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 ______________October 31, 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 ___1-4702__
AMREP Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 59-0936128
- -------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
641 Lexington Avenue, Sixth Floor, New York, New York 10022
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code _______(212) 705-4700_______
Indicate by check mark whether the Registrant (1) has filed all reports required
to befiled 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 subject to such filing requirements
for the past 90 days.
Yes _____X______ No ___________
Number of Shares of Common Stock, par value $.10 per share, outstanding at
December 12, 1997 - 7,368,650.
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
INDEX
PART I PAGE NO.
- ------ --------
Consolidated Financial Statements:
Balance Sheets
October 31, 1997 (Unaudited) and
April 30, 1997 (Audited) 1
Statements of Income and Retained Earnings (Unaudited)
Three Months Ended October 31, 1997 and 1996 2
Statements of Income and Retained Earnings (Unaudited)
Six Months Ended October 31, 1997 and 1996 3
Statements of Cash Flows (Unaudited)
Six Months Ended October 31, 1997 and 1996 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis 6 - 7
PART II
Other Information 8
Signatures 9
Exhibit Index 10
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
October 31, 1997 and April 30, 1997
(Dollar amounts in thousands, except par value)
October 31, 1997 April 30, 1997
----------------- ---------------
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 3,714 $ 16,178
Receivables, net:
Real estate operations 9,103 10,486
Magazine circulation operations 62,229 43,015
Real estate inventory 96,499 86,102
Other real estate investments 3,367 4,893
Investment property 5,371 6,413
Property, plant and equipment, at cost,
net of accumulated depreciation and
amortization of $14,394 at October 31,
1997 and $13,532 at April 30, 1997 19,541 18,974
Other assets 15,604 14,059
Excess of cost of subsidiaries over net
assets acquired 6,258 5,191
------------- -----------
$ 221,686 $ 205,311
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, deposits and accrued $ 42,525 $ 30,081
expenses
Notes payable:
Amounts due within one year 29,943 24,833
Amounts subsequently due 49,427 54,991
Taxes payable:
Amounts due within one year 1,853 512
Amounts subsequently due 13,923 13,923
Deferred income taxes 5,137 5,137
------------ -----------
142,808 129,477
------------ -----------
Shareholders' equity:
Common stock, $.10 par value;
shares authorized -- 20,000,000;
shares issued -- 7,398,677 at October
31, 1997 and April 30, 1997 740 740
Capital contributed in excess of par value 44,928 44,928
Retained earnings 33,390 30,346
Treasury stock, at cost; 30,027 shares (180) (180)
------------ -----------
78,878 75,834
------------ -----------
$ 221,686 $ 205,311
============ ===========
See notes to consolidated financial statements.
1
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings (Unaudited)
Three Months Ended October 31, 1997 and 1996
(Amounts in thousands, except per share amounts)
1997 1996
------------- -----------
REVENUES
Real estate operations:
Home and condominium sales $ 19,499 $ 13,272
Land sales 7,123 3,838
----------- ---------
26,622 17,110
Magazine circulation operations 15,188 14,610
Interest and other operations 1,730 1,510
----------- ---------
43,540 33,230
----------- ---------
COSTS AND EXPENSES
Real estate cost of sales 19,850 13,783
Operating expenses:
Magazine circulation operations 11,309 11,337
Real estate commissions and selling 1,871 1,673
Other operations 1,536 1,642
General and administrative:
Real estate operations and corporate 1,963 1,861
Magazine circulation operations 1,622 1,481
Interest, net 1,157 1,017
----------- ---------
39,308 32,794
----------- ---------
INCOME BEFORE INCOME TAXES 4,232 436
PROVISION FOR INCOME TAXES 1,693 174
----------- ---------
NET INCOME 2,539 262
RETAINED EARNINGS, beginning of period 30,851 23,467
----------- ---------
RETAINED EARNINGS, end of period $ 33,390 $ 23,729
=========== =========
NET INCOME PER SHARE $ 0.34 $ 0.04
=========== =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,369 7,369
=========== =========
See notes to consolidated financial statements.
2
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings (Unaudited)
Six Months Ended October 31, 1997 and 1996
(Amounts in thousands, except per share amounts)
1997 1996
----------- ---------
REVENUES
Real estate operations:
Home and condominium sales $ 38,368 $ 30,325
Land sales 11,429 6,913
----------- ---------
49,797 37,238
Magazine circulation operations 28,194 27,088
Interest and other operations 3,344 3,312
----------- ---------
81,335 67,638
----------- ---------
COSTS AND EXPENSES
Real estate cost of sales 38,413 29,272
Operating expenses:
Magazine circulation operations 21,896 22,059
Real estate commissions and selling 3,599 3,071
Other operations 3,095 3,451
General and administrative:
Real estate operations and corporate 3,755 3,770
Magazine circulation operations 3,191 3,080
Interest, net 2,313 1,827
----------- ---------
76,262 66,530
----------- ---------
INCOME BEFORE INCOME TAXES 5,073 1,108
PROVISION FOR INCOME TAXES 2,029 443
----------- ---------
NET INCOME 3,044 665
RETAINED EARNINGS, beginning of period 30,346 23,064
----------- ---------
RETAINED EARNINGS, end of period $ 33,390 $ 23,729
=========== =========
NET INCOME PER SHARE $ 0.41 $ 0.09
=========== =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 7,369 7,369
=========== =========
See notes to consolidated financial statements.
