United States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
or the Securities Exchange Act of 1934
For quarterly period ended March 31, 1994
Commission File Number 0-2382
_______________
MTS SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 612-937-4000 41-0908057
(State or other jurisdiction of (Telephone number of I.R.S. Employer
incorporation or organization) registrant including Identification No.)
area code)
14000 Technology Drive, Eden Prairie, Minnesota 55344
(Address/Zip Code of principal executive offices)
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.
_ X_ Yes ___ No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $.25 par value; 4,582,388 shares outstanding.
PART I. FINANCIAL INFORMATION
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1994 AND SEPTEMBER 30, 1993
MAR 31 SEPT 30
1994 1993
ASSETS UNAUDITED AUDITED
--------- ---------
(expressed in $ 000's)
Cash and cash equivalents $ 9,851 $ 7,597
Accounts receivable 44,668 41,841
Unbilled contracts and retainage receivable 43,041 47,066
Inventories-
Customer jobs-in-process 9,639 7,394
Components, assemblies and parts 19,336 17,615
Prepaid expenses 3,428 1,932
--------- ---------
Total current assets 129,963 123,445
--------- ---------
Land 3,703 3,725
Buildings and improvements 35,364 27,532
Machinery and equipment 47,474 45,376
Accumulated depreciation (40,374) (39,379)
--------- ---------
Total property and equipment 46,167 37,254
--------- ---------
Other assets 5,236 5,017
--------- ---------
$ 181,366 $ 165,716
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Notes payable to banks $ 28,046 $ 28,602
Current maturities of long-term debt 1,011 2,194
Accounts payable 9,579 6,882
Accrued compensation and benefits
15,499 16,085
Accrued income taxes 1,446 726
Other accrued liabilities 7,840 5,148
Advance billings to customers 5,049 7,324
--------- ---------
Total current liabilities 68,470 66,961
--------- ---------
Deferred income taxes 2,634 3,241
Long-term debt, less current maturities
12,353 2,503
--------- ---------
Common stock, $.25 par; 16,000,000 shares
authorized: 4,582,388 and 4,543,603
shares issued and outstanding 1,146 1,136
Additional paid-in capital 3,268 2,677
Retained earnings 89,924 85,661
Cumulative translation adjustment
3,571 3,537
--------- ---------
Total shareholders' investment
97,909 93,011
--------- ---------
$ 181,366 $ 165,716
========= =========
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE 3 MONTHS ENDED
MARCH 31
1994 1993
---------- ----------
(expressed in 000's except
for per share amounts)
<S> <C> <C>
NET SALES $ 46,357 $ 43,167
COST OF SALES 28,978 25,296
---------- ----------
Gross profit 17,379 17,871
---------- ----------
OPERATING EXPENSES:
Selling 9,669 8,728
General and administrative 3,275 2,778
Research and development 3,357 3,302
Interest expense 554 328
Interest income (43) (98)
Other (income) and expense, net (including $3.7 million gain
from real estate transaction in 1994) (4,448) (540)
---------- ----------
Total operating expense 12,364 14,498
---------- ----------
INCOME BEFORE INCOME TAXES 5,015 3,373
PROVISION FOR INCOME TAXES 1,834 1,186
---------- ----------
NET INCOME $3,181 $2,187
========== ==========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $0.68 $0.48
========== ==========
DIVIDENDS PER SHARE $0.14 $0.12
========== ==========
BACKLOG $ 86,848 $ 108,653
========== ==========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,684 4,519
========== ==========
</TABLE>
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE 6 MONTHS ENDED
MARCH 31
1994 1993
-------- --------
(expressed in 000's except
for per share amounts)
<S> <C> <C>
NET SALES $ 93,597 $ 83,184
COST OF SALES 56,774 48,608
-------- --------
Gross profit 36,823 34,576
-------- --------
OPERATING EXPENSES:
Selling 18,923 17,349
General and administrative 6,023 4,929
Research and development 6,029 5,926
Interest expense 952 664
Interest income (95) (184)
Other (income) and expense, net (including $3.7 million gain
from real estate transaction in 1994) (3,550) 57
-------- --------
Total operating expense 28,282 28,741
-------- --------
INCOME BEFORE INCOME TAXES 8,541 5,835
PROVISION FOR INCOME TAXES 3,000 1,974
-------- --------
NET INCOME $5,541 $3,861
======== ========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $1.19 $0.85
======== ========
DIVIDENDS PER SHARE $0.28 $0.24
======== ========
BACKLOG $86,848 $108,653
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,675 4,530
======== ========
</TABLE>
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
FOR THE 6 MONTHS ENDED
MAR 31 MAR 31
1994 1993
---- ----
(expressed in $000's)
OPERATING ACTIVITIES
Net income $ 5,541 $ 3,861
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 2,957 1,897
Deferred income taxes (607) (69)
Foreign currency translation adjustment 34 (886)
Changes in operating assets and liabilities:
Receivables, including accounts, unbilled
contracts and retainages 1,198 (4,117)
Inventories (3,966) (4,920)
Prepaid expenses (1,496) (749)
Accrued income taxes 720 (578)
Advance billings to customers (2,276) 3,040
Other, net 4,803 81
----- ------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 6,908 (2,440)
----- ------
INVESTING ACTIVITIES
Property and equipment, net (11,740) (1,099)
Investment in Custom Servo Motors, Inc. -- (471)
Excess purchase cost over assets
acquired in Adamel Lhomargy (40) --
Other assets (309) 133
----- ------
NET CASH USED IN INVESTING ACTIVITIES (12,089) (1,437)
------- ------
FINANCING ACTIVITIES
Net borrowings (payments) on notes payable (556) 11,042
Proceeds from issuance of long-term debt 9,690
Payments on long-term borrowings (1,023) (1,996)
Cash dividends (1,277) (1,068)
Proceeds from employee stock option
and stock purchase plans 601 317
Payments to purchase and retire common stock -- (1,177)
----- ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,435 7,118
----- ------
CASH EQUIVALENTS 2,254 3,241
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,597 9,277
----- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,851 $ 12,518
======== ========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION AