Exhibit Index at Page 14
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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 NOVEMBER 1, 1997
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 - 1653
GENESEE CORPORATION
(Exact name of registrant as specified in its charter)
STATE OF NEW YORK 16-0445920
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
445 St. Paul Street, Rochester, New York 14605
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (716) 546-1030
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
As of the date of this report, the Registrant had the following
shares of common stock outstanding:
Number of Shares
Class Outstanding
Class A Common Stock (voting), 209,885
par value $.50 per share
Class B Common Stock (non-voting), 1,408,194
par value $.50 per share
<PAGE>
GENESEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
November 1, 1997 and May 3, 1997
<TABLE>
<S> <C> <C>
UNAUDITED AUDITED
(Dollars in Thousands) November 1, 1997 May 3, 1997
ASSETS
Current assets:
Cash and cash equivalents $ 524 4,521
Marketable securities available for sale 17,220 32,627
Trade accounts receivable, less allowance for doubtful receivables
of $420 at November 1, 1997; $408 at May 3, 1997 12,586 11,037
Inventories, at lower of cost (first-in, first-out) or market 15,330 13,957
Deferred income tax assets 760 760
Other current assets 2,165 1,219
Total current assets 48,585 64,121
Net property, plant and equipment 35,266 32,986
Investment in and notes receivable from unconsolidated real estate partnerships 4,922 4,949
Investments in direct financing and leveraged leases 33,137 32,144
Goodwill 9,404 -
Other assets 4,870 2,729
Total assets 136,184 136,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 8,474 9,611
Income taxes payable 761 932
Federal and state beer taxes payable 1,257 2,029
Accrued expenses and other 7,536 6,395
Total current liabilities 18,028 18,967
Deferred income tax liabilities 8,925 8,789
Accrued postretirement benefits 15,515 15,515
Mortgage payable 547 -
Other liabilities 344 413
Total liabilities 43,359 43,684
Minority interests in consolidated subsidiaries 2,039 1,690
Shareholders' equity:
Common stock Class A 105 105
Common stock Class B 753 753
Additional paid-in capital 5,842 5,834
Retained earnings 86,669 87,720
Unrealized gain on marketable securities, net of income taxes 892 648
Less treasury stock, at cost 3,475 3,505
Total shareholders' equity 90,786 91,555
Total liabilities and shareholders' equity $ 136,184 136,929
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF EARNINGS AND RETAINED EARNINGS
Thirteen Weeks Ended November 1, 1997 and October 26, 1996
<TABLE>
(Dollars in Thousands,
Except Per Share Data)
<S> <C> <C>
UNAUDITED
1997 1996
Revenues $ 47,827 47,296
Federal and state beer taxes 7,913 10,241
Net revenues 39,914 37,055
Cost of sales 31,007 28,630
Gross profit 8,907 8,425
Selling, general and administrative expenses 10,291 8,818
Operating loss (1,384) (393)
Investment income 556 528
Other income / (expense), net (129) 83
Interest of minority partners in earnings of
consolidated subsidiaries (194) (161)
Earnings / (loss) before income taxes (1,151) 57
Income taxes (382) 21
Net earnings / (loss) - ($.48) per share in 1997
and $.02 in 1996 (769) 36
Retained earnings at beginning of period 88,571 88,112
Less: dividends - $.70 per share in 1997
and $.70 per share in 1996 1,133 1,133
Retained earnings at end of period $ 86,669 87,015
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
GENESEE CORPORATION AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF EARNINGS AND RETAINED EARNINGS
Twenty Six Weeks Ended November 1, 1997 and October 26, 1996
<TABLE>
(Dollars in Thousands,
Except Per Share Data) UNAUDITED
<S> <C> <C>
1997 1996
Revenues $ 100,880 98,864
Federal and state beer taxes 18,020 21,466
Net revenues 82,860 77,398
Cost of sales 63,089 58,325
Gross profit 19,771 19,073
Selling, general and administrative expenses 19,510 17,767
Operating income 261 1,306
Investment income 1,390 1,132
Other income / (expense), net (160) 143
Interest of minority partners in earnings of
consolidated subsidiaries (383) (349)
Earnings before income taxes 1,108 2,232
Income taxes 461 804
Net earnings - $.40 per share in 1997
and $.88 in 1996 647 1,428
Retained earnings at beginning of period 87,720 87,285
Less: Dividends - $1.05 per share in 1997
and $1.05 per share in 1996 1,698 1,698
Retained earnings at end of period $ 86,669 87,015
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
GENESEE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twenty Six Weeks Ended November 1, 1997 and October 26, 1996
<TABLE>
UNAUDITED
<S> <C> <C>
(Dollars in thousands) 1997 1996
Cash flows from operating activities:
Net earnings $ 647 1,428
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,539 2,431
Other 456 378
Changes in non-cash assets and liabilities:
Trade accounts receivable (1,260) 1,275
Inventories (993) (666)
Other assets (226) (223)
Accounts payable (1,271) (771)
Accrued expenses and other 96 507
Income taxes payable (171) 252
Federal and state beer taxes (772) (848)
Other liabilities (70) 44
Net cash (used in) provided by operating activities (1,025) 3,807
Cash flows from investing activities:
Purchase of Freedom Foods, net of cash acquired (11,060) -
Capital expenditures (3,529) (2,549)
Sales of marketable securities 25,131 5,861
Purchases of marketable securities and other investments (10,845) (5,029)
Investments in and advances to unconsolidated real
estate investments, net of distributions 27 53
Net investment in direct financing and leveraged leases (992) (792)
Withdrawals by minority interest (35) (187)
Net cash used in investing activities (1,303) (2,643)
Cash flows from financing activities:
Principle payments on mortgage payable (9) -
Payment of dividends (1,698) (1,698)
Net proceeds from treasury stock transactions 38 40
Net cash used in financing activities (1,669) (1,658)
Net decrease in cash and cash equivalents (3,997) (494)
Cash and cash equivalents at beginning of the year 4,521 2,560
Cash and cash equivalents at end of the period $ 524 2,066
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
GENESEE CORPORATION
Notes to Consolidated Financial Statements
NOTE (A) The Corporation's consolidated financial statements
enclosed herein are unaudited with the exception of the
Consolidated Balance Sheet at May 3, 1997 and, because of
the seasonal nature of the business and the varying
schedule of its special sales efforts, these results are
not necessarily indicative of the results to be expected
for the entire year. In the opinion of management, the
interim financial statements reflect all adjustments,
consisting of only normal recurring items, which are
necessary for a fair presentation of the results for the
periods presented. The accompanying financial statements
have been prepared in accordance with GAAP and SEC
guidelines applicable to interim financial information.
These statements should be reviewed in conjunction with
the annual report to shareholders for the year ended May
3, 1997.
NOTE (B) The weighted average number of Class A and Class B shares
outstanding used in the computation of net earnings per
share is 1,618,079 for the thirteen week period ended
November 1, 1997 and 1,617,227 for the thirteen week
period ended October 26, 1996. The weighted average number
of Class A and Class B shares outstanding used in the
computation of net earnings per share is 1,617,845 for the
twenty six weeks ended November 1, 1997 and 1,616,973 for
the twenty six weeks ended October 26, 1996.
NOTE (C) Inventories are summarized as follows:
<TABLE>
Dollars in thousands
<S> <C> <C>
November 1, 1997 May 3, 1997
Finished goods $ 4,702 5,250
Goods in process 1,731 2,301
Raw materials, containers and packaging supplies 8,897 6,406
Total inventories $ 15,330 13,957
</TABLE>
NOTE (D) In February 1997, the Financial Accounting Standard Board
(FASB) issued Statement No. 128, Earnings per Share (SFAS
128), which requires presentation of earnings per share by
all entities that have issued common stock or potential
common stock if those securities trade in a public
market. SFAS No. 128 requires basic and diluted earnings
per share be presented for all periods for which a
statement of earnings is presented. The Corporation is
required to adopt SFAS No. 128 in the third quarter of
fiscal 1998. The pro forma effect of SFAS 128 would
result in basic earnings / (loss) per share of ($.48) and
$.02 in the second quarter of fiscal 1998 and 1997,
respectively, and $.40 and $.88 in the first half of
fiscal 1998 and 1997, respectively. The pro forma effect
of SFAS 128 would result in diluted earnings / (loss) per
share of ($.47) and $.02 in the second quarter of fiscal
1998 and 1997, respectively, and $.40 and $.88 in the
first half of fiscal 1998 and 1997, respectively.
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Comparison of 13 weeks ended November 1, 1997 to 13 weeks ended
October 26, 1996
Consolidated net revenues for the thirteen weeks ended November
1, 1997 were $39.9 million, an increase of $2.9 million over
consolidated net revenues reported for the same period last year.
The higher revenues were due to increased sales by the Corporation's
Foods Division.
On a consolidated basis, the Corporation reported a net loss of
$769,000, or $.48 per share in the second quarter this year,
compared to a net profit of $36,000, or $.02 per share, for the same
period last year. The loss this year was attributable to lower
sales and a larger pre-tax loss in the Corporation's brewing
operations.
Genesee Brewing Company
Genesee Brewing Company's net sales in the second quarter were
$28.9 million, a decrease of $1.7 million from last year's second
quarter net sales of $30.6 million. Barrel sales were down nearly
20,000 barrels, or 3.9%, despite a 16,000 barrel increase in
contract brewing volume. Volume under the contract to brew and
package product for Boston Beer Company increased 19.5% in the
second quarter to 99,000 barrels.
Sales of Genesee Brewing Company's HighFalls craft brands
continued to grow, with second quarter barrel sales up 6,000
barrels, or 6.3%, over the same period a year ago. However, the
rate of growth in Highfalls barrel sales slowed in the second
quarter compared to the first quarter when barrelage was up 10%.
This slower growth is generally consistent with industry trends as
the craft segment of the market continues to mature.
As has been the case for several years, Genesee Brewing
Company's core brands continued to experience declining volume.
Core brand volume was down 42,000 barrels, or 13%, in the second
quarter. Within the core brands, higher-margin returnable glass
packages and 24-can packages showed the largest volume declines.
These declines were partially offset by higher unit sales of lower
margin, value-priced 30 and 36 can "Multipaks".
Lower overall barrel volume and an unfavorable shift in product
mix towards lower-margin contract volume and Multipak can packages
resulted in a lower gross profit in the second quarter. In
addition, intense competition has resulted in price stagnation over
the past year and a half, further depressing Genesee Brewing
Company's gross profit margins. Genesee Brewing Company's gross
profit declined $984,000 in the second quarter compared to the same
period a year ago. Gross profit as a percent of sales was 21.4%
compared to 23.4% in the second quarter last year, reflecting the
unfavorable shift in product mix and the absence of meaningful price
increases.
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Selling, general and administrative expenses were up $1.2
million in the second quarter of fiscal 1998 compared to the same
period last year. The increase was primarily due to the timing of
planned increases in sales and marketing expenditures -- primarily
to support the company's HighFalls brands and expansion of those
brands into new markets. Much of the selling and marketing spending
for the current fiscal year has been front loaded into the first
half of the year in an effort to spur sales during the critical
summer selling season. Expenditures in the prior year were greater
in the second half of the year to support the new markets opened
during that year.
Due to lower volume, the unfavorable shift in product mix and
increased sales and marketing expenditures, Genesee Brewing Company
showed an operating loss of $3.3 million for the second quarter this
year versus a $1.0 million operating loss for the second quarter
last year.
The competitive conditions in the brewing industry that are
impacting the performance of Gensee Brewing Company are not expected to
abate in the near term.
Foods Division
Second quarter net sales for the Foods Division were up $4.4
million, or 75.6%, over the prior year period. Sales of bouillon
cubes and powder, resulting from the May 1997 acquisition of Freedom
Foods, Inc., accounted for $2 million of the Foods Division's
overall sales increase. Sales of bouillon cubes and powders in the
second quarter met expectations and the transition of production
from Florida to the Foods Division's plant in Albion, New York was
completed on time and on plan during the second quarter.
Sales of the Foods Division's existing private label product
lines increased by $1.3 million compared to the second quarter last
year, due to higher iced tea sales and the continued sales growth in
the division's line of noodle and rice side dish products, which
were up 24% for the quarter.
The overall increase in net sales in the second quarter was
also attributable to a new short term contract to supply dry soup
mix to the U.S. Government. Sales revenue under this contract
totaled $1.4 million in the second quarter.
Gross profit for the quarter was up $1.2 million compared to
the same period last year due to higher sales volume. In addition,
gross profit margin as a percent of sales was 19.3% this year
compared to 12.7% last year. The higher margins reflect a favorable
shift in product mix due to the new bouillon business.
Selling, general and administrative expenses were up $193,000
primarily due to increased broker commissions as a result of higher
sales volume.
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Due to continued and profitable growth in existing product
lines and the acquisition of Freedom Foods' bouillon business, the
Foods Division showed operating income of $1.3 million for the
quarter, an increase of over $1 million compared to the same period
last year.
Genesee Ventures
Genesee Ventures, Inc., the Corporation's equipment leasing and
real estate investment subsidiary, reported operating income of
$475,000 for the second quarter of fiscal 1998, compared to $391,000
for the second quarter of fiscal 1997. Lease revenues were up
$160,000 for the quarter reflecting continued growth in Genesee
Ventures' leasing portfolio. The performance of Genesee Ventures'
real estate investments was generally on plan for the second quarter
and slightly ahead of last year.
Comparison of 26 weeks ended November 1, 1997 to 26 weeks ended
October 26, 1996
Consolidated year-to-date net revenues were $82.9 million, an
increase of $5.5 million from the consolidated net revenues of $77.4
million reported for the same period last year. The higher revenues
were the result of increased sales by the Corporation's Foods
Division.
On a consolidated basis, the Corporation reported net earnings
of $647,000, or $.40 per share, for the first half of this year,
compared to net earnings of $1.4 million, or $.88 per share, for the
same period last year. The $781,000, or $.48 per share, decrease in
net earnings was primarily attributable to a decline in Genesee
Brewing Company's operating performance.
Genesee Brewing Company
Genesee Brewing Company's net sales in the first half of fiscal
1998 were $64.0 million, a decrease of $1.4 million, or 2.1%, from
the prior year's net sales of $65.4 million. Barrel sales (which
include volume under the contract to brew and package product for
Boston Beer Company) were down 2,400 barrels, or .2%, in the first
half of fiscal 1998. Sales under the Boston Beer Company
contract totaled 174,000 barrels in the first half of this year
compared to 129,000 barrels in the same period last year, an
increase of 45,000 barrels, or 35.0%.
Sales of Genesee Brewing Company's HighFalls craft brands were
up 16,500 barrels, or 7.6%, over the same period a year ago.
However, the rate of growth in Highfalls barrels sales is lower this
year than last year. HighFalls barrelage was up 35.0% for the year
in fiscal 1997. The slower growth rates this year are generally
consistent with industry trends as the craft segment of the market
continues to mature.
