 12
ICO, INC.
NOTE 7. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Opinion Number
121 (Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be disposed of). The Company expects to adopt FAS 121 during the
fourth quarter of fiscal year 1996. The impact on fiscal year 1996 results of
operations, if any, is not known at this time.
NOTE 8. SUBSEQUENT EVENT
Effective July 19, 1996 the Company acquired Polymer Service, Inc. of Beaumont,
Texas and Polymer Service of Indiana, Inc. located in East Chicago, Indiana,
for approximately: $1,835,000 cash, the assumption of liabilities of
$1,683,000, and 431,826 shares of ICO common stock. These companies provide
size reduction, compounding and related processing services for the
petrochemical industry. The Company will account for this acquisition under
the purchase method of accounting.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
For the nine months ended June 30, 1996 cash provided by operating activities
decreased $1,398,000 compared to the same period in 1995. This decrease
occurred in spite of net income of $4,702,000 for the nine months ended June
30, 1996 compared to $3,830,000 for the nine months ended June 30, 1995, due to
the payment of income taxes and various accrued liabilities during the nine
months ended June 30, 1996. The Company had working capital of $28,758,000 at
June 30, 1996.
Cash flows used for investing activities increased to $11,584,000 versus
$5,971,000 for the nine months ended June 30, 1995 primarily as a result of the
Wedco acquisition and capital expenditures.
Inventory increased $2,866,000 during the nine months ended June 30, 1996 as a
result of the acquisition of Wedco and increased product sales primarily within
the Company's production service operations (i.e. the sale of inspected and
reconditioned oil company tubular goods and sucker rods).
Expenditures for property, plant and equipment totaled $7.1 million during the
nine months ended June 30, 1996. $6.3 million of the expenditures related to
the Company's oilfield service business with the remaining $790,000 relating to
the size reduction business. Capital expenditures within the oilfield service
business primarily consisted of major repairs, the enhancement of existing
facilities and the manufacture of equipment currently under mill inspection
services contracts.
During June of 1996 the Company's British subsidiary combined amounts due under
a credit facility into an existing mortgage loan, thereby increasing the
principle to 1,000,000 GBP ($1,593,000 at June 30, 1996 exchange rates).
Additionally, the mortgage loan was amended by fixing the interest rate at 8.9%
and extending the amortization of the loan to a 10-year period (from the date
of the amendment).
During June of 1996 the Company's Dutch subsidiary extended two mortgage loans
to terms of 10 years and increased the credit availability under one of the
credit facilities from 2,000,000 NLG ($1,172,000 at June 30,
The accompanying notes are an integral part of
these financial statements.
11
<PAGE> 13
ICO, INC.
1996 exchange rates) to 3,000,000 NLG ($1,759,000). The mortgage loans total
7,063,000 NLG ($4,141,000) at June 30 and bear interest at 6.8% and 7.2%.
Results of Operations
For the nine months ended June 30, 1996 the Company had revenues of $73,531,000
compared to $63,055,000 for the nine months ended June 30, 1995, an increase of
16.6%. Third quarter revenues increased 35% to $29,658,000 compared to
$21,964,000 for the third quarter of 1995.
Revenues from exploration services, increased $911,000 or 11.0% from the
quarter ended June 30, 1996 compared to the same period in the prior year. The
demand for these services is affected by domestic drilling activity. The
quarterly average rig count was up approximately 13% in fiscal year 1996 versus
1995.
Production services revenues, which include used tubular and sucker rod
services, increased $494,000 or 6.7% from the quarter ended June 30, 1995
compared to the same period in 1996. The demand for these services has been
favorably impacted by generally higher oil prices in 1996 versus 1995. The
Company's acquisition of the assets of Rainbow Inspection in March of 1996
accounted for approximately half the quarterly revenue growth.
Revenues from corrosion control, which include internal coating and lining
services, decreased $380,000 or 6.6% during the quarter ended June 30,1996
compared to the same quarter in 1995. These results are due to decreased sales
experienced by the Company's Houston, Texas coating facility and less external
coating revenues in the West Texas market.
Revenues from other sales and services consist primarily of revenues generated
by the Company's Canadian subsidiary relating to reconditioning engines
utilized in connection with pumping units of oil wells. These revenues were
lower in the third quarter of 1996 versus the same quarter of 1995 due to
abnormally harsh weather conditions in western Canada.
Size reduction sales and services revenues relate entirely to revenues of the
Company's Wedco Technology, Inc. subsidiary which was acquired April 30, 1996.
See Note 6 to the June 30, 1996 financial statements regarding segment and
foreign operations information.
Cost of sales as a percentage of net revenues was 68.7% for the three months
ended June 30, 1996 compared to 67.9% for the same period in 1995. The
oilfield service business experienced a gross margin decline of approximately
2% during the third quarter of 1996 versus the same quarter in 1995.
Approximately half of the decline is the result of reclassifying expenses to
costs of sales for employee expenses which were previously included in sales,
general and administrative expenses. The reclassifications were made based
upon the employees' job functions. The remaining gross margin decline is based
upon the differing mix of products and services provided by the Company during
the two quarters. This decline was partially offset by increased gross margins
due to the acquisition of Wedco on April 30, 1996.
Selling, general and administrative expenses increased to $5,276,000 for the
quarter ended June 30, 1996 compared to $4,356,000 for the quarter ended June
30, 1995. As a percentage of net revenues, selling, general and administrative
costs decreased to 17.8% during the third quarter of 1996 versus 19.8% for the
same quarter in the prior period. The overall increase in these expenses is
primarily due to increased general and administrative costs resulting from the
acquisition of Wedco. These costs also increased due to the timing of legal
expenses within the June 30, 1996 quarter in relation to the same quarter of
1995, which are not expected to continue.
The accompanying notes are an integral part of
these financial statements.
12
<PAGE> 14
ICO, INC.
