SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
[x] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934.
For the Period ended June 30, 1995.
OR
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
Commission File Number: 0-13143
INNOVEX INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1223933
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1313 South Fifth Street, Hopkins, Minnesota 55343-9904
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 938-4155
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 July 24, 1995, 7,032,577 shares of the registrant's common stock, $.04 par
value per share, were outstanding.
Exhibit Index, page 10
PART 1: ITEM 1 FINANCIAL INFORMATION
INNOVEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1995 1994
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,420,188 $ 1,719,587
Short-term investments 15,976,890 11,396,797
Accounts receivable, less allowance for
doubtful accounts of $264,000 (1994 - $220,000) 6,812,510 4,722,091
Inventories 2,061,940 1,782,156
Notes receivable 59,311 97,610
Deferred income taxes 444,335 539,335
Other current assets 995,128 734,036
Total current assets 28,770,302 20,991,612
Property, plant and equipment, net of accumulated depreciation
of $5,759,000 and $4,421,000 6,878,075 6,730,612
Intangible and other assets, net of amortization of $603,000
and $186,000 2,318,166 2,212,200
$37,966,543 $29,934,424
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 350,300 $ 350,300
Accounts payable 1,597,611 1,019,896
Accrued compensation 1,390,509 1,190,558
Income taxes payable 1,033,310 107,187
Other accrued liabilities 272,919 697,019
Total current liabilities 4,644,649 3,364,960
Long-term debt 1,206,713 1,532,140
Deferred compensation and income taxes 445,679 321,017
Stockholders' equity:
Common stock, $.04 par value; 15,000,000 shares authorized,
7,032,577 and 4,523,468 shares issued and outstanding 281,303 180,939
Capital in excess of par value 7,661,479 6,865,574
Retained earnings 23,726,720 17,669,794
Total stockholders' equity 31,669,502 24,716,307
$37,966,543 $29,934,424
</TABLE>
See accompanying notes.
INNOVEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended June 30,
1995 1994
Net sales $ 14,025,617 $ 8,439,117
Costs and expenses:
Cost of sales 7,760,021 5,823,848
Selling, general and administrative 1,366,483 1,019,283
Engineering 716,594 329,659
Net interest (income) expense (163,029) (82,597)
Other (income) expense (144) 38,847
Income before taxes 4,345,692 1,310,077
Provision for income taxes 1,391,000 403,000
Net income $ 2,954,692 $ 907,077
Net income per share: $ 0.41 $ 0.13
Nine months Ended June 30,
1995 1994
Net sales $ 35,694,306 $ 20,552,562
Costs and expenses:
Cost of sales 20,638,549 14,561,021
Selling, general and administrative 3,611,430 2,384,782
Engineering 1,770,861 873,671
Net interest (income) expense (453,202) (262,335)
Other (income) expense 212,637 94,980
Income before taxes 9,914,031 2,900,443
Provision for income taxes 3,220,000 897,000
Net income $ 6,694,031 $ 2,003,443
Net income per share: $ 0.94 $ 0.30
See accompanying notes.
INNOVEX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Nine Months Ending June 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,694,031 $ 2,003,443
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,058,729 1,427,144
Deferred income taxes -- 20,921
Other non-cash charges (credits) (53,026) 143,108
Changes in operating assets and liabilities:
Receivables (2,090,419) (1,306,720)
Inventories (279,784) 290,202
Other assets (222,793) 324,667
Payables 577,715 703,326
Other liabilities (99,487) (346,799)
Income taxes payable 926,123 (57,433)
Net cash provided by (used in) operating activities 7,511,089 3,201,859
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,853,614) (1,106,646)
Cash paid for product line acquisitions (310,698) (1,714,049)
Capitalized software (211,905) (309,954)
Proceeds from sale of assets 75 2,850,300
Purchase of held-to-maturity securities (12,205,000) (7,056,234)
Maturity of held-to-maturity securities 4,785,000 2,915,000
Sale of available-for-sale securities 3,215,915 --
Net cash provided by (used in) investing activities (6,580,227) (4,421,583)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (325,427) (170,277)
Proceeds from exercise of options 896,807 81,034
Dividends paid (801,641) (723,150)
Net cash provided by (used in) financing activities (230,261) (812,393)
Increase (decrease) in cash and cash equivalents 700,601 (2,032,117)
Cash and cash equivalents at beginning of year 1,719,587 2,292,611
Cash and cash equivalents at end of period $ 2,420,188 $ 260,494
</TABLE>
SUPPLEMENTAL DISCLOSURES:
The Company considers all highly liquid investments with a maturity date of
three months or less when purchased to be "cash equivalents."