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Genesee Brewing Company's established core brands continued to
show negative trends. Volume was down 11% and the package mix
continued to shift towards lower-margin 30 and 36 can "Multipaks".
Lower volume and an unfavorable shift in product mix towards
lower-margin contract volume and Multipak can packages resulted in a
lower gross profit for the first half of fiscal 1998. In addition,
intense competition has resulted in price stagnation over the past
year and a half, further depressing Genesee Brewing Company's gross
profit margins. Genesee Brewing Company's gross profit declined
$1.3 million this year compared to the same period a year ago.
Gross profit as a percent of sales was 24.0% compared to 25.5% last
year, reflecting the unfavorable shift in product mix.
Selling, general and administrative expenses were up $1.7
million compared to the same period last year. The increase was
primarily due to the timing of planned increases in sales and
marketing expenditures -- primarily to support the company's
HighFalls brands which included expansion into new markets. Much of
this fiscal year's selling and marketing spending has been front
loaded into the first half of the year in an effort to spur sales
during the critical summer selling season. Last year's expenditures
were greater in the second half of the year in support of new
markets opened during that year.
Due to lower volume, an unfavorable shift in product mix and
increased sales and marketing expenditures, Genesee Brewing Company
showed an operating loss of $2.7 million for the first half of this
year versus a $282,000 operating profit last year.
The competitive conditions in the brewing industry that are
impacting the performance of Genesee Brewing Company are not expected
to abate in the near term.
Foods Division
Net sales for the Foods Division were $17.4 million in the
first half of fiscal 1998, compared to $10.7 million for the first
half last year. The increase in net sales of $6.7 million, or
62.0%, for the first half was attributable to the bouillon business
acquired in May 1997, a new short term government soup contract and
to continued growth in iced tea sales.
The Foods Division reported operating income of $1.7 million
for the first half this year, compared to operating income of
$136,000 for the same period last year. The $1.6 million increase
in operating income was due the increased sales volume and higher
profit margins of the bouillon business.
<PAGE>
GENESEE CORPORATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
Genesee Ventures
Genesee Ventures, Inc., the Corporation's equipment leasing and
real estate investment subsidiary, reported operating income of $1.4
million for the first half of fiscal 1998, compared to $1.2 million
for the first half of fiscal 1997. The increase in operating income
was primarily attributable to higher lease revenues from Cheyenne
Leasing.
LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents, and marketable securities totaled $17.7
million at November 1, 1997, compared to $37.1 million at May 3,
1997. The decrease was primarily due to the internally funded
acquisition of Freedom Foods for $11.3 million in May 1997. In
addition, cash was used to finance an inventory build by the Foods
Division. Inventories at November 1, 1997 were $1.4 million higher
than the balances reported at May 3, 1997 primarily as a result of
increased private label sales by the Foods Division and due to the
higher inventory balances needed to maintain service levels for
bouillon customers. In addition, capital spending was up in the
first half of this fiscal year primarily as a result of site
development work and new equipment purchases necessary for moving
bouillon production from Florida to the Foods Division facility in
Albion, New York. The Corporation continued its pursuit to further
diversify its business by obtaining a 10% minority interest in a
privately held food company for $1.5 million, which is accounted for
by the cost method.
Trade receivables at November 1, 1997 were approximately $1.5
million higher than the balances reported at May 3, 1997. Although
Genesee Brewing Company receivables were lower due to seasonality
and lower sales volume, the Foods Division receivable balances
increased due to higher sales volume.
Current liabilities at November 1, 1997 were down $939,000 from
fiscal year end. This decrease was primarily attributable to timing
of federal and state beer tax payments.
The Corporation has a strategy to search for and develop
opportunities which will contribute to the Corporation's future
growth. The Corporation plans to continue to use its strong
financial position to further diversify its business in order to
broaden its profit base and contribute to the continued long-term
success of the Corporation.
The Corporation expects to fund future capital needs internally
as it has in the past. With respect to real estate and equipment
leasing, such investments may also include a debt component,
generally obtained on a non-recourse basis. Any future acquisitions
are expected to be financed primarily with cash but may also involve
debt financing.
<PAGE>
GENESEE CORPORATION
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
The Corporation's annual meeting of Class A shareholders was
held on October 23, 1997. At the annual meeting, shareholders
elected Gary C. Geminn, Richard P. Miller, Jr., and Charles S. Wehle
to serve as directors until the annual meeting of shareholders in
2000. The terms of office of Stephen B. Ashley, William A.
Buckingham, Thomas E. Clement, Samuel T. Hubbard, Jr., Robert N.
Latella, John D. Reifenrath and John L. Wehle, Jr. continued after
the annual meeting of shareholders.
Item 5. Other Information
During the second quarter of fiscal 1998, the Corporation and
its partners in a Rochester, New York office building finalized
negotiations with a new lender to refinance the mortgage on the
building. The closing took place on September 25, 1997. The new
financing package includes a $31.5 million first mortgage loan
obtained on a non-recourse basis and a $5.5 million term loan which
is secured, in part, by a 50% limited guarantee from the
Corporation. The Corporation's exposure under the guarantee is
capped at $2.75 million.
The building is currently 97% occupied, operating on plan and
in compliance with all covenants and obligations contained in the
new mortgage loan agreement. The building has an appraised value in
excess of the total debt against it. In addition, the other
partners in the project have provided the Corporation with
collateral to secure the Corporation's obligation under its
guarantee of the term loan.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are attached to this
report:
Exhibit 3 - By-laws as amended September 13, 1997.
(b) Reports on Form 8-K. The Corporation did not file any
reports on Form 8-K during the quarter for which this report
is filed.
<PAGE>
GENESEE CORPORATION
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.
GENESEE CORPORATION
Date: 12/12/97 / s / Mark W. Leunig
Mark W. Leunig
Vice President and Secretary
Date: 12/12/97 / s / Edward J. Rompala
Edward J. Rompala
Vice President - Finance and Treasurer
<PAGE>
Exhibit Index
Exhibit Number Exhibit Page
3 By-Law as amended on September13,1997 15
<PAGE>
Exhibit 3
BY-LAWS
OF
GENESEE CORPORATION
Approved March 12, 1968 and amended October 20, 1969, March 10,
1971, March 10, 1975, September 4, 1975, October 21, 1976,
August 31, 1977, March 6, 1986, October 23, 1986, June 4, 1987,
September 11, 1987 and September 13, 1997.
Certified to be a true and correct copy
of the By-laws in effect as of September
16, 1997.
/ s / Mark W. Leunig
Mark W. Leunig
Secretary
Dated: September 16, 1997
<PAGE>
GENESEE CORPORATION
BY-LAWS
Article I
Shareholders
Section 1. Annual Meeting: An annual meeting of shareholders
for the election of directors and the transaction of other business
shall be held on such day in the month of October in each year and at
such time on such day as shall be fixed by the Board of Directors of the
Corporation not later than 10 days before the meeting.
Section 2. Special Meetings: Special meetings of the
shareholders may be called by the Board of Directors. Such meetings
shall be held at such time as may be fixed in the call and stated in the
notice of meeting.
Section 3. Place of Meetings: Meetings of shareholders shall be
held at such place, within or without the State of New York, as may be
fixed in the notice of meeting. Unless otherwise provided by action of
the Board of Directors, all meetings of shareholders shall be held at
the office of the Corporation in Rochester, New York.
Section 4. Notice of Meetings: Notice of each meeting of
shareholders shall be in writing and shall state the place, date, and
hour of the meeting and the purpose or purposes for which the meeting is
called.
A copy of the notice of any meeting shall be given, personally, or
by mail, not less than ten or more than fifty days before the date of
the meeting, to each shareholder entitled to vote at such meeting. If
mailed, such notice is given when deposited in the United States mail,
with postage thereon prepaid, directed to the shareholder at his address
as it appears on the record of shareholders, or, if he shall have filed
with the Secretary of the Corporation a written request that notices to
him be mailed to some other address, then directed to him at such other
address.
Section 5. Inspectors of Election: The Board of Directors, in
advance of any shareholders' meeting, may appoint one or more inspectors
to act at the meeting or any adjournment thereof. If inspectors are not
so appointed, the person presiding at a shareholders' meeting may, and
on the request of any shareholder entitled to vote thereat shall,
appoint two inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality
and according to the best of his ability.
The inspectors shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, and the validity and effect of proxies, and
<PAGE>
shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with
fairness to all shareholders. On request of the person presiding at the
meeting or any shareholder entitled to vote thereat, the inspectors
shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them.
Any report or certificate made by them shall be prima facie evidence of
the facts stated and of the vote as certified by them.
Section 6. List of Shareholders at Meetings: A list of
shareholders as of the record date, certified by the Secretary or any
Assistant Secretary or by the transfer agent, if any, shall be produced
at any meeting of shareholders upon the request therat or prior thereto
of any shareholder. If the right to vote at any meeting is challenged,
the inspectors of election, or person presiding thereat, shall require
such list of shareholders to be produced as evidence of the right of the
persons challenged to vote at such meeting, and all persons who appear
from such list to be shareholders entitled to vote thereat may vote at
such meeting.
Section 7. Qualification of Voters: Every shareholder of record
of Common Stock of the Corporation shall be entitled at every meeting of
shareholders to one vote for every share of Class A Common Stock
standing in his name on the record of shareholders.
Section 8. Quorum of Shareholders: The holders of a majority of
the shares entitled to vote thereat shall constitute a quorum at a
meeting of shareholders for the transaction of any business.
The shareholders present, in person or by proxy, and entitled to
vote may, by a majority of votes cast, adjourn the meeting despite the
absence of a quorum.
Section 9. Vote of Shareholders: Directors shall, except as
otherwise required by law, be elected by a plurality of the votes cast
at a meeting of shareholders by the holders of shares entitled to vote
in the election.
Whenever any corporate action, other than the election of
directors, is to be taken by vote of the shareholders, it shall, except
as otherwise required by law, be authorized by a majority of the votes
cast at a meeting of shareholders by the holders of shares entitled to
vote thereon.
Section 10. Proxies: Every shareholder entitled to vote at a
meeting of shareholders or to express consent or dissent without a
meeting may authorize another person or persons to act for him by proxy.
Section 11. Fixing Record Date: For the purpose of determining
the shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or to express consent to or
dissent from any proposal without a meeting, or for the purpose of
determining shareholders entitled to
<PAGE>
receive payment of any dividend or the allotment of any rights, or for
the purpose of any other action, the Board of Directors may fix, in
advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than fifty nor less than ten
days before the date of such meeting, nor more than fifty days prior to
any other action.
Article II
Board of Directors
Section 1. Power of Board and Qualification of Directors: The
business of the Corporation shall be managed by the Board of Directors,
each of whom shall be at least twenty-one years of age. Except as to
any person who has at any time served as the chief executive officer or
the chief operating officer of the Corporation, neither a director who
has reached the age of 70 nor a director who is an employee of the
Corporation and whose employment terminates for any reason, shall be
eligible for re-election to the Board of Directors.
(Amended by Board of Directors, 3/6/86)
Section 2. Number of Directors: The number of directors
constituting the entire Board of Directors shall be such number as may
be fixed from time to time by vote of a majority of the entire Board of
Directors, and until otherwise fixed by the Board shall be twelve. No
decrease in the number of directors shall shorten the term of any
incumbent director.
(Amended by approval of Shareholders, 10/21/76)
Section 3. Election and Term of Directors: The Board of
Directors shall be classified, with respect to the time for which each
class shall hold office, into three classes, as nearly equal in number
as possible as determined by the Board of Directors. The first class of
directors shall be initially elected to hold office until the annual
meeting of shareholders held in the first year following the year of
their election, the second class shall be initially elected to hold
office until the annual meeting of shareholders held in the second year
following the year of their election, and the third class shall be
elected to hold office until the annual meeting of shareholders held in
the third year following the year of their election, with the members of
each class to hold office until their successors are elected and
qualified. Thereafter, the successors of the class of directors whose
term expires at each annual meeting of shareholders shall be elected to
hold office until the annual meeting of shareholders held in the third
year following the year of their election and until their successors are
elected and qualified.
(Amended by approval of Board of Directors, 9/11/87)
<PAGE>
Section 4. Quorum of the Board; Action by the Board: A one-third
of the entire Board of Directors shall constitute a quorum for the
transaction of business, and the vote of the majority of the directors
present at the time of such vote, if a quorum is then present, shall be
the act of the Board.
Section 5. Meeting of the Board: An annual meeting of the Board
of Directors shall be held in each year directly after the adjournment
of the annual shareholders' meeting. Regular meetings of the Board
shall be held at such times as may from time to time be fixed by
resolution of the Board. Special meetings of the Board may be held at
any time upon the call of the President or any two directors.
Meetings of the Board of Directors shall be held at such place,
within or without the State of New York, as from time to time may be
fixed by resolution of the Board for annual and regular meetings and in
the notice of meeting for special meetings. If no place is so fixed,
meetings of the Board shall be held at the office of the Corporation in
Rochester, New York.
No notice need be given of annual or regular meetings of the Board
of Directors. Notice of each special meeting of the Board shall be
given by oral, telegraphic, or written notice, duly given or sent or
mailed to each director not less than one day before such meeting.
Section 6. Newly Created Directorships and Vacancies: Newly
created directorships resulting from an increase in the number of
directors and vacancies occurring in the Board of Directors for any
reason except the removal of directors by shareholders without cause may
be filled by vote of a majority of the directors then in office,
although less than a quorum exists. A director elected to fill a
vacancy shall be elected to hold office for the unexpired term of his
predecessor.
Section 7. Executive and Other Committees of Directors: The
Board of Directors, by resolution adopted by a majority of the entire
Board, may designate from among its members an Executive Committee
consisting of three or more directors and may designate from among its
numbers other committees each consisting of three or more directors, and
each of which, to the extent provided in the resolution, shall have all
the authority of the Board, except that no such committee shall have
authority as to matters vested solely in the Board by law.
Section 8. Compensation of Directors: The Board of Directors
shall have authority to fix the compensation of directors for services
in any capacity.
Section 9. Indemnification of Directors and Officers:
(a) Right to Indemnification. Except as prohibited by law or as
provided in Paragraph (b) below, the Corporation shall indemnify any
person against all reasonable expenses, including attorneys fees, and
all judgments, excise taxes, fines, penalties, amounts paid in
settlement and any other liability paid or incurred by such person in
connection with any actual or threatened claim, action, suit or
<PAGE>
proceeding, whether civil, criminal, administrative, investigative, or
other, or whether brought by or in the right of the Corporation or
otherwise, in which such person may be involved as a party or otherwise,
by reason of the fact that such person or such person's testator or
intestate is or was a director or officer of the Corporation, or serves
or served in any capacity at the request of the Corporation any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise. To the maximum extent permitted by law, the
Corporation shall make advances of expenses incurred by such person in
connection with any such actual or threatened claim, action, suit or
proceeding prior to final disposition thereof, provided that the
Corporation receives an undertaking by or on behalf of such person to
repay such advances to the extent such person is ultimately found not to
be entitled to indemnification.
(b) Exclusions. No indemnification shall be made to or on behalf
of any person if a judgment or other final adjudication adverse to such
person establishes that either (i) such person's acts were committed in
bad faith, or were the result of active and deliberate dishonesty, and
were material to the action, or (ii) such person gained in fact a
financial benefit or other economic advantage to which such person was
not legally entitled.
(c) Indemnification Not Exclusive. The right of indemnification
under this Section 9 shall not be deemed exclusive of any other rights
to which persons seeking indemnification hereunder may be entitled under
applicable law, by agreement or otherwise, and the provisions hereof
shall inure to the benefit of the heirs, beneficiaries and legal
representatives of persons entitled to indemnification hereunder and
shall be applicable to actions arising from acts or omissions occurring
before or after the adoption hereof. Persons who are not directors or
officers of the Corporation may be similarly indemnified and entitled to
advancement or reimbursement of expenses to the extent authorized at any
time by the Board of Directors. The Corporation is authorized to enter
into agreements with any of its directors or officers extending rights
to indemnification and advancement of expenses to such person to the
fullest extent permitted by applicable law, but the failure to enter
into any such agreement shall not affect or limit the rights of such
person pursuant to this By-Law.
(d) Contract Rights. The right of indemnification under this
Section 9 shall be deemed to constitute a contract between the
Corporation and the persons entitled to indemnification and may not,
without the consent of such person, be amended or repealed with respect
to any event, act or emission occurring or allegedly occurring prior to
the end of the term of office such person is serving when such amendment
or repeal is adopted.
(Amended by approval of Board of Directors, 6/4/87)
Section 10. Action Without a Meeting: Any action required or
permitted to be taken by the Board of Directors or any committee thereof
may be taken without a meeting if all members of the Board or the
committee consent in writing to the adoption of a resolution authorizing
the action. The resolution and the written consents thereto shall be
filed with the minutes of the proceedings of the Board or committee.
(Amended by approval of Board of Directors, 3/10/75)
<PAGE>
Section 11. Participation in Board Meeting by Conference
Telephone: Any one or more members of the Board of Directors or any
committee thereof may participate in a meeting of such Board or
committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each
other at the same time. Participation by such means shall constitute
presence in person at a meeting.
(Amended by approval of Board of Directors, 9/4/75)
Section 12. Director Emeritus: The Board of Directors may from
time to time designate one or more persons to serve as a Director
Emeritus of the Corporation, or to hold such other honorary title as the
Board may determine. Each such designee shall serve at the pleasure of
the Board and the rights, privileges, compensation and other terms of
service of each such designee shall be fixed by resolution of the Board,
provided that no such designee shall be entitled to vote on any action
taken by the Board or be counted for purposes of determining the
presence of a quorum of the Board. References in these By-Laws to
directors or to the Board of Directors shall not be deemed to include or
refer to any such designee.
(Added by approval of Board of Directors, 9/13/97)
Article III
Officers
Section 1. Officers: The Board of Directors, as soon as may be
practicable after the annual election of directors, shall elect a
Chairman of the Board of Directors, a President, one or more Vice
Presidents (one of whom may be designated Executive Vice President), a
Secretary and a Treasurer, and from time to time may elect or appoint
such other officers as it may determine. Any two or more offices may be
held by the same person, except the offices of President and Secretary.
(Amended 10/20/69)
Section 2. Term of Office and Removal: Each officer shall hold
office for the term for which he is elected or appointed, and until his
successor has been elected or appointed and qualified.
Section 3. Powers and Duties: The officers of the Corporation
shall each have such powers and authority and perform such duties in the
management of the property and affairs of the Corporation, as from time
to time may be prescribed by the Board of Directors and, to the extent
not so prescribed, they shall each have such powers and authority and
perform such duties in the management of the property and
<PAGE>
affairs of the Corporation, subject to the control of the Board, as
generally pertain to their respective offices.
Without limitation of the foregoing:
(a) Chairman of the Board of Directors: The Chairman shall
be a senior officer of the Corporation, shall preside at all meetings of
the Corporation's stockholders and at all meetings of the Board of
Directors and shall be a Director of the Corporation.
(b) President: The President shall be the Chief Executive
Officer of the Corporation. In the absence of the Chairman of the
Board, he shall preside at meetings of shareholders and of the Board of
Directors.
(c) Executive Vice President: The Executive Vice President
shall be the Chief Operating and Administrative Officer and, in the
event of the death, resignation, removal, disability, or absence of the
President, shall possess the powers and perform the duties of the
President.
(d) Vice Presidents: The Board of Directors shall determine
the powers and duties of the respective Vice Presidents and may, in its
discretion, fix such order of seniority among the respective Vice
Presidents as it may deem advisable.