Depreciation and amortization increased from $1,339,000 for the quarter ended
June 30, 1995 to $2,149,000 for the quarter ended June 30, 1996. The increase
resulted from the Wedco acquisition as well as capital expenditures made during
the year ended June 30, 1996.
For the nine months ended June 30, 1996, the Company had net income of
$4,702,000 compared to $3,830,000 for the nine months ended June 30, 1995. For
the third quarter of 1996, net income was $1,428,000 versus $1,451,000 for the
same quarter of 1995. Net income changed primarily due to the explanations
above as well as lower interest income and higher income tax expense discussed
below.
Other Income (Expense)
As discussed more fully in Note 4, the Company acquired ownership in two joint
ventures as a result of the Wedco acquisition. Equity income includes income
of the French joint venture - Micronyl S.A. which is accounted for using the
equity method.
Interest income/expense decreased $306,000 in the third quarter ended June 30,
1996 versus the same quarter of 1995. The decrease is due to debt of $18
million the Company assumed upon acquiring Wedco as well as approximately
$100,000 less interest income on the Company's cash and cash equivalents which
decreased primarily due to the acquisition of Wedco.
Income Taxes
In accordance with FAS 109, the need for a valuation allowance does not exist
as of the acquisition date of April 30, 1996. Thus, while the Company has
approximately $6.3mm in net operating loss carryforwards at June 30, 1996, the
benefits of these carryforwards will no longer be recognized as a benefit in
the income statement. Instead, the utilization of these benefits will be
recorded as a reduction of the tax asset. As a result of this treatment,
income tax expense as a percentage of pretax income has increased in fiscal
year 1996 versus 1995.
Foreign Currency Translation
The fluctuation of the dollar against the Dutch guilder, the British pound and
the Swiss Krona has impacted the translation of revenues and income of Wedco's
European operations into U.S. dollars for the two months ended June 30,1996.
Gains and losses from the translation of certain balance sheet accounts are not
included in determining net income, but are accumulated as a separate component
of stockholders' equity. These unrealized gains and losses are subject to
deferred income taxes. As a result of the dollar's fluctuation against these
currencies and changes in the net assets of foreign subsidiaries, stockholders'
equity decreased net of deferred income taxes by approximately $149,000 during
the three months ended June 30, 1996.
The accompanying notes are an integral part of
these financial statements.
13
<PAGE> 15
ICO, INC.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Special Meeting of Shareholders of the Company was held on April 29, 1996 for
the following purposes:
1) The approval of the issuance of the Corporation's Common Stock
pursuant to the Merger Agreement dated December 8, 1995, as amended, among the
corporation, W Acquisition Corp. and Wedco Technology, Inc.
2) To amend the Corporation's Articles of Incorporation to change the
corporation's name to Willoughby International, Inc.
Holders of common stock of record at the close of business March 15, 1996 were
entitled to vote at the meeting.
Proposal 1 above was approved with 5,202,948 (82.0% of the votes cast at the
meeting) for; 1,087,949 votes against; 53,232 abstentions and zero broker
non-votes.
Proposal 2 above was not approved with 5,063,299 votes for; 1,224,678 votes
against; 56,151 abstentions and zero broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
The following exhibits are filed as part of this report:
Exhibit 2 - Merger Agreement dated December 8, 1995, as amended, among ICO,
Inc., W Acquisition Corp. and Wedco Technology, Inc.(1)
Exhibit 3(ii) - By-laws of Registrant as amended
Exhibit 27 - Financial Data Schedule
(1) Incorporated by reference from the Registrant's Registration Statement
Number 333-00831 on Form S-4.
On May 14, 1996 the Company filed a Form 8-K Current Report regarding the
merger of Wedco Technology, Inc. into a wholly owned subsidiary of the Company.
On July 15, 1996 the Company filed a Form 8-K/A as amendment No. 1 to the May
14, 1996 Form 8-K Current Report filing to supply the Company's audited
financial statements as of March 31, 1996.
The accompanying notes are an integral part of
these financial statements.
14
<PAGE> 16
ICO, INC.
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.
ICO, Inc.
------------------------------------
(Registrant)
/s/ Asher O. Pacholder
------------------------------------
August 14, 1996 Asher O. Pacholder
Chairman and Chief Financial Officer
(Principal Financial Officer)
/s/ Jon C. Biro
------------------------------------
Jon C. Biro, Controller & Treasurer
(Principal Accounting Officer)
<PAGE> 17
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
3(ii) -- By-laws of Registrant as amended
27 -- Financial Data Schedule
<PAGE> 1
EXHIBIT 3(ii)
AMENDED AND RESTATED BYLAWS
OF
ICO, INC.
Date of Adoption: April 1, 1995
As Amended: December 4, 1995
ARTICLE 1: OFFICES
1.01 REGISTERED OFFICE. The registered office of the Corporation required
by the Texas Business Corporation Act (the "TBCA") to be maintained in the
State of Texas shall be as designated from time to time by the Board of
Directors in the manner provided by law.
1.02 OTHER OFFICES. The corporation may also have offices at such other
places both within and without the State of Texas as the Board of Directors may
from time to time determine or the business of the corporation may require.
ARTICLE 2: SHAREHOLDERS
2.01 PLACE OF MEETINGS. Meetings of shareholders shall be held at the time
and place, within or without the State of Texas, stated in the notice of the
meeting or in a waiver of notice.
2.02 ANNUAL MEETINGS. An annual meeting of the shareholders, for the
election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held on such date, and at such time as the Board of Directors shall
fix and set forth in the notice of the meeting, which date shall be within
thirteen (13) months subsequent to the last annual meeting of shareholders. At
the annual meeting of the shareholders, only such business shall be conducted
as shall have been properly brought before the annual meeting. To be properly
brought before the annual meeting of shareholders, business must be (i)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (ii) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (iii)
otherwise properly brought before the meeting by a shareholder of the
Corporation who is a shareholder of record at the time of giving of notice
provided for in this Section 2.02, who shall be entitled to vote at such
meeting and who complies with the notice procedures set forth in this Section
2.02. For business to be properly brought before an annual meeting by a
shareholder, the shareholder, in addition to any other applicable requirements,
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of shareholders of the Corporation. A shareholder's
notice to the Secretary shall set forth as to each matter the shareholder
proposes to bring before the annual meeting: (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and
<PAGE> 2
address, as they appear on the Corporation's books, of the shareholder
proposing such business, (c) the class and number of shares of voting stock of
the Corporation which are beneficially owned by the shareholder, (d) a
representation that the shareholder intends to appear in person or by proxy at
the meeting to bring the proposed business before the annual meeting, and (e) a
description of any material interest of the shareholder in such business.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the procedures set
forth in this Section 2.02. The presiding officer of an annual meeting shall,
if the facts warrant, determine and declare to the meeting that business was
not properly brought before the meeting in accordance with the provisions of
this Section 2.02, and if he should so determine, he shall so declare to the
meeting and any such business not properly brought before the meeting shall not
be transacted.
Notwithstanding the foregoing provisions of this Section 2.02, a
shareholder shall also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this Section 2.02.
2.03 SPECIAL MEETINGS. Unless otherwise provided in the Articles of
Incorporation, special meetings of the shareholders for any purpose or purposes
may be called at any time by the Chairman of the Board, by the President or by
a majority of the Board of Directors, by a majority of the executive committee
(if any), or by the holders of at least ten percent (10%) of all the shares
entitled to vote at the proposed special meeting, but such special meetings may
not be called by any other person or persons.
2.04 NOTICE OF MEETINGS. Written or printed notice stating the place, day
and hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than 60 days before the date of the meeting, either personally or by
mail, by or at the direction of the officer or person calling the meeting, to
each shareholder entitled to vote at such meeting. If mailed, any such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the share transfer
records of the Corporation, with postage thereon prepaid.
2.05 QUORUM. The holders of a majority of the shares entitled to vote
(counting for such purposes all abstentions and broker nonvotes), represented
in person or by proxy, shall constitute a quorum at meetings of the
shareholders, except as otherwise provided in the Articles of Incorporation.
If, however, such quorum shall be not present or represented at a meeting of
the shareholders, the holders of a majority of the shares entitled to vote
thereat, and represented in person or by proxy, shall have power to recess the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such recessed
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
convened had a quorum been present. Shareholders present at a duly organized
meeting with a quorum present may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
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<PAGE> 3
2.06 VOTING AT MEETINGS. With respect to any matter other than the
election of directors or a matter for which the affirmative vote of the holders
of a specified portion of the shares entitled to vote is required by the TBCA,
the act of the shareholders shall be the affirmative vote of the holders of a
majority of the shares entitled to vote, and voted for or against, the matter
at a meeting of shareholders at which a quorum is present; provided that, for
purposes of this sentence, all abstentions and broker nonvotes shall not be
counted as voted either for or against such matter. With respect to the
election of directors, directors shall be elected by a plurality of the votes
cast by the holders of shares entitled to vote in the election of directors at
a meeting of shareholders at which a quorum is present; provided that
abstentions and broker nonvotes shall not be counted as votes cast either for
or against any nominee for director.
2.07 METHOD OF VOTING. Each outstanding share, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares of any
class or classes are limited or denied by the Articles of Incorporation. At
any meeting of the shareholders, every shareholder having the right to vote may
vote either in person, or by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. Voting for Directors shall be in
accordance with Section 3.06 of these Bylaws. Any vote may be taken by voice
or by show of hands unless someone entitled to vote objects, in which case
written ballots shall be used.
2.08 FIXING RECORD DATE. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive a distribution by the corporation
(other than a distribution involving a purchase or redemption by the
corporation of any of its own shares) or a share dividend or in order to make a
determination of shareholders for any other purpose, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty (60) days, and,
in the case of a meeting of shareholders, not less than ten (10) days, prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders,
or shareholders entitled to receive a distribution by the corporation (other
than a distribution involving a purchase or redemption by the corporation of
any of its own shares) or a share dividend, the date on which such notice of
the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such distribution or share dividend is adopted, as the case
may be, shall be the record date for such determination of shareholders. When
a determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this Section 2.08, such determination shall apply
to any adjournment thereof.
2.09 ACTION WITHOUT MEETING. Any action required by statute to be taken at
a meeting of shareholders, or any action which may be taken at a meeting of the
shareholders, may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof and such consent shall have
the force and effect as a unanimous vote of the shareholders. The signed
consent, or a signed copy, shall be placed in the minute book.
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<PAGE> 4
2.10 VOTING LIST. The officer or agent having charge of the share transfer
records of the Corporation shall make, at least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the registered office
or principal place of business of the Corporation and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The
original share transfer records shall be prima-facie evidence as to who are the
shareholders entitled to examine such list or transfer records or to vote at
any meeting of shareholders. Failure to comply with the requirements of this
Section shall not affect the validity of any action taken at such meeting.
2.11 PROXIES. A shareholder may vote either in person or by proxy executed
in writing by the shareholder. A telegram, telex, cablegram or similar
transmission by the shareholder, or a photographic, photostatic, facsimile or
similar reproduction of a writing executed by the shareholder shall be treated
as an execution in writing for purposes of this Section. Proxies for use at
any meeting of shareholders or in connection with the taking of any action by
written consent shall be filed with the Secretary, or such other officer as the
Board of Directors may from time to time determine by resolution, before or at
the time of the meeting or execution of the written consent, as the case may
be. All proxies shall be received and taken charge of and all ballots shall be
received and canvassed by the secretary of the meeting who shall decide all
questions touching upon the qualification of voters, the validity of the
proxies, and the acceptance or rejection of votes, unless an inspector or
inspectors shall have been appointed by the chairman of the meeting, in which
event such inspector or inspectors shall decide all such questions.
No proxy shall be valid after 11 months from the date of its execution
unless otherwise provided in the proxy. A proxy shall be revocable unless the
proxy form conspicuously states that the proxy is irrevocable and the proxy is
coupled with an interest. Proxies coupled with an interest shall include the
appointment as proxy of any of the persons set forth in the TBCA, including
without limitation:
(a) a pledgee;
(b) a person who purchased or agreed to purchase, or owns or holds
an option to purchase, the shares;
(c) a creditor of the Corporation who extended it credit under
terms requiring the appointment;
(d) an employee of the Corporation whose employment contract
requires the appointment; or
(e) a party to a voting agreement executed under Section B,
Article 2.30 of the TBCA.
Should a proxy designate two or more persons to act as proxies, unless
such instrument shall provide to the contrary, a majority of such persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Corporation shall not be required to recognize such proxy with
respect to such issue if such proxy
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<PAGE> 5
does not specify how the shares that are the subject of such proxy are to be
voted with respect to such issue.
2.12 INSPECTORS OF ELECTION. The chairman of each meeting of shareholders
shall appoint one or more persons to act as inspectors of election. The
inspectors of election shall report to the meeting the number of shares of each
class and series of stock, and of all classes, represented either in person or
by proxy. The inspectors of election shall oversee the vote of the
shareholders for the election of directors and for any other matters that are
put to a vote of shareholders at the meeting; receive a ballot evidencing votes
cast by the proxy committee of the Board of Directors; judge the qualifications
of shareholders voting; collect, count and report the results of ballots cast
by any shareholders voting in person; and perform such other duties as may be
required by the chairman of the meeting or the shareholders.
2.13 NOMINATIONS FOR ELECTION AS A DIRECTOR. Only persons who are
nominated in accordance with the procedures set forth in these bylaws shall be
eligible for election by shareholders as, and to serve as, directors.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of shareholders (a) by or at the direction
of the Board of Directors or (b) by any shareholder of the Corporation who is a
shareholder of record at the time of giving of notice provided for in this
Section 2.13, who shall be entitled to vote for the election of directors at
the meeting and who complies with the notice procedures set forth in this
Section 2.13. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing
to the Secretary of the Corporation. To be timely, a shareholder's notice
shall be delivered to or mailed and received at the principal executive offices
of the Corporation (i) with respect to an election to be held at the annual
meeting of the shareholders of the Corporation, not less than ninety (90) days
prior to the anniversary date of the immediately preceding annual meeting of
shareholders of the Corporation, and (ii) with respect to an election to be
held at a special meeting of shareholders of the Corporation for the election
of directors not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the special meeting was mailed
to shareholders of the Corporation as provided in these bylaws or public
disclosure of the date of the special meeting was made, whichever first occurs.
Such shareholder's notice to the Secretary shall set forth (x) as to each
person whom the shareholder proposes to nominate for election or re-election as
a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to being named
in the proxy statement as a nominee and to serve as a director if elected), and
(y) as to the shareholder giving the notice (i) the name and address, as they
appear on the Corporation's books, of such shareholder and (ii) the class and
number of shares of voting stock of the Corporation which are beneficially
owned by such shareholder. At the request of the Board of Directors, any
person nominated by the Board of Directors for election as a director shall
furnish to the Secretary of the Corporation that information required to be set
forth in a shareholder's notice of nomination which pertains to the nominee.
In the event that a person is validly designated as a nominee to the Board of
Directors in accordance with the procedures set forth in this Section 2.13 and
shall thereafter become unable or unwilling to stand for election to the Board
of Directors, the Board of Directors or the shareholder who proposed such
nominee, as the case may be, may designate
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<PAGE> 6
a substitute nominee. Other than directors chosen pursuant to the provisions
of Section 3.03, no person shall be eligible to serve as a director of the
Corporation unless nominated in accordance with the procedures set forth in
this Section 2.13. The presiding officer of the meeting of shareholders shall,
if the facts warrant, determine and declare to the meeting that a nomination
was not made in accordance with the procedures prescribed by these bylaws, and
if he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. Notwithstanding the foregoing provisions of
this Section 2.13, a shareholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder with respect to the matters set forth in this
Section 2.13.
ARTICLE III: DIRECTORS
3.01 MANAGEMENT. The business and affairs of the corporation shall be
managed by the Board of Directors who may exercise all such powers of the
corporation and do all such lawful acts and things as are not (by statute or by
the Articles of Incorporation or by these Bylaws) directed or required to be
exercised or done by the shareholders.
3.02 NUMBER: QUALIFICATION. The number of Directors of the corporation
shall be not less than six nor more than twelve, the exact number to be set
from time to time by the Board of Directors. None of said Directors need be
shareholders or residents of any particular state.
3.03 CHANGE IN NUMBER. The number of Directors may be increased or
decreased from time to time by amendment to these Bylaws, but no decrease
shall have the effect of shortening the term of any incumbent Director.
Any directorship to be filled by reason of an increase in the number of
Directors may be filled by election at an annual or special meeting of
shareholders called for that purpose, or may be filled by
the Board of Directors.
3.04 CLASSIFICATION. The Board of Directors shall be divided into three
classes: Class I, Class II and Class III. The number of directors in each
class shall be the whole number contained in the quotient arrived at by
dividing the authorized number of Directors by three and if a fraction is also
contained in such quotient and if such fraction is one-third, the extra
Director shall be a member of Class III, and if the fraction is two-thirds, one
extra Director shall be a member of Class III and the other shall be a member
of Class II. Except as otherwise provided in this Section 3.04, each Director
elected at an annual meeting shall serve for a term ending on the date of the
third annual meeting following the meeting at which such Director was elected;
provided, however, that the Directors first elected to Class I shall serve for
a term ending on the annual meeting immediately following the annual meeting at
which such Directors were first elected, the Directors first elected to Class
II shall serve for a term ending on the second annual meeting following the
meeting at which such Directors were first elected and the Directors first
elected to Class III shall serve a full term as hereinabove provided. The
foregoing notwithstanding, each Director shall serve until his successor shall
have been duly elected and qualified or until his earlier death, resignation or
removal. For purposes of this Section 3.04, reference to the first election of
Directors shall signify the election of Directors at the annual meeting held in
1994. At each annual election held after 1994, the Directors chosen to succeed
those whose terms have expired shall be identified as being of the same class
as the Directors they succeed. If for any
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<PAGE> 7
reason the number of Directors in the various classes shall not conform with
the formula set forth in this Section, the Board of Directors may redesignate
any Director in a different class in order that the balance of Directors in
such class shall conform thereto; provided, however, that no such redesignation
may have the effect of reducing the term to which a Director was elected.