3
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited) (Page 1 of 2)
Six Months Ended October 31, 1997 and 1996
(Amounts in thousands)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: --------- ---------
Net Income $ 3,044 $ 665
--------- ---------
Adjustments to reconcile net income to net cash used
by operating activities -
Depreciation and amortization 1,686 1,239
Changes in assets and liabilities, net of effects
from purchase of assets of business:
Receivables, net (17,793) (7,226)
Real estate inventory (2,298) (12,139)
Other real estate investments 1,526 1,524
Investment property 1,042 768
Other assets (842) (2,190)
Accounts payable, deposits and accrued expenses 12,092 2,001
Taxes payable 1,341 (1,505)
--------- ---------
Total adjustments (3,246) (17,528)
--------- ---------
Net cash used by operating activities (202) (16,863)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,598) (793)
Purchase of assets of business, net of cash
acquired (2,202) -
--------- ---------
Net cash used by investing activities (3,800) (793)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt financing 17,948 35,670
Principal debt payments (26,410) (19,959)
--------- ---------
Net cash provided (used) by financing
activities (8,462) 15,711
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (12,464) (1,945)
--------- ---------
CASH AND CASH EQUIVALENTS, beginning of period 16,178 7,607
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 3,714 $ 5,662
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid - net of amounts capitalized $ 2,237 $ 1,683
========= =========
Income taxes paid $ 688 $ 1,543
========= =========
See notes to consolidated financial statements.
4
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Six Months Ended October 31, 1997 and 1996
Note 1:
- -------
The consolidated financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. The consolidated financial
statements reflect all adjustments which are, in the opinion of
management, necessary to reflect a fair presentation of the results for
the interim periods presented. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K.
Note 2:
- ------
Certain amounts as previously reported in the April 30, 1997 Balance Sheet
and October 31, 1996 Statements of Income and Statements of Cash Flows
have been reclassified to conform to the presentation used at October 31,
1997.
5
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 1 of 2)
October 31, 1997
RESULTS OF OPERATIONS
- ---------------------
Total revenues for the three and six month periods ended October 31, 1997
increased 31% and 20%, respectively, from the similar periods last year,
reflecting higher revenues from both real estate and magazine circulation
operations.
Revenues from real estate operations increased 56% and 34% during the three and
six month periods ended October 31, 1997, respectively, compared to the prior
year, resulting from increases in both home and condominium and land sales.
Revenues from home and condominium sales increased 47% and 27% in the three and
six month periods, respectively, resulting from an increase in total unit
deliveries from 106 to 169 in the second quarter and from 249 to 332 in the six
month period as compared to the similar periods last year, which increase is due
in part to the number and timing of projects open and available for sale in the
current year as compared to the prior year. Last year's results had been
adversely impacted from delays in receiving certain governmental or utility
company approvals. The increase in housing revenues was offset partly by a
decrease in the gross profit percentage, which resulted from a number of
factors, including a change in the mix of homes delivered and higher lot
development costs. In addition, the Company closed a number of large commercial
land sales in New Mexico in the second quarter, which resulted in increased
revenues of 86% from land sales for the quarter and 65% for the six month
period. Land sale revenues and related gross profits can vary from year to year
as a result of the nature and timing of specific transactions, and thus prior
results are not an indication of amounts that may be expected to occur in future
periods. As a result of these factors, gross profit from combined housing and
land sales increased by approximately $3.4 million in both the second quarter
and six months this year, respectively, as compared to the similar periods last
year.
Revenues from magazine circulation operations increased approximately 4% in both
the three and six months periods ended October 31, 1997, as compared to the
similar periods last year, due to increases in both the Fulfillment Services and
Newsstand Distribution Services. Revenues from Fulfillment Services increased
approximately 4% and 5% in the three and six month periods this year,
respectively, due primarily to increased volume resulting from a new contract
with a major publisher, which was partially offset by decreased volumes in other
areas of the business. Revenues from the Newsstand Distribution Services also
increased approximately 3% and 2% in the three and six month periods this year,
respectively, compared to the prior year, due to a generally higher volume of
magazine sales. This sales increase has reversed the trend of lower sales over
the last two years which had related to residuary consumer resistance to retail
cover price increases imposed in 1996. In addition, a major
6
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations (Page 2 of 2)
October 31, 1997
realignment of industry relationships in the distribution of magazines developed
rapidly during 1996, which has led to a substantial reduction in the number of
wholesalers. These changes have adversely impacted Kable's sales and profits.
Magazine circulation operating expenses are comparable to the prior year in both
periods. As a result of these factors, operating income from magazine
circulation operations increased by approximately $600,000 and $1,300,000 in the
second quarter and six months this year, respectively, as compared to last year.
Real estate commissions and selling expenses increased approximately $198,000 in
the three months and by $528,000 in the six months, primarily as a result
of the increased volume, as well as from an increase in the number of projects
open for sale. Real estate and corporate general and administrative expenses
increased $102,000 in the three month period due to the costs of the Company's
California operation, which commenced operations in September 1997, as well as
from higher legal expenses. Real estate and corporate general and
administrative expenses were comparable for the six month period. General and
administrative costs of the magazine circulation operations increased by
$141,000 and $111,000 for the three and six month periods, respectively, as a
result of several factors, none of which were individually significant.
Interest expense increased in both real estate and magazine operations in both
the second quarter and six months period this year primarily due to higher
average borrowings partially offset by an increase in the amount of capitalized
real estate interest.
FINANCIAL CONDITION
- -------------------
Receivables from magazine circulation operations increased from $43.0 million at
April 30, 1997, to $62.2 million at October 31, 1997, resulting partially from
the timing of monthly billings as well as from delays in payments experienced by
Kable from wholesalers which Kable believes is partially a result of the
industry consolidation issue as discussed above. As a result, cash decreased by
$12.5 million and accounts payable, deposits and accrued expenses increased by
approximately $12.4 million at October 31, 1997 compared to April 30, 1997.
During the three month period ended October 31, 1997, a subsidiary of the
Company acquired the assets and operations of a residential real estate company
based in Sacramento, California with operations in northern California,
Portland, Oregon and Reno, Nevada. The purchase price consisted of cash in the
amount of $2.2 million and the assumption of debt of approximately $8.4 million.
The increases in inventory, other assets, excess of cost over net assets
acquired and notes payable result principally from the effect of this purchase.
7
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
PART II
Other Information
-----------------
Item 4. Submission of Matters to Vote of Security Holders
- ------- -------------------------------------------------
The Annual Meeting of Shareholders was held on September 24, 1997.
At the meeting, Edward B. Cloues, II and James Wall were elected as
directors. The terms of office as directors of Jerome Belson, Daniel Friedman,
Nicholas G. Karabots, Albert Russo, Samuel N. Seidman and Mohan Vachani
continue.
Shareholders cast votes for the election of directors as follows:
Nominee "For" "Withheld"
------- ------- ----------
Edward B. Cloues, II 6,781,513 40,000
James Wall 6,780,937 40,576
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
---------
3(a) Amendment to Section 3 of Article III of the By-laws.
3(b) Amendment to Section 1 of Article IV of the By-laws.
3(c) By-laws as restated September 24, 1997.
4(a) Amendment No. 2 dated December 13, 1996, to Amended and
Restated Loan Agreement between American National Bank and
Trust Company of Chicago and Kable News Company, Inc.
4(b) Amendment No. 3 dated September 18, 1997, to Amended and
Restated Loan Agreement between American National Bank and
Trust Company of Chicago and Kable News Company, Inc.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
No reports on Form 8-K were filed by Registrant during the
quarter ended October 31, 1997.
8
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
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.
AMREP Corporation
(Registrant)
Dated: December 12, 1997 By: /s/ Mohan Vachani
-----------------
Mohan Vachani
Senior Vice President,
Chief Financial Officer
Dated: December 12, 1997 By: /s/ Peter M. Pizza
------------------
Peter M. Pizza
Vice President, Controller
9
<PAGE>
FORM 10-Q
AMREP CORPORATION AND SUBSIDIARIES
EXHIBIT INDEX
-------------
3(a) Amendment to Section 3 of Article III of the By-laws.
3(b) Amendment to Section 1 of Article IV of the By-laws.
3(c) By-laws as restated September 24, 1997.
4(a) Amendment No. 2 dated December 13, 1996, to Amended and
Restated Loan Agreement between American National Bank and
Trust Company of Chicago and Kable News Company, Inc.
4(b) Amendment No. 3 dated September 18, 1997, to Amended and
Restated Loan Agreement between American National Bank and
Trust Company of Chicago and Kable News Company, Inc.
27 Financial Data Schedule.
10
EXHIBIT 3(a)
Article III
DIRECTORS
Section 3. Organizational Meeting
- ---------- ----------------------
The Directors shall, if a quorum is present, hold an
organizational meeting for the purpose of (a) electing from among themselves a
Chairman of the Board, (b) electing officers and (c) the transaction of
any other business. Such organizational meeting shall be held
immediately after the annual meeting of shareholders, or as soon
thereafter as practicable.
EXHIBIT 3(b)
Article IV
OFFICERS - CHAIRMAN OF THE BOARD
Section 1. Officers
- ---------- --------
The officers of the Corporation shall be elected by the
Board of Directors. The officers shall be a President, one or more
Vice-Presidents (one of whom may be designated Executive Vice-President),
a Secretary and a Treasurer, and such other officers as the Board of Directors
from time to time shall determine. The President shall be chosen from among
the directors, but other officers need not be directors. The officers
shall be elected annually by the Board of Directors at its first meeting
following the annual meeting of shareholders, and each such officer shall
hold office until the corresponding meeting in the next year and until his
or her successor shall have been duly chosen and qualified, or until he or she
shall have resigned or have been removed from office. Any vacancy in any of
the above offices shall be filled for the unexpired portion of the term by
the Board of Directors, at any regular or special meeting. A majority of
the entire Board shall have power at any regular or special meeting to remove
any officer, with or without cause.
EXHIBIT 3(c)
As amended through 9/24/97
AMREP CORPORATION
BY-LAWS
Article I
OFFICES
Section 1. Location
- ---------- --------
The registered office of the Corporation in the State of Oklahoma
shall be at 735 First National Building, Oklahoma City, Oklahoma.
The Corporation may also have offices at such other places within
and without the State of Oklahoma as the Board of Directors may from time to
time appoint or the business of the Corporation may require.
Article II
SHAREHOLDERS
Section 1. Annual Meeting
- ---------- --------------
An annual meeting of the shareholders for the election of directors
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
each year shall fix. Each annual meeting shall be held at such place, within or
without the State of Oklahoma, as the Board of Directors shall determine.
An annual meeting may be adjourned from time to time and place to
place until its business is completed. The election of directors shall be by
plurality vote.
Section 2. Special Meetings
- ---------- ----------------
Special meetings of the shareholders may be called by the Board of
Directors (by such vote as is required by the Certificate of Incorporation) or
by the Chairman of the Board or the President. Special meetings shall be held
at such place, on such date, at such time as the Board or person calling the
meeting shall fix.
<PAGE>
Section 3. Notice of Meetings
- ---------- ------------------
Notice of every meeting of the shareholders shall be given in the
manner provided by law.
Section 4. Quorum
- ---------- ------
At any meeting of shareholders, except as otherwise required by law
the holders of a majority of the shares of stock entitled to vote, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business. If a quorum shall not be present or represented by proxy at any
meeting, the chairman of the meeting or the shareholders entitled to vote
thereat who are present in person or by proxy shall have power to adjourn the
meeting to another place, date or time, without notice other than announcement
at the meeting except as otherwise required by law. At such adjourned meeting
at which the requisite amount of voting stock shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally noticed.
Section 5. Organization
- ---------- ------------
In the absence of the Chairman of the Board and the President at a
meeting of shareholders, the highest ranking officer of the Corporation who is
present shall call to order the meeting and act as chairman thereof. In the
absence of the Secretary of the Corporation, the secretary of the meeting shall
be such person as the chairman appoints.
Section 6. Conduct of Business
- ---------- -------------------
The chairman of any meeting of shareholders shall determine the
order of business and all other matters of procedure at the meeting, including
such regulation of the manner of voting and the conduct of discussion as seems
to him in order. The chairman may appoint one or more inspectors of Election at
any meeting.
Section 7. Qualification of Voters
- ---------- -----------------------
The Board of Directors may fix a date not more than sixty nor less
than ten days before the date of any meeting of the shareholders as the record
date for such meeting. Only those persons who were holders of record of voting
stock at the record date shall be entitled to notice and to vote at such
meeting.
<PAGE>
Section 8. Stock List
- ---------- ----------
A list of shareholders entitled to vote at each meeting of
shareholders shall be prepared and made available for examination as required by
law.
Section 9. Proxy
- ---------- -----
Subject to the provisions of Article II, Section 7 of these By-Laws,
at each meeting of the shareholders every shareholder having the right to vote
shall be entitled to vote in person or by proxy appointed by an instrument in
writing, provided such instrument is filed with the Office of the Secretary of
the Corporation at or before the meeting.
Section 10. Record date for Consents to
- ----------- Corporate Actions in Writing
----------------------------------
In order that the Corporation may determine the shareholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (l0) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. Any shareholder of record seeking to have the shareholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten (l0) days after the date
on which such a request is actually received, adopt a resolution fixing the
record date, if no record date has been fixed by the Board of Directors within
ten (l0) days of the date on which such a request is actually received, the
record date for determining shareholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by the Oklahoma General Corporation Act, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its registered office in
the State of Oklahoma, its principal place of business, or any officer or agent
of the Corporation having custody of the book in which proceedings of
shareholders meetings are recorded. Delivery shall be by hand or by certified
or registered mail, return receipt requested. If no record date has been fixed
by the Board of Directors and prior action by the Board of Directors is required
by the Oklahoma General Corporation Act, the record date for determining
shareholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
<PAGE>
Section 11. Nomination of Directors
- ----------- -----------------------
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors. Nominations of
candidates for election as directors of the Corporation at a meeting of
shareholders may be made by the Board of Directors or by any shareholder
entitled to vote for the election of directors at the meeting. However, a
shareholder so entitled to vote may nominate one or more persons for election as
directors only if notice of such shareholder's intent to make such nomination or
nominations has been duly given in writing to the Secretary of the Corporation,
which notice shall be duly given only if delivered to, or sent to and received
at, the office of the Secretary of the Corporation not later than (a) with
respect to an election to be held at an annual meeting of shareholders, the date
which is 60 days prior to the anniversary date of the immediately preceding
annual meeting, and (b) with respect to an election to be held at a special
meeting of shareholders, the close of business on the tenth day following the
date on which notice of such meeting is first given to shareholders or, if such
tenth day is not a business day, the close of business on the first business day
next succeeding. Each such notice shall set forth: (a) the name and address of
the shareholder proposing to make such nomination or nominations; (b) a
representation that the shareholder is either the holder of record of shares of
the Corporation entitled to vote for the election of directors at such meeting
or is the beneficial owner of such shares which are owned of record by a nominee
or custodian, and statement of the number of such shares owned; (c) the
shareholder's representation that the shareholder intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (d) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; and (e) with respect to each person proposed to be nominated
for election as a director, (i) the name, age, business address and residence
address, and the business experience or other qualifications of the person, (ii)
such other information regarding the person as would be required to be included
in a proxy statement filed pursuant to the rules of the Securities and Exchange
Commission, had the person been nominated by the Board of Directors, and (iii)
the consent of the person to serve as a director of the Corporation if so
elected. No shareholder nomination shall be effective unless made in accordance
with the procedures set forth in this Section 11. The person presiding at the
meeting shall, if the facts warrant, determine that a shareholder nomination was
not made in accordance with the procedures set forth in this Section 11, and if
such determination be made, shall so declare to the meeting, in which event the
defective nomination shall be disregarded and the persons so nominated shall not
be eligible for election as directors.
Article III
DIRECTORS
Section 1. Number, Election and Terms
- ---------- --------------------------
(a) The property and business of the Corporation shall be managed
by the Board of Directors (the "Board"). The Board shall consist of eight
directors (the "entire Board").
(b) The Directors shall be divided into three classes, as nearly
equal in number as possible as determined by the Board, one class to hold office
initially for a term expiring at the annual meeting of shareholders to be held
in l988, another class to hold office initially for a term expiring at the
annual meeting of shareholders to be held in l989, and another class to hold
office initially for a term expiring at the annual meeting of shareholders to be
held in l990, with the members of each class to hold office until their
successors are elected and qualified. At each annual meeting of shareholders,
the successors of the class of Directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting of
shareholders held in the third year following the year of their election and, in
each case, until their respective successors are elected and qualified.
<PAGE>
Section 2. Vacancies - Change in Number of Directors
- ---------- ------------------------------------------
If the number of Directors shall be increased, the vacancies thereby
created shall be filled by the shareholders. If a vacancy or vacancies occurs
otherwise than by removal or an increase in the number of Directors in one or
more classes, such vacancy or vacancies shall be filled by the majority of the
remaining members of the Board, though less than a quorum, and the person or
persons so elected shall hold office for the remainder of the term of the
applicable class. A vacancy caused by removal of a Director shall be filled by
the shareholders. No decrease in the number of Directors constituting the Board
shall shorten the term of any incumbent Director.
Section 3. Organizational Meeting
- ---------- ----------------------
The Directors shall, if a quorum is present, hold an organizational
meeting for the purpose of (a) electing from among themselves a Chairman of the
Board, (b) electing officers and (c) the transaction of any other business. Such
organizational meeting shall be held immediately after the annual meeting of
shareholders, or as soon thereafter as practicable.
Section 4. Regular Meetings
- ---------- ----------------
Regular meetings of the Board shall be held at such time and place
as shall from time to time be determined by the Board.
Section 5. Special Meetings
- ---------- ----------------
Special meetings of the Board may be called at any time by the
Chairman of the Board or the President, and shall be called by the President or
Secretary on the written request of two directors. Special meetings shall be
held at the principal office of the Corporation in the City of New York, or such
other place as may be set forth in the notice thereof.
Section 6. Notice of Meetings
- ---------- ------------------
Notice of the organizational meeting need not be given if it is held
immediately after the annual meeting of shareholders.
Notice of regular meetings of the Board need not be given.
<PAGE>
Notice of the organizational meeting (if required) and of every
special meeting of the Board shall be given to each Director at his usual place
of business, or at such other address as shall have been furnished by him for
the purpose. Such notice shall be given at least forty-eight hours before the
meeting by telephone or by being personally delivered, mailed or telegraphed.
Such notice need not include a statement of the business to be transacted at, or
the purpose of, any such meeting. If a quorum shall not be present at any
meeting of the Board, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum be
present.
Section 7. Quorum
- ---------- ------
Except as may be otherwise provided by law or in these By-Laws, the
presence of one-half of the entire Board shall be necessary and sufficient to
constitute a quorum for the transaction of business at any meeting of the Board
and 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.
Section 8. Participation in Meetings by Conference
- ---------- Telephone
----------------------------------------
Members of the Board, or of any committee thereof, may participate
in a meeting of such Board or committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting.
Section 9. Powers
- ---------- ------
The business, property and affairs of the Corporation shall be
managed by or under the direction of its Board of Directors, which shall have
and may exercise all the powers of the Corporation to do all such lawful acts
and things as are not by law, or by the Certificate of Incorporation, or by
these By-Laws, directed or required to be exercised or done by the shareholders.
Section 10. Compensation of Directors
- ----------- -------------------------
Directors shall receive such compensation for their services as
shall be determined from time to time by a majority of the entire Board.
Directors may receive compensation for services as director even though they are
compensated for serving the Corporation in other capacities, as salaried
officers or otherwise.
<PAGE>
Article IV
OFFICERS - CHAIRMAN OF THE BOARD
Section 1. Officers
- ---------- --------
The officers of the Corporation shall be elected by the Board of
Directors. The officers shall be a President, one or more Vice-Presidents (one
of whom may be designated Executive Vice-President), a Secretary and a
Treasurer, and such other officers as the Board of Directors from time to time
shall determine. The President shall be chosen from among the directors, but
other officers need not be directors. The officers shall be elected annually by
the Board of Directors at its first meeting following the annual meeting of
shareholders, and each such officer shall hold office until the corresponding
meeting in the next year and until his or her successor shall have been duly
chosen and qualified, or until he or she shall have resigned or have been
removed from office. Any vacancy in any of the above offices shall be filled
for the unexpired portion of the term by the Board of Directors, at any regular
or special meeting. A majority of the entire Board shall have power at any
regular or special meeting to remove any officer, with or without cause.
Section 2. Other Officers
- ---------- --------------
The Board of Directors may elect or appoint such other officers and
agents as it shall deem appropriate. Such officers and agents shall hold office
at the pleasure of the Board of Directors.
Section 3. Chairman of the Board - Duties
- ---------- ------------------------------
The Chairman of the Board shall preside at all meetings of
shareholders and of the Board of Directors at which he shall be present. He
also shall have such other duties as may from time to time be assigned to him by
the Board of Directors.
Section 4. President - Duties
- ---------- ------------------
In the absence of the Chairman of the Board, the President shall
preside at all meetings of shareholders and of the Board of Directors at which
he shall be present. He shall be Chief Executive Officer of the Corporation
and, subject to the direction of the Board of Directors, shall have direct
charge and supervision of the business of the Corporation. He also shall have
such other duties as from time to time may be assigned to him by the Board of
Directors.
Section 5. Other Officers - Duties
- ---------- -----------------------
The Vice-Presidents, the Secretary, the Treasurer and the other
officers and agents each shall perform the duties and exercise the powers
usually incident to such offices or positions and/or such other duties and
powers as may be assigned to them by the Board of Directors or the Chief
Executive Officer.
<PAGE>
Article V
AMENDMENTS
Section 1. Alterations - Amendments - Repeal
- ---------- ---------------------------------
Subject to the Certificate of Incorporation, these By-Laws may be
altered or repealed, and other By-Laws may be adopted, by the affirmative vote
of holders of a majority of the shares issued and outstanding and entitled to
vote at any regular or special meeting of shareholders, or by a majority of the
entire Board of Directors at any regular or special meeting.
EXHIBIT 4(a)
AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AGREEMENT
This AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AGREEMENT ("Amendment"),
is made as of the____ day of December, 1996 by and between AMERICAN NATIONAL
BANK AND TRUST COMPANY OF CHICAGO, a national banking association with its
principal office located at 33 N. LaSalle Street, Chicago, IL 60690, and KABLE
NEWS COMPANY, INC. ("Company"), an Illinois corporation with its principal place
of business located at 16 South Wesley Avenue, Mt. Morris, Illinois 61054.
WITNESSETH:
WHEREAS, Company and Bank previously entered into a certain Amended and
Restated Loan Agreement dated as of October 6, 1995, said Loan Agreement amended
pursuant to that certain Amendment No. 1 to Amended and Restated Loan Agreement
dated as of September 26, 1996 (collectively, the "Agreement"); and
WHEREAS, Company has requested and Bank has agreed to an increase of an
additional Two Million Five Hundred Thousand Dollars ($2,500,000.00) to the
Credit Loan.
NOW THEREFORE, in consideration of the terms and conditions contained
herein and of any extension of credit heretofore, now or hereafter made by Bank
to Company, the parties hereto agree as follows:
1. All capitalized terms used herein without definition should have the
meanings set forth in the Agreement.
2. Section 1.1(a) of the Agreement is amended in its entirety to now read as
follows:
"l.l Amount.
(a) Credit Loan. Subject to terms of this Agreement, the Company
may borrow from the Bank and the Bank will thereupon lend to the Company,
and the Company shall repay in accordance with the terms of this Agreement
and may reborrow at any time prior to the Maturity Date any amount which
is a multiple of $100,000 up to a maximum amount at any one time
outstanding of $35,000,000 (herein called the 'Credit' or the 'Credit
Loan'), provided that the Bank receives prior to the initial borrowing the
certificates required by Sections 7.1 and 7.2 and, prior to all subsequent
borrowings, the representations and certificates required by Section 7.2."
<PAGE>
3. Section 1.2(a) of the Agreement is amended in its entirety to now read as
follows:
"1.2 Notes.
(a) Revolving Note. The borrowing under the Revolving Credit
described in Section 1.1(a) will be evidenced by a note (herein called the
'Revolving Note'), in the form of Exhibit I hereto, dated December ____ ,
1996. which is payable to the order of the Bank on August 31, 1999, in the
principal amount of $35,000,000. The principal amount of the Credit Loan
outstanding as of the date hereof shall be recorded by the Bank on
computer or other records of the Bank, and the principal amount of each
additional Credit Loan and of any payment of principal of the Revolving
Note may be evidenced by notations made by the Bank on such records,
showing the date and amount of each additional Credit Loan or payment of
principal. The aggregate unpaid amount of Credit Loans set forth on such
records shall be rebuttable presumptive evidence of the principal amount
thereof owing and unpaid if the Bank records all of the Credit Loans
and makes notations of the payments of principal on such records, but the
Bank shall not be under any obligation to do so."
4. Section 1.9 of the Agreement is amended it its entirety to now read as
follows:
"1.9 Commitment Fee. The Company shall pay to the Bank, quarterly
in arrears, a commitment fee equal to one quarter of one percent (1/4%) of
the difference between (a) $35,000,000; and (b) the average daily amount
of the $35,000,000 Credit Loan that is outstanding during the proceeding
quarter, with such commitment fee payable on the fifteenth (15th) day of
the first month following the end of each quarter during the term of this
Agreement."
5. In Section 9.1 of the Agreement, the indented paragraph beginning with
"(a) Maximum Loan Amount. On any given day ..." is amended to now read in its
entirety as follows:
"(a) Maximum Loan Amount. On any given day during the term of this
Agreement, the "Maximum Loan Amount" for purposes of the Revolving Note
(and the maximum amount that the Company may borrow on under the Credit
Loan) is hereby defined as the lessor of: (a) 80% of the Company's 'Net
Accounts Receivable' (as hereinafter defined); and (b) $35,000,000. For
purposes of this Agreement, the term 'Net Account Receivables' means the
amount shown on line 10 of the most recent Monthly Collateral Report
delivered to the Bank, plus all estimated net billings shown on the then
current Collateral Reconciliation Report and minus all collections that
are deposited in the 'Cash Collateral Account' (as defined in Section
9.1(b)(ix) hereof). The estimated net billings of the Company will then
be adjusted to the extent necessary on the next Monthly Collateral Report
submitted to the Bank to reflect the actual net billings of the Company.
To the extent that there is any discrepancy between the net billings as
shown on the Collateral Reconciliation Report and those shown on the
Monthly Collateral Report, the net billings on the Monthly Collateral
Report shall control in all respects."