(e) Secretary: The Secretary shall issue notices of all
meetings of shareholders and directors where notices of such meetings
are required by law or these By-Laws, and shall keep the minutes of such
meetings. He shall sign such instruments and attest such documents as
require his signature or attestation and affix the corporate seal
thereto where appropriate.
(f) Treasurer: The Treasurer shall have general charge of,
and be responsible for, the fiscal affairs of the Corporation and shall
sign all instruments and documents as require his signature.
(Amended 10/23/86)
Section 4. Records: The Corporation shall keep (a) correct and
complete books and records of account; (b) minutes of the proceedings of
the shareholders, Board of Directors, and any committees of the Board;
and (c) a current list of the directors and officers and their residence
addresses.
The Corporation shall also keep at its office in the State of New
York or at the office of its transfer agent or registrar in the State of
New York, if any, a record containing the names and addresses of all
shareholders, the number and class of shares held by each and the dates
when they respectively became the owners of record thereof.
Section 5. Checks and Similar Instruments: All checks and drafts
on the Corporation's bank accounts and all bills of exchange and
promissory notes and all acceptances, obligations, and other
instruments, for the payment of money, shall be signed by facsimile or
otherwise on behalf of the Corporation by such officer or officers or
agent or agents as shall be thereunto authorized from time to time by
the Board of Directors.
<PAGE>
Section 6. Voting Shares Held by the Corporation: Either the
President or the Secretary may vote shares of stock held by the
Corporation in other corporations and may execute for and on behalf of
the Corporation proxies for such purpose.
Article IV
Share Certificates and Loss Thereof - Transfer of Shares
Section 1. Form of Share Certificates: The shares of the
Corporation shall be represented by certificates, in such forms as the
Board of Directors may from time to time prescribe, signed by the
chairman of the Board if such there be, or the President or a Vice
President and the Secretary or an Assistant secretary or the Treasurer
or an Assistant Treasurer, and may be sealed with the seal of the
corporation or a facsimile thereof. The signatures of the officers upon
a certificate may be facsimiles if the certificate is counter-signed by
a transfer agent or registered by a registrar other than the Corporation
or its employee. In case any officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date
of issue.
Section 2. Lost, Stolen, or Destroyed Share Certificates: No
certificate or certificates for shares of the Corporation shall be
issued in place of any certificate alleged to have been lost, stolen, or
destroyed, except upon production of such evidence of the loss, theft,
or destruction, and upon such indemnification and payment of costs of
the Corporation and its agents to such extent and in such manner as the
Board of Directors may from time to time prescribe.
Section 3. Transfer of Shares: Shares of the Corporation shall
be transferable on the books of the Corporation by the registered holder
thereof in person or by his duly authorized attorney, by delivery for
cancellation of a certificate or certificates for the same number of
shares, with proper endorsement consisting of either a written
assignment of the certificate or a power of attorney to sell, assign, or
transfer the same or the shares represented thereby, signed by the
person appearing by the certificate to be the owner of the shares
represented thereby, either written thereon or attached thereto, with
such proof of the authenticity of the signature as the Corporation or
its agents may reasonably require. Such endorsement may be either in
blank or to a specified person, and shall have affixed thereto all stock
transfer stamps required by law.
<PAGE>
Article V
Other Matters
Section 1. Corporate Seal: The corporate seal shall have
inscribed thereon the name of the Corporation and such other appropriate
legend as the Board of Directors may from time to time determine. In
lieu of the corporate seal, when so authorized by the Board, a facsimile
thereof may be affixed or impressed or reproduced in any other manner.
Section 2. Amendments: By-Laws of the Corporation may be
amended, repealed or adopted by vote of the holders of the shares at the
time entitled to vote in the election of any directors. By-Laws may
also be amended, repealed, or adopted by the Board of Directors, but any
By-Law adopted by the Board may be amended or repealed by the
shareholders entitled to vote thereon as hereinabove provided.
If any By-Law regulating an impending election of directors is
adopted, amended, or repealed by the Board of Directors, there shall be
set forth in the notice of the next meeting of shareholders for the
election of directors the By-Law so adopted, amended, or repealed,
together with a concise statement of the changes made.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-02-1998
<PERIOD-END> NOV-01-1997
<CASH> 524
<SECURITIES> 17,220
<RECEIVABLES> 13,006
<ALLOWANCES> 420
<INVENTORY> 15,330
<CURRENT-ASSETS> 48,585
<PP&E> 116,799
<DEPRECIATION> 81,533
<TOTAL-ASSETS> 136,184
<CURRENT-LIABILITIES> 18,028
<BONDS> 0
<COMMON> 858
0
0
<OTHER-SE> 89,928
<TOTAL-LIABILITY-AND-EQUITY> 136,184
<SALES> 100,880
<TOTAL-REVENUES> 100,880
<CGS> 63,089
<TOTAL-COSTS> 18,020
<OTHER-EXPENSES> 19,510
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,108
<INCOME-TAX> 461
<INCOME-CONTINUING> 647
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 647
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0
</TABLE>