3.05 VACANCIES; INCREASES IN THE NUMBER OF DIRECTORS; REMOVAL. Any vacancy
occurring in the Board of Directors may be filled in accordance with the
following paragraph of this Section 3.05 or may be filled by the affirmative
vote of a majority of the remaining directors though less than a quorum of the
Board of Directors. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office.
Any vacancy occurring in the Board of Directors or any directorship to
be filled by reason of an increase in the number of directors (i) may be filled
by election at an annual or special meeting of shareholders called for that
purpose or (ii) may be filled by the Board of Directors; provided that, with
respect to any directorship to be filled by the Board of Directors by reason of
an increase in the number of directors (a) such directorship shall be for a
term of office continuing only until the next election of one or more directors
by shareholders and (b) the Board of Directors may not fill more than two such
directorships during the period between any two successive annual meetings of
shareholders. If the Board of Directors is classified, any director elected at
an annual or special meeting of shareholders to fill a directorship created by
reason of an increase in the number of directors shall be elected for a term
coterminous with the remaining term of the other members of the class to which
he has been designated in accordance with the provisions of these Bylaws.
At any meeting of shareholders at which a quorum of shareholders is
present called expressly for that purpose, any director may be removed, but
only for cause, by vote of the holders of two-thirds of the shares then
entitled to vote for the election of such director.
3.06 ELECTION OF DIRECTORS. Directors shall be elected by plurality vote.
Cumulative voting shall not be permitted.
3.07 PLACE OF MEETINGS. Meetings of the Board of Directors, regular or
special, may be held either within or without the State of Texas.
3.08 REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board.
3.09 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by the Chairman on three day's notice to each Director, either
personally or by mail or by telegram. Special meetings shall be called by the
Chairman of the Board or Secretary in like manner and on like notice on the
written request of a majority of the Board of Directors. Except as otherwise
expressly provided by statute, Articles of Incorporation, or these Bylaws,
neither the business to be transacted at, nor the purpose of, any special
meeting need be specified in a notice or waiver of notice.
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<PAGE> 8
3.10 QUORUM -- MAJORITY VOTE. At meetings of the Board of Directors a
majority of the number of Directors fixed by these Bylaws shall constitute a
quorum for the transaction of business. The act of a majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, except as otherwise specifically provided by statute, the
Articles of Incorporation, or these Bylaws. If a quorum is not present at a
meeting the Board of Directors, the Directors present, may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present.
3.11 COMPENSATION. By resolution of the Board of Directors, the Directors
may be paid their expenses, if any, of attendance at each meeting of the Board
of Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director, and such other compensation
as may be established from time to time by the Board of Directors. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation therefor. Members of the executive
committee or of special or standing committees may be allowed like compensation
for attending committee meetings.
3.12 PROCEDURE. The Board of Directors shall keep regular minutes of its
proceedings. The minutes shall be placed in the minute book of the
corporation.
3.13 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action
permitted or required by the TBCA, the Articles of Incorporation or these
bylaws to be taken at a meeting of the Board of Directors or any committee
designated by the Board of Directors may be taken without a meeting if a
consent in writing, setting forth the action to be taken, is signed by all the
members of the Board of Directors or committee, as the case may be. Such
consent shall have the same force and effect as a unanimous vote at a meeting
and may be stated as such in any document or instrument filed with the
Secretary of State, and the execution of such consent shall constitute
attendance or presence in person at a meeting of the Board of Directors or any
such committee, as the case may be. Subject to the requirements of the TBCA,
the Articles of Incorporation or these bylaws for notice of meetings, unless
otherwise restricted by the Articles of Incorporation, members of the Board of
Directors, or members of any committee designated by the Board of Directors,
may participate in and hold a meeting of the Board of Directors or any
committee of directors, as the case may be, by means of a conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in such meeting shall
constitute attendance and presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
3.14 APPROVAL AND RATIFICATION OF ACTS OR CONTRACTS BY SHAREHOLDERS. The
Board of Directors in its discretion may submit any act or contract for
approval or ratification at any annual meeting of the shareholders, or at any
special meeting of the shareholders called for the purpose of considering any
such act or contract, and any act or contract that shall be approved or be
ratified by the vote of the shareholders holding a majority of the issued and
outstanding shares of stock of the Corporation entitled to vote and present in
person or by proxy at such meeting (provided that a quorum is present), shall
be as valid and as binding upon the Corporation and upon all the shareholders
as if it has been approved or ratified by every shareholder of the
-8-
<PAGE> 9
Corporation. In addition, any such act or contract may be approved or ratified
by the written consent of shareholders holding a majority of the issued and
outstanding shares of capital stock of the Corporation entitled to vote and
such consent shall be as valid and as binding upon the Corporation and upon all
the shareholders as if it had been approved or ratified by every shareholder of
the Corporation.
ARTICLE 4: COMMITTEES
4.01 DESIGNATION; POWERS. The Board of Directors may, by resolution passed
by a majority of the whole board, designate one or more committees, including,
if they shall so determine, an executive committee, an audit committee, a
compensation committee, and one or more special committees, each such committee
to consist of one or more of the Directors of the Corporation. Any such
designated committee shall have and may exercise such of the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that
no such committee shall have the power or authority of the Board of Directors
in reference to amending the Articles of Incorporation, adopting an agreement
of merger or consolidation, recommending to the shareholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the shareholders a dissolution of the Corporation or a
revocation of a dissolution of the Corporation, or amending, altering or
repealing the bylaws or adopting new bylaws for the Corporation and, unless
such resolution or the Articles of Incorporation expressly so provides, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Any such designated committee may authorize
the seal of the Corporation to be affixed to all papers which may require it.
In addition to the above such committee shall have such other powers and
limitations of authority as may be determined from time to time by resolution
adopted by the Board of Directors.
4.02 PROCEDURE; MEETINGS; QUORUM. Any committee designated pursuant to
Section 4.01 shall choose its own chairman, shall keep regular minutes of its
proceedings and report the same to the Board of Directors when requested, shall
fix its own rules or procedures, and shall meet at such times and at such place
or places as may be provided by such rules, or by resolution of such committee
or resolution of the Board of Directors. At every meeting of any such
committee, the presence of a majority of all the members thereof shall
constitute a quorum and the affirmative vote of a majority of the members
present shall be necessary for the adoption by it of any resolution.
4.03 SUBSTITUTION OF MEMBERS. The Board of Directors may designate one or
more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of such committee. In the absence
or disqualification of a member of a committee, the member or members present
at any meeting and not disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of the absent or disqualified member.
-9-
<PAGE> 10
ARTICLE 5: NOTICE
5.01 METHOD OF NOTICE. Whenever any notice is required to be given by law,
the Articles of Incorporation or under the provisions of these bylaws, said
notice shall be deemed to be sufficient if given (i) by telegraphic, cable or
wireless transmission or (ii) by deposit of the same in a post office box in a
sealed prepaid wrapper addressed to the person entitled thereto at his post
office address, as it appears on the records of the Corporation, and such
notice shall be deemed to have been given on the day of such transmission or
mailing, as the case may be.
5.02 WAIVER OF NOTICE. Whenever notice is required to be given by law, the
Articles of Incorporation or under any of the provisions of these bylaws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
shareholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Articles of
Incorporation or the bylaws.
ARTICLE 6: OFFICERS
6.01 NUMBER, TITLES AND TERM OF OFFICE. The officers of the Corporation
shall be a Chairman of the Board, President, one or more Vice Presidents (any
one or more of whom may be designated Executive Vice President or Senior Vice
President), a Chief Financial Officer, a Treasurer, a Secretary and such other
officers as the Board of Directors may from time to time elect or appoint.
Each officer shall hold office until his successor shall be duly elected and
shall qualify or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided. Any number of offices may be held
by the same person, unless the Articles of Incorporation provides otherwise.
Except for the Chairman of the Board, no officer need be a director.
6.02 SALARIES. The salaries or other compensation of the officers and
agents of the Corporation shall be fixed from time to time by the Board of
Directors.
6.03 REMOVAL. Any officer or agent elected or appointed by the Board of
Directors may be removed, either with or without cause, by the vote of a
majority of the whole Board of Directors at a special meeting called for the
purpose, or at any regular meeting of the Board of Directors, provided the
notice for such meeting shall specify that the matter of any such proposed
removal will be considered at the meeting but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment of an officer or agent shall not of itself create contract
rights.
6.04 VACANCIES. Any vacancy occurring in any office of the Corporation may
be filled by the Board of Directors.
-10-
<PAGE> 11
6.05 POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The Chairman of the
Board shall preside at all meetings of the shareholders and of the Board of
Directors. Subject to the control of the Board of Directors and the executive
committee (if any), the Chairman of the Board shall have general executive
charge, management and control of the properties, business and operations of
the Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts,
evidences of indebtedness and other obligations in the name of the Corporation
and may sign all certificates for shares of capital stock of the Corporation;
and shall have such other powers and duties as designated in accordance with
these bylaws and as from time to time may be assigned to him by the Board of
Directors. The Chairman of the Board shall be elected to a term of office
which is the same as his term of office as a director.
6.06 POWERS AND DUTIES OF THE PRESIDENT. Unless the Board of Directors
otherwise determines, the President shall be the chief executive officer of the
Corporation and may sign all certificates for shares of capital stock of the
Corporation; and he or she shall have such other powers and duties as
designated in accordance with these bylaws and as from time to time may be
assigned to him or her by the Board of Directors.
6.07 VICE PRESIDENTS. The Vice Presidents shall perform such duties and
have such powers as the Board of Directors may from time to time prescribe.
6.08 CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall have the
responsibility for the management and coordination of the financing, borrowing
and financial planning and budgeting activities of the Corporation, and he
shall have such other powers and duties as designated in these bylaws and as
from time to time may be assigned to him by the Board of Directors.
6.09 TREASURER. The Treasurer shall have responsibility for the custody
and control of all the funds and securities of the Corporation, and he shall
have such other powers and duties as designated in these bylaws or as from time
to time assigned to him by the Board of Directors. He shall perform all acts
incident to the position of Treasurer, subject to the control of the Chairman
of the Board and the Board of Directors; and he shall, if required by the Board
of Directors, give such bond for the faithful discharge of his duties in such
form as the Board of Directors may require.
6.10 ASSISTANT TREASURERS. Each Assistant Treasurer shall have the usual
powers and duties pertaining to his office, together with such powers and
duties as designated in these bylaws and as from time to time may be assigned
to him by the Chairman of the Board or the Board of Directors. The Assistant
Treasurers shall exercise the powers of the Treasurer during that officer's
absence or inability or refusal to act.
6.11 SECRETARY. The Secretary shall keep the minutes of all meetings of
the Board of Directors, committees of directors and the shareholders, in books
provided for that purpose; he shall attend to the giving and serving of all
notices; he may in the name of the Corporation affix the seal of the
Corporation to all contracts of the Corporation and attest the affixation of
the seal of the Corporation thereto; he may sign with the other appointed
officers all certificates for shares of
-11-
<PAGE> 12
capital stock of the Corporation; he shall have charge of the certificate
books, transfer books and stock ledgers, and such other books and papers as the
Board of Directors may direct, all of which shall at all reasonable times be
open to inspection of any director upon application at the office of the
Corporation during business hours; he shall have such other powers and duties
as designated in these bylaws and as from time to time may be assigned to him
by the Board of Directors; and he shall in general perform all acts incident to
the office of Secretary, subject to the control of the Board of Directors.