<PAGE>
6. Collateral. To induce Bank to enter into this Amendment and to make the
increased Credit Loan available to Company, Company hereby agrees, acknowledges
and confirms with Bank that (i) the security interest granted to Bank in the
Collateral as provided in Section 9 of the Agreement is hereby confirmed and
remains in full force and effect, and (ii) such security interest in the
Collateral shall extend to and the Collateral shall secure all of the increased
Credit Loan, in addition to all Other Obligations of Company under the
Agreement.
7. Company shall deliver to Bank a new Revolving Note dated as of the date
hereof in the principal amount of $35,000,000 (the "Replacement Note"), in the
form attached hereto, which Replacement Note shall be issued to Bank in
replacement of and substitution for, and not in payment of, the Revolving Note
dated September 26, 1996 and all Obligations evidenced thereby shall hereafter
be evidenced by the Replacement Note. All references in the Agreement to the
"Revolving Note" shall hereafter be deemed to refer to the Replacement Note.
Upon delivery of the executed Replacement Note by Company to Bank, Bank shall
mark the prior Revolving Note as "canceled and replaced."
8. Company hereby represents and warrants to Bank that the execution,
delivery and performance by it of this Amendment has been duly authorized by all
necessary corporate action, and that this Amendment is a legal, valid and
binding obligation of Company enforceable against it in accordance with its
terms, except as the enforcement thereof may be subject to: (a) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally; and (b) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law).
9. Company hereby represents and warrants to Bank that the execution,
delivery and performance by Company of this Amendment does not, and will not,
contravene or conflict with any provision of (i) law, (ii) any judgment, decree,
or order, or (iii) Company's articles of incorporation or by-laws, and does not,
and will not, contravene or conflict with, or cause any Lien to arise under, any
provision of any agreement or instrument binding upon Company or upon any
property of Company.
10. Company hereby certifies that each of the representations and warranties
contained in the Agreement and each of the other agreements delivered in
connection therewith (the "Other Agreements") is true and correct in all
material respects on and as of the date hereof as if made on the date hereof,
except to the extent specifically amended pursuant to this Amendment and that no
Event of Default of Default currently exists under the Agreement or any of the
Other Agreements or will exist after or be triggered by the execution and
delivery of this Amendment.
11. Except as specifically amended above, the Loan Agreement, as amended, and
each of the Other Agreements shall remain in full force and effect and is hereby
ratified and confirmed.
12. The execution, delivery and effectiveness of this Amendment shall be
limited precisely as written and shall not be deemed to (i) be consent to any
waiver or modification of any other term or condition of the Loan Agreement or
any of the Other Agreements or (ii) prejudice any right, power or remedy which
Bank now has or may have in the future under or in connection with the Loan
Agreement of any of the Other Agreements. Upon the effectiveness of this
Amendment, each reference in the Loan Agreement to 'this Agreement,'
'hereunder,' 'hereof,' 'herein' or words of similar import shall mean and be a
reference to the Loan Agreement as amended hereby.
<PAGE>
13. This Amendment shall be deemed to be effective as of December _______,
1996, provided that Company shall deliver to Bank the documents described on the
attached Schedule of Documents upon the execution hereof.
14. This Amendment may be executed in separate counterparts, each of which
shall, collectively and separately, constitute one agreement. To the extent the
terms of this Amendment conflict with the terms of the Agreement or any Exhibit
or Schedule thereto, the terms of this Amendment shall be controlling.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by
their respective duly authorized officers as of the day and year first written
above.
KABLE NEWS COMPANY, INC.
By: /s/ Mohan Vachani
-----------------
Its: Vice President
-----------------
ATTEST:
By: /s/ Valerie Ascuitto
--------------------
Its: Assistant Secretary
--------------------
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: /s/ Elizabeth G. Brandt
-----------------------
Name: Elizabeth G. Brandt
-----------------------
Its: Commercial Banking Officer
---------------------------
EXHIBIT 4(b)
AMENDMENT NO. 3 TO AMENDED AND RESTATED LOAN AGREEMENT
This Amendment No. 3 to Amended and Restated Loan Agreement ("Amendment"),
is made as of the 18th day of September, 1997 by and between AMERICAN NATIONAL
BANK AND TRUST COMPANY OF CHICAGO, a national banking association with its
principal office located at 33 N. LaSalle Street, Chicago, IL 60690 ("Bank"),
and KABLE NEWS COMPANY, INC., an Illinois corporation with its principal place
of business located at 16 South Wesley Avenue, Mt. Morris, Illinois 61054
("Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Company and Bank previously entered into a certain Amended and
Restated Loan Agreement dated as of October 6, 1995 as amended by that certain
Amendment No. 1 to Amended and Restated Loan Agreement dated as of September 26,
1996 and that certain Amendment No. 2 to Amended and Restated Loan Agreement
dated as of December 13, 1996 (as so amended, the "Agreement"); and
WHEREAS, Company has requested that certain provisions of the Agreement be
amended as set forth herein, and that Bank increase the amount available under
the Credit Loan to $37,000,000, and extend the maturity of the Credit Loan.
NOW THEREFORE, in consideration of the terms and conditions contained
herein, and of any extension of credit heretofore, now or hereafter made by Bank
to Company, the parties hereto hereby agree as follows:
1. All capitalized terms used herein without definition shall have the
meanings set forth in the Agreement.
2. Section 1.1(a) of the Agreement is amended in its entirety to read
as follows:
"(a) Credit Loan. Subject to terms of this Agreement, the Company
may borrow from the Bank and the Bank will thereupon lend to the Company,
and the Company shall repay in accordance with the terms of this Agreement
and may reborrow at any time prior to the Maturity Date any amount which
is a multiple of $100,000 up to a maximum amount at any one time
outstanding of $37,000,000 (herein called the 'Credit' or the 'Credit
Loan'), provided that the Bank receives prior to the initial borrowing the
certificates required by Sections 7.1 and 7.2 and, prior to all subsequent
borrowings, the representations and certificates required by Section 7.2."