Cash paid for interest was $91,000 and $105,000 in 1995 and 1994, respectively.
Income tax payments were $2,291,000 and $939,000 in 1995 and 1994, respectively.
See accompanying notes.
INNOVEX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions on Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The unaudited condensed
consolidated financial statements include the accounts of Innovex Inc. and its
subsidiaries (the "Company") after elimination of all significant intercompany
transactions and accounts. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of operating results have been made. Operating results for interim periods are
not necessarily indicative of results which may be expected for the year as a
whole. For further information, refer to the consolidated financial statements
and footnotes included in the registrant's annual report on Form 10-K for the
year ended September 30, 1994.
NOTE 2 - SHORT-TERM INVESTMENTS
Under FASB #115 which was adopted by the Company in fiscal 1994, the
Company classifies debt and equity securities in three categories: trading,
available-for-sale and held-to-maturity securities. Trading securities are
measured at fair value, with unrealized holding gains and losses included in
income. The Company was not holding any trading securities at June 30, 1995.
Available-for-sale securities are measured at fair value, with net unrealizable
gains or losses reported in stockholder's equity net of applicable deferred
taxes. The unrealized holding loss for available-for-sale securities held at
June 30, 1995 was $189,000, with $133,000 of the loss considered a permanent
impairment of the available-for-sale securities which was recorded as a loss in
prior period Statements of Operations. No available-for-sale securities were
sold during the current quarter. Sales of available-for-sale securities during
the current fiscal year resulted in the realization of a $140,000 loss.
Held-to-maturity securities are carried at amortized cost.
The amortized cost adjusted for recognized permanent impairment losses,
unrealized gains and losses, and fair value of the Company's available-for-sale
and held-to-maturity securities at June 30, 1995 are summarized as follows
(thousands of dollars):
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Available-for-sale securities:
Adjustable rate term trusts $ 1,815 -- $ 56 $ 1,759
Bond mutual funds 548 -- -- 548
$ 2,363 -- $ 56 $ 2,307
Held-to-maturity securities:
Mutual obligation bonds $13,470 $27 -- $13,497
Auction rate municipal preferreds 200 -- -- 200
$13,670 $27 -- $13,697
NOTE 3 - THREE FOR TWO STOCK SPLIT
Net Income per share calculations for prior periods have been adjusted
to reflect a three for two stock split effective on May 31, 1995.
PART I: ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
Innovex Inc. (the Company), through its largest division, Precision
Products, develops, engineers and manufactures specialty precision
electromagnetic products for original equipment manufacturers ("OEM's"). Lead
wire assemblies for the thin film disk drive market are the Division's primary
product.
The Company also operates two other divisions, Iconovex and InnoMedica.
These divisions currently only produce a small portion of the Company's revenue.
Iconovex is responsible for the further development and marketing of a document
handling software product, Syntactica, which was purchased in November 1993. The
purchased software prepares indexes and abstracts of documents stored on
electronic media. The initial application derived from the purchased software,
Indexicon, was designed for use on personal computers and began shipping in
fiscal 1994. Another product, AnchorPage, was released at the end of the fiscal
1995 third quarter. AnchorPage enables Internet World Wide Web sites to provide
their users access to web site information automatically using conceptual
navigational techniques. The current method involves the manual insertion of
tags to create hypertext links used for accessing the information. AnchorPage
provides faster and more reliable access to that information.
InnoMedica was formed late in fiscal 1993 to further develop the
Company's medical business. In line with this strategy, the Company acquired
Daig Corporation's pacemaker lead wire and adapter product line in September
1993 and Possis Medical, Inc's pacemaker lead wire product line in March 1994.
Revenue generated by this division should continue to increase throughout fiscal
1995 as its production capacity expands.
Prior to December 1992, the Company operated another division, the
Photo Group. The Company discontinued its photo business in two stages.
Effective November 29, 1992, the operating assets and liabilities, with the
exception of the receivables, were sold to Lucht Acquisition Corporation (LAC),
an unrelated third party, for approximately $4,000,000 cash and a 40 percent
interest in LAC. On November 1, 1993, the Company sold the remaining 40 percent
interest in LAC to LAC's majority shareholder for $2,850,000 in cash.
RESULTS OF OPERATIONS
NET SALES
The Company's net sales from operations totaled $14,026,000 for the
quarter, up 66% from $8,439,000 reported in fiscal 1994. Sales of $35,694,000
for the nine months ended June 30, 1995 increased 74% from the prior year
period. The increases were due to the strong demand for lead wire assemblies
caused by the increased demand for thin-film disk drives. The lead wire assembly
demand is expected to remain strong throughout the remainder of the fiscal year.
GROSS MARGINS
The Company's consolidated gross profit as a percent of sales for the
third quarter increased to 45% from the 31% reported for the same period last
year while the gross margin percent for the first nine months increased to 42%
from 29% for the same period last year. This is primarily due to strong sales
volume in the current year compounded by low fiscal 1994 sales volume caused by
the temporary softness in disk drive demand in the first half of fiscal 1994.
The high level of sales in the current year resulted in more efficient
utilization of the Company's automation-related fixed costs. The gross margin
should remain relatively stable for the remainder of the fiscal year as improved
manufacturing efficiencies should offset any price concessions which may occur.
OPERATING EXPENSES
Operating expenses were 14.9% of sales for the current quarter, down
from 16.0% in the prior year's third quarter. Operating expenses for the first
nine months of fiscal 1995 were 15.1% of sales, down from 15.9% for the prior
year. The decrease in operating expenses as a percent of sales for the current
year is primarily due to the significant increase in sales more than offsetting
the increase in total operating expenses. Total operating expenses increased due
to the higher level of costs being incurred by the two start-up divisions,
higher accruals for incentive based compensation and increased process and new
product research spending as compared to the prior year. The level of operating
expenses is not expected to change significantly for the remainder of the fiscal
year.
OPERATING PROFIT
Consolidated operating profit of $4,183,000 in the current quarter was
up from the $1,266,000 profit for the prior year third quarter. Consolidated
operating profit for the first nine months was $9,673,000 versus $2,733,000 for
the same period last year. This is primarily the result of the increased sales
volume. Operating profit for the remainder of the fiscal year is expected to
remain strong due to the continued high demand for thin-film lead wire
assemblies. Revenues from the Company's Iconovex and InnoMedica Divisions are
expected to continue to increase with each division expected to approach
profitability by the end of the fiscal year.
NET INCOME
Consolidated net income for the 1995 third quarter was $2,955,000 or
$0.41 per share as compared to $907,000 or $0.13 per share for the prior year
third quarter. Consolidated net income for the first nine months of fiscal 1995
was $6,694,000 or $0.94 per share versus $2,003,000 or $0.30 per share for the
same period last year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and short-term investments increased to $18.4 million at June 30,
1995 from $13.1 million at September 30, 1994. This increase was primarily due
to income generated by the Company's operating activities.
Accounts receivable at June 30, 1995 increased by $2,090,000 from
September 30, 1994 due to the increased level of sales at the end of the third
quarter as compared to the quarter ended on September 30, 1994. Accounts payable
at June 30, 1995 increased by $578,000 from September 30, 1994 due to fixed
asset purchases and inventory purchases to support the sales increase.
Working capital totaled $24,100,000 and $17,600,000 at June 30, 1995
and September 30, 1994, respectively.
Since September 30, 1994, the Company has invested $1,854,000 in fixed
assets. These additions include approximately $1,400,000 for equipment to expand
and further automate the lead wire assembly production and packaging process.
The Company also paid an additional $311,000 related to the March 1994 agreement
to purchase Possis Medical, Inc.'s pacemaker lead wire product line.
Management believes that internally generated funds will provide
adequate sources of capital for supporting projected growth in fiscal 1995.
PART II - OTHER INFORMATION
Responses to Items 1 through 5 are omitted since these items are either
inapplicable or the response thereto would be negative.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
3.1 Articles of Incorporation, as Amended of Innovex Inc.
11 Statement regarding Computation of Per Share Earnings
27 Financial Data Schedule
b) Reports on Form 8-K
None.
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.
INNOVEX INC.
Registrant
Date: July 31, 1995
By \s\ Thomas W. Haley
Thomas W. Haley
Chief Executive Officer
By \s\ Douglas W. Keller
Douglas W. Keller
Corporate Controller
INDEX TO EXHIBITS
Exhibits Page
3.1 Articles of Incorporation, as Amended of Innovex Inc. 13-22
11 Computation of Per Share Net Income 11
27 Financial Data Schedule 12
ARTICLES OF INCORPORATION, AS AMENDED
OF
INNOVEX INC.
ARTICLE I.
Name
The name of the corporation shall be Innovex Inc.
ARTICLE II.
Business Purposes
The purposes for which this corporation is organized are as follows:
a. General business purposes.
To do everything necessary, proper, advisable or convenient
for the accomplishment of the purposes herein above set forth,
and to do all other things incidental thereto or connected
therewith, which are not forbidden by the laws under which
this corporation is organized, by other laws, or by these
Articles of Incorporation.
b. To carry out the purposes hereinabove set forth in any state,
territory, district or possession of the United States, or in
any foreign country to the extent that such purposes are
forbidden by law, to limit in any certificate for application
to do business, the purposes or purpose which the corporation
proposes to carry on therein to such as are not forbidden by
law thereof.
ARTICLE III.
Duration
The duration of the corporation shall be perpetual.
ARTICLE IV.
Registered Office
The location and post office address of the registered office of the
corporation in the State of Minnesota is 1313 Fifth Street S., Hopkins,
Minnesota 55343.
ARTICLE V.
Powers of the Corporation
This corporation shall have all the powers granted to private
corporations organized for profit by said Minnesota Business Corporation Act,
and in furtherance and not in limitation of the powers conferred by the laws of
the State of Minnesota upon corporations organized for the foregoing purposes,
the corporation shall have the power:
a. To acquire, hold, mortgage, pledge or dispose of the shares,
bonds, securities or other evidences of indebtedness of the
United States of America, or of any domestic or foreign
corporation, and while the holder of such shares to exercise
all the privileges of ownership, including the right to vote
thereon, to the same extent as a natural person might or could
do, by the president of this corporation or by proxy appointed
to him, unless some other person, by resolution of the Board
of Directors, shall be appointed to vote such shares.
b. To purchase or otherwise acquire on such terms and in such
manner as the Bylaws of this corporation from time to time
provide, and to own all shares of the capital stock of this
corporation, and to reissue the same from time to time.
c. When and as authorized by the vote of the holders of not less
than a majority of the shares entitled to vote, at a
shareholders' meeting called for that purpose, or when
authorized upon the written consent of the holders of a
majority of such shares, to sell, lease, exchange or otherwise
dispose of all, or substantially all of its property and
assets including its goodwill, upon such terms and for such
consideration which may be money shares, bonds, or other
instruments for the payment of money or other property as the
Board of Directors deems expedient or advisable.
d. To acquire, hold, lease, encumber, convey or otherwise dispose
of, either alone or in conjunction with others, real and
personal property within or without the state and to take real
and personal property by will or gift.
e. To acquire, hold, take over as a going concern and thereafter
to carry on, mortgage, sell or otherwise dispose of, either
alone or in conjunction with others, the rights, property,
shares, bonds, securities and other evidences of indebtedness,
including commodities and business of any person, entity,
partnership, limited partnership, association or corporation
heretofore or hereafter engaged in any business, the purpose
of which is similar to the purposes set forth in Article II of
these Articles of Incorporation.
f. To enter into any lawful arrangement for sharing profits,
union of interests, reciprocal association or cooperative
association with any corporation, association, partnership,
individual or other legal entity, for the carrying on of any
business, the purpose of which is similar to the purposes set
forth in Article II of these Articles of Incorporation or
limited partnership the purposes of which are similar to such
person.
ARTICLE VI.
Mergers and Consolidation
Any agreement for the consolidation or merger with one or more foreign
or domestic corporations may be authorized by vote of the holders of a majority
of the shares entitled to vote.
ARTICLE VII.
Capital Stock
Section 1. The aggregate number of shares which this corporation shall
have authority to issue is 15,000,000 shares, par value $.04 each, which shall
be known as "common stock."
Section 2. Each of the common shares of this corporation now issued,
having a par value of $0.10 per share, shall be equal to and is hereby changed
into two and one-half fully paid nonassessable shares of this corporation,
having a par value of $0.04 per share, authorized to be issued under the
Articles of Incorporation, as hereby amended. Certificates for common shares
having a par value of $0.04 per share shall be issued in place and upon
surrender of certificates for shares having a par value of $0.10 per share now
issued, on the aforesaid basis; provided, however, that upon this amendment to
the Articles of Incorporation becoming effective, the holders of said shares now
issued shall thereupon cease to be holders of said shares and shall become
holders of the herein authorized common shares upon the basis hereinabove
specified, whether or not certificates representing said herein authorized
common shares are then issued and delivered.
Section 3. The powers and duties of the shareholders and the Board of
Directors with respect to the common shares shall include:
a. The holders of the common stock shall be entitled to receive,
when and as declared by the Board of Directors, out of
earnings or surplus legally available therefor, dividends,
payable either in cash, in property or in shares of the
capital stock of the corporation.
b. The common stock may be allotted as and when the Board of
Directors shall determine, and, under and pursuant to the laws
of the State of Minnesota, the Board of Directors shall have
the power to fix or alter, from time to time, in respect of
shares then unallotted, any and all of the following: The
dividend rate; the redemption price; the liquidation price;
the conversion rights and the sinking or purchase fund rights
of shares of any class, or of any series of any class, or the
number of shares constituting any series of any class. The
Board of Directors shall also have the power to fix the terms,
provisions and conditions of options to purchase or subscribe
for shares of any class or classes, including the price and
conversion basis thereof, and to authorize the issuance
thereof. The Board of Directors shall also have the power to
issue shares of stock of the corporation for cash, services,
property, securities or assets of other business enterprises,
or otherwise, as it may from time to time deem expedient.
c. No holder of stock in the corporation shall be entitled to any
cumulative voting rights.
d. No holder of stock of the corporation shall have any
preferential, preemptive or other rights of subscription to
any shares of any class of stock of the corporation allotted
or sold or to be allotted or sold now or hereafter authorized,
or to any obligations convertible into the stock of the
corporation of the class, or any right of subscription to any
part thereof.
ARTICLE VIII.
Stated Capital
The minimum amount of stated capital with which the corporation will
begin business is $1,000.00.
ARTICLE IX.
Management and Additional Powers
Section 1. The management and conduct of the business of the
corporation shall be vested in a Board of Directors, which shall consist of such
number of directors, not less than the minimum permitted by law, as shall be
fixed in the Bylaws, or in the absence of such provision in the Bylaws, as shall
be determined by the shareholders at any annual or special meeting thereof. The
term of the first Board of Directors, as hereinafter identified, shall extend
until the first shareholders' meeting subsequent to incorporation.
Section 2. Except as otherwise herein provided, the term of office of
each director of the corporation shall be for a period of one (1) year, and
until his successor is elected and qualified, unless the director is removed as
provided by law.
Section 3. At the first shareholders' meeting of the corporation
subsequent to incorporation, director or directors shall be elected to serve
until the next annual meeting of shareholders and until a successor or
successors are elected and qualified. Thereafter, all directors shall be elected
for the full term of one (1) year and until their respective successors are
elected and qualified, unless removed is provided by law. If a vacancy in the
Board of Directors occurs during the term of any director, a successor director
to serve during the unexpired portion of said term may be elected by the
remaining directors.
Section 4. The Board of Directors shall have the authority to accept or
reject subscription for capital stock made after incorporation and may grant
options to purchase or subscribe for capital stock. The Board of Directors shall
from time to time fix and determine the consideration for which the corporation
shall issue and sell its capital stock, and also the dividends to be paid by the
corporation upon the capital stock. The Board of Directors shall have authority
to fix the terms and conditions of rights to convert any securities of this
corporation into shares and to authorize the issuance of such conversion rights.
Section 5. The Board of Directors shall have the authority to issue
bonds, debentures or other securities convertible into capital stock or other
securities of any class, or bearer warrants nor other evidences of optional
rights to purchase and/or subscribe to capital stock or other securities of any
class, upon such terms, in such manner, and under such conditions as may be
fixed by resolution of the Board prior to the issue thereof.
Section 6. The Board of Directors shall have the authority to make and
alter the Bylaws, subject to the power of the shareholders to change or repeal
the Bylaws.
Section 7. A quorum for any meeting of shareholders to transact
business of this corporation except as otherwise specifically provided herein or
by law shall be the presence in person or by proxy of the holders of a majority
of the shares of common stock of the corporation outstanding and of record on
the record date set for such meeting.
Section 8. No contract or other transaction between the corporation and
any person, firm, association or corporation, and no other act of this
corporation shall, in the absence of fraud, be invalidated or in any way
affected by the fact that any of the directors of the corporation are, directly
or indirectly, pecuniarily or otherwise interested in such contract, transaction
or other act or related to or interested in such person, firm, association or
corporation, as director, stockholder, officer, employee, member or otherwise.
Any director of the corporation, individually, or any firm or association of
which any director may be a member may be a party to or may be pecuniarily or
otherwise interested in any contract or transaction of the corporation, provided
that the fact that he individually or such firm or association is to interested
shall be disclose or known to the Board of Directors or a majority of such
members thereof as shall be present at any meeting of the Board of Directors, or
of any committee of directors having the powers of the full Board, at which
action upon any such contract, transaction or other act is taken, and if such
fact shall be so disclosed or known, any director of this corporation so related
or otherwise interested may be counted in determining the presence of a quorum
at any meeting of the Board of Directors of such committee at which action upon
any such contract, transaction or act shall be taken and may vote thereat with
respect to such action with like force and effect as if he were not so related
or interested. Any director of the corporation may vote upon any contract or
other transaction between the corporation and any subsidiary or affiliated
corporation.
Section 9. Officers and directors of this corporation may hold
positions as officers and directors of any other corporations in related
businesses, and their efforts to advance such corporations will not constitute a
breach of fiduciary loyalty to this corporation in the absence of a showing of
bad faith.
ARTICLE X.
Directors
The first Board of Directors shall be comprised of three (3) persons
whose names and addresses are as follows:
Thomas W. Haley
405 Third Avenue Southeast
Pipestone, Minnesota
Michael C. Slagel
900 Crescent Drive
Clayton, Missouri
Dale R. Wikman
5127 Skyline Drive
Minneapolis, Minnesota
ARTICLE XI.
Incorporators
The names and addresses of the incorporators are as follows:
R. J. FitzGerald
860 Northwestern Bank Building
Minneapolis, MN 55402
ARTICLE XII.
Amendment
Any provisions contained in these Articles of Incorporation may be
amended solely by the affirmative vote of the holders of a majority of the stock
entitled to vote.
ARTICLE XIII.
Indemnification
Section 1. No director of the corporation shall be personally liable to
the corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its shareholders; (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) under section 302A.559 or 80A.23 of Minnesota Statutes;
(iv) for any transaction from which the director derived any improper personal
benefit; or (v) for any act or omission occurring prior to the date when this
provision becomes effective.
Section 2. The provisions of this Article XIII shall not be deemed to
limit or preclude indemnification of a director by the corporation for any
liability of a director which has not been eliminated by the provisions of this
Article XIII.
Section 3. If Minnesota Statutes hereafter are amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the corporation shall be eliminated or limited to the
fullest extent permitted by the Minnesota Statutes, as so amended.
EXHIBIT 11 - COMPUTATION OF PER SHARE NET INCOME
For the Three Months Ended
June 30,
1995 1994
Net income for the period used in
determining net income per share $2,954,692 $ 907,077
Weighted average common and common equivalent shares
used in determining net income per share 7,198,041 6,785,202
Net income per share $0.41 $0.13
For the Nine Months Ended
June 30,
1995 1994
Net income for the period used
in determining net income per share $6,694,031 $2,003,443
Weighted average common and common equivalent shares
used in determining net income per share 7,112,692 6,777,437
Net income per share $0.94 $0.30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS INCLUDED IN THE 10-Q FOR THE QUARTER ENDED JUNE
30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,420
<SECURITIES> 15,977
<RECEIVABLES> 7,077
<ALLOWANCES> 264
<INVENTORY> 2,062
<CURRENT-ASSETS> 28,770
<PP&E> 12,637
<DEPRECIATION> 5,759
<TOTAL-ASSETS> 37,967
<CURRENT-LIABILITIES> 4,645
<BONDS> 1,207
<COMMON> 281
0
0
<OTHER-SE> 31,388
<TOTAL-LIABILITY-AND-EQUITY> 37,967
<SALES> 35,694
<TOTAL-REVENUES> 35,694
<CGS> 20,639
<TOTAL-COSTS> 20,639
<OTHER-EXPENSES> 5,382
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96
<INCOME-PRETAX> 9,914
<INCOME-TAX> 3,220
<INCOME-CONTINUING> 6,694
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,694
<EPS-PRIMARY> .94
<EPS-DILUTED> .94
</TABLE>