6.12 ASSISTANT SECRETARIES. Each Assistant Secretary shall have the usual
power and duties pertaining to his office, together with such other powers and
duties as designated in these bylaws and as from time to time may be assigned
to him by the Chairman of the Board or the Board of Directors. The Assistant
Secretaries shall exercise the powers of the Secretary during that officer's
absence or inability or refusal to act.
6.13 ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS. Unless
otherwise directed by the Board of Directors, the Chairman of the Board shall
have power to vote and otherwise act on behalf of the Corporation, in person or
by proxy, at any meeting of security holders of or with respect to any action
of security holders of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in such other
corporation.
6.14 INTERESTED PARTY TRANSACTIONS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for
this reason, solely because the director or officer is present at or
participates in the meeting of the Board or committee thereof which authorizes
the contract or transaction, or solely because his or their votes are counted
for such purpose, if : (i) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to
the Board of Directors or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to his
relationship or interest and as to the contract or transaction are disclosed or
are known to the shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the shareholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the shareholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
ARTICLE 7: INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
7.01 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions
as provided in this Article 7, each person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil,
-12-
<PAGE> 13
criminal, administrative, arbitrative or investigative (hereinafter a
"proceeding"), or any appeal in such a proceeding or any inquiry or
investigation that could lead to such a proceeding, by reason of the fact that
he or she, or a person of whom he or she is the legal representative, is or was
a director or officer of the Corporation or while a director or officer of the
Corporation is or was serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other enterprise
shall be indemnified by the Corporation to the fullest extent permitted by the
TBCA, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment) against judgments, penalties
(including excise and similar taxes and punitive damages), fines, settlements
and reasonable expenses (including, without limitation, attorneys' fees)
actually incurred by such person in connection with such proceeding, and
indemnification under this Article 7 shall continue as to a person who has
ceased to serve in the capacity which initially entitled such person to
indemnity hereunder. The rights granted pursuant to this Article 7 shall be
deemed contract rights, and no amendment, modification or repeal of this
Article 7 shall have the effect of limiting or denying any such rights with
respect to actions taken or proceedings arising prior to any such amendment,
modification or repeal. It is expressly acknowledged that the indemnification
provided in this Article 7 could involve indemnification for negligence or
under theories of strict liability.
7.02 ADVANCE PAYMENT. The right to indemnification conferred in this
Article 7 shall include the right to be paid or reimbursed by the Corporation
the reasonable expenses incurred by a person of the type entitled to be
indemnified under Section 7.01 who was, is or is threatened to be made a named
defendant or respondent in a proceeding in advance of the final disposition of
the proceeding and without any determination as to the person's ultimate
entitlement to indemnification; provided, however, that the payment of such
expenses incurred by any such person in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of a written
affirmation by such director or officer of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification under this
Article 7 and a written undertaking, by or on behalf of such person, to repay
all amounts so advanced if it shall ultimately be determined by a court of
competent jurisdiction that such indemnified person is not entitled to be
indemnified under this Article 7 or otherwise.
7.03 INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation, by adoption
of a resolution of the Board of Directors, may indemnify and advance expenses
to an employee or agent of the Corporation to the same extent and subject to
the same conditions under which it may indemnify and advance expenses to
directors and officers under this Article 7; and, the Corporation may indemnify
and advance expenses to persons who are not or were not directors, officers,
employees or agents of the Corporation but who are or were serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred
-13-
<PAGE> 14
by him in such capacity or arising out of his status as such a person to the
same extent that it may indemnify and advance expenses to directors under this
Article 7.
7.04 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article 7, the Corporation may pay or reimburse expenses incurred by a director
or officer in connection with his or her appearance as a witness or other
participation in a proceeding at a time when he or she is not a named defendant
or respondent in the proceeding.
7.05 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article 7 shall not be
exclusive of any other right which a director or officer or other person
indemnified pursuant to Section 7.03 may have or hereafter acquire under any
law (common or statutory), provision of the Articles of Incorporation of the
Corporation or these bylaws, agreement, vote of shareholders or disinterested
directors or otherwise.
7.06 INSURANCE. The Corporation may purchase and maintain insurance, at
its expense, to protect itself and any person who is or was serving as a
director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another foreign
or domestic corporation, partnership, joint venture, proprietorship, employee
benefit plan, trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under this Article 7.
7.07 SHAREHOLDER NOTIFICATION. To the extent required by law, any
indemnification of or advance of expenses to a director or officer in
accordance with this Article 7 shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
with a meeting and, in any case, within the 12-month period immediately
following the date of the indemnification or advance.
7.08 SAVINGS CLAUSE. If this Article 7 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify and hold harmless each director,
officer or any other person indemnified pursuant to this Article 7 as to costs,
charges and expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative to the full extent permitted
by any applicable portion of this Article 7 that shall not have been
invalidated and to the fullest extent permitted by applicable law.
ARTICLE 8: CAPITAL STOCK
8.01 CERTIFICATES OF STOCK. The certificates for shares of the capital
stock of the Corporation shall be in such form, not inconsistent with that
required by law and the Articles of Incorporation, as shall be approved by the
Board of Directors. The Chairman of the Board, President or a Vice President
(if any) shall cause to be issued to each shareholder one or more certificates,
which shall
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<PAGE> 15
be signed by the Chairman of the Board, President or a Vice President (if any)
and the Secretary or an Assistant Secretary (if any) or the Treasurer or an
Assistant Treasurer (if any) certifying the number of shares (and, if the stock
of the Corporation shall be divided into classes or series, the class and
series of such shares) owned by such shareholder in the Corporation; provided,
however, that any of or all the signatures on the certificate may be facsimile.