<PAGE>
3. Section 1.2(a) of the Agreement is amended in its entirety to read
as follows:
"(a) Revolving Note. The borrowing under the Revolving Credit
described in Section 1.1(a) will be evidenced by a note (herein called the
'Revolving Note'), in the form of Exhibit I hereto, dated September 18,
1997, which is payable to the order of Bank on August 31, 2000, in the
principal amount of $37,000,000. The principal amount of the Credit Loan
outstanding as of the date hereof shall be recorded by Bank on computer or
other records of Bank, and the principal amount of each additional Credit
Loan and of any payment of principal of the Revolving Note may be
evidenced by notations made by Bank on such records, showing the date and
amount of each additional Credit Loan or payment of principal. The
aggregate unpaid amount of Credit Loans set forth on such records shall be
rebuttable presumptive evidence of the principal amount thereof owing and
unpaid if Bank records all of the Credit Loans and makes notations of all
the payments of principal on such records, but Bank shall not be under any
obligation to do so."
4. Section 1.9 of the Agreement is amended by deleting the number
"$35,000,000" wherever occurring and substituting therefore the number
"37,000,000".
5. In Section 8.1(h) of the Agreement is amended by deleting the date
"August 31, 1999" and substituting therefore the date "August 31, 2000".
6. Section 9.1 of the Agreement is amended by deleting the number
"$35,000,000" and substituting therefore the number "$37,000,000".
7. Collateral. To induce Bank to enter into this Amendment and to make
the increased Credit Loan available to Company, Company hereby agrees,
acknowledges and confirms with Bank that (i) the security interest granted to
Bank in the Collateral as provided in Section 9 of the Agreement is hereby
confirmed and remains in full force and effect, and (ii) such security interest
in the Collateral shall extend to and the Collateral shall secure the increased
Credit Loan, in addition to all Other Obligations of Company under the
Agreement.
8. Company shall deliver to Bank a new Revolving Note dated as of the
date hereof in the principal amount of $37,000,000 (the "Replacement Note"), in
the form attached hereto, which Replacement Note shall be issued to Bank in
replacement of and substitution for, and not in payment of, the Revolving Note
dated December 13, 1996 and all Obligations evidenced thereby shall hereafter be
evidenced by the Replacement Note. All references in the Agreement to the
"Revolving Note" shall hereafter be deemed to refer to the Replacement Note.
Upon delivery of the executed Replacement Note by Company to Bank, Bank shall
mark the prior Revolving Note as "cancelled and replaced."
9. Company hereby represents and warrants to Bank that the execution,
delivery and performance by it of this Amendment has been duly authorized by all
necessary corporate action, and that this Amendment is a legal, valid and
binding obligation of Company enforceable against it in accordance with its
terms, except as the enforcement thereof may be subject to: (a) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally; and (b) general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law).
<PAGE>
10. Company hereby represents and warrants to Bank that the execution,
delivery and performance by Company of this Amendment does not, and will not,
contravene or conflict with any provision of (i) law, (ii) any judgment, decree,
or order, or (iii) Company's articles of incorporation or by-laws, and does not,
and will not, contravene or conflict with, or cause any Lien to arise under, any
provision of any agreement or instrument binding upon Company or upon any
property of Company.
11. Company hereby certifies that each of the representations and
warranties contained in the Agreement and each of the other agreements delivered
in connection therewith (the "Other Agreements") is true and correct in all
material respects on and as of the date hereof as if made on the date hereof,
except to the extent specifically amended pursuant to this Amendment and that no
Event of Default or Default currently exists under the Agreement or any of the
Other Agreements or will exist after or be triggered by the execution and
delivery of this Amendment.
12. Except as specifically amended above, the Loan Agreement, as
amended, and each of the Other Agreements shall remain in full force and effect
and is hereby ratified and confirmed.
13. The execution, delivery and effectiveness of this Amendment shall be
limited precisely as written and shall not be deemed to (i) be consent to any
waiver or modification of any other term or condition of the Loan Agreement or
any of the Other Agreements or (ii) prejudice any right, power or remedy which
Bank now has or may have in the future under or in connection with the Loan
Agreement or any of the Other Agreements. Upon the effectiveness of this
Amendment, each reference in the Loan Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of similar import shall mean and be a
reference to the Loan Agreement as amended hereby.
14. This Amendment shall be deemed to be effective as of September 18,
1997, provided that Company shall deliver to Bank the documents described on the
attached Schedule of Documents upon the execution hereof.
15. This Amendment may be executed in separate counterparts, each of
which shall, collectively and separately, constitute one agreement. To the
extent the terms of this Amendment conflict with the terms of the Agreement or
any Exhibit or Schedule thereto, the terms of this Amendment shall be
controlling.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by
their respective duly authorized officers as of the day and year first written
above.
ATTEST: KABLE NEWS COMPANY, INC.
By: ________________ By: /s/ Mohan Vachani
-----------------
Its: ________________ Name: Mohan Vachani
-----------------
Its: Vice President
-----------------
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By: ___________________
Name: Robin P. Winer
--------------------
Its: Assistant Vice President
------------------------
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FDS - 2ND QUARTER
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<PERIOD-END> OCT-31-1997
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0
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