If the Board of Directors shall have provided for a seal, such certificates
shall bear such seal or a facsimile thereof. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures
shall have been placed upon any such certificate or certificates shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued by the Corporation, such certificate may nevertheless be issued by
the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue. The stock certificates shall
be consecutively numbered and shall be entered in the books of the Corporation
as they are issued and shall exhibit the holder's name and number of shares.
Each certificate shall conspicuously bear any legend required pursuant
to Article 2.19 or Article 2.22 of the TBCA, as well as any other legend
required by law.
8.02 TRANSFER OF SHARES. The shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives, upon
surrender and cancellation of certificates for a like number of shares (or upon
compliance with the provisions of Section 8.05, if applicable). Upon such
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer (or upon compliance with the
provisions of Section 8.05, if applicable) and of compliance with any transfer
restrictions applicable thereto contained in an agreement to which the
Corporation is a party or of which the Corporation has knowledge by reason of
legend with respect thereto placed on any such surrendered stock certificate,
it shall be the duty of the Corporation to issue a new certificate to the
person entitled thereto, cancel the old certificate and record the transaction
upon its books.
8.03 OWNERSHIP OF SHARES. Unless otherwise provided in the TBCA, and
subject to the provisions of Chapter 8 -- Investment Securities of the Texas
Business & Commerce Code:
(i) the Corporation may regard the person in whose name any shares
issued by the Corporation are registered in the share transfer records
of the Corporation at any particular time (including, without
limitation, as of a record date fixed pursuant to Article 2.26B or
2.26C of the TBCA) as the owner of those shares at that time for
purposes of voting those shares, receiving distributions thereon or
notices in respect thereof, transferring those shares, exercising
rights of dissent with respect to those shares, exercising or waiving
any preemptive right with respect to those shares, entering into
agreements with respect to those shares in accordance with Article
2.22 or 2.30 of the TBCA, or giving proxies with respect to those
shares; and
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<PAGE> 16
(ii) neither the Corporation nor any of its officers, directors,
employees, or agents shall be liable for regarding the person as the
owner of those shares at that time for those purposes, regardless of
whether that person does not possess a certificate for those shares.
8.04 REGULATIONS REGARDING CERTIFICATES. The Board of Directors shall have
the power and authority to make all such rules and regulations as they may deem
expedient concerning the issuance, transfer and registration or the replacement
of certificates for shares of capital stock of the Corporation.
8.05 LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. The Board of
Directors may determine the conditions upon which a new certificate of stock
may be issued in place of a certificate that is alleged to have been lost,
stolen, destroyed or mutilated; and may, in its discretion, require the owner
of such certificate or his legal representative to give bond, with sufficient
surety, to indemnify the Corporation and each transfer agent and registrar
against any and all losses or claims which may arise by reason of the issuance
of a new certificate in the place of the one so lost, stolen, destroyed or
mutilated.
ARTICLE 9: MISCELLANEOUS PROVISIONS
9.01 FISCAL YEAR. The fiscal year of the Corporation shall be such as
established from time to time by the Board of Directors.
9.02 CORPORATE SEAL. The Board of Directors may provide a suitable seal,
containing the name of the Corporation. The Secretary shall have charge of the
seal (if any). If and when so directed by the Board of Directors, duplicates
of the seal may be kept and used by the Treasurer, if any, or by any Assistant
Secretary or Assistant Treasurer.
9.03 RESIGNATIONS. Any director, member of a committee or officer may
resign at any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or if no time be specified, at the time
of its receipt by the chief executive officer or Secretary. The acceptance of
a resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
9.04 FACSIMILE SIGNATURES. In addition to the provisions for the use of
facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
9.05 BOOKS AND RECORDS. The Corporation shall keep books and records of
account and shall keep minutes of the proceedings of its shareholders, its
Board of Directors and each committee of its Board of Directors. The
Corporation shall keep at its registered office or principal place of business,
or at the office of its transfer agent or registrar, a record of the original
issuance of shares issued by the Corporation and a record of each transfer of
those shares that have been presented to the Corporation for registration of
transfer. Such records shall contain the names and addresses of all past and
current shareholders of the Corporation and the number and class of shares
issued by the Corporation held by each of them. Any books, records, minutes
and share
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<PAGE> 17
transfer records may be written form or in any other form capable of being
converted into written form within a reasonable time.
9.06 AMENDMENTS. The Board of Directors may amend or repeal the
Corporation's bylaws, or adopt new bylaws, unless: (a) the Articles of
Incorporation or the TBCA reserves the power exclusively to the shareholders in
whole or part; or (b) the shareholders, in amending, repealing or adopting a
particular bylaw, expressly provide that the Board of Directors may not amend
or repeal that bylaw.
Unless the Articles of Incorporation or a bylaw adopted by the
shareholders provides otherwise as to all or some portion of the Corporation's
bylaws, the Corporation's shareholders may amend, repeal or adopt the
Corporation's bylaws even though the bylaws may also be amended, repealed or
adopted by the Board of Directors.
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly filing on Form 10-Q for the period ended June 30, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 17,818,000
<SECURITIES> 0
<RECEIVABLES> 24,218,000
<ALLOWANCES> 950,000
<INVENTORY> 7,739,000
<CURRENT-ASSETS> 52,542,000
<PP&E> 126,290,000
<DEPRECIATION> 52,808,000
<TOTAL-ASSETS> 168,397,000
<CURRENT-LIABILITIES> 23,786,000
<BONDS> 0
<COMMON> 35,505,000
0
13,000
<OTHER-SE> 91,290,000
<TOTAL-LIABILITY-AND-EQUITY> 168,397,000
<SALES> 73,531,000
<TOTAL-REVENUES> 74,326,000
<CGS> 51,051,000
<TOTAL-COSTS> 68,927,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,399,000
<INCOME-TAX> 697,000
<INCOME-CONTINUING> 4,702,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,702,000
<EPS-PRIMARY> .27
<EPS-DILUTED> 0
</TABLE>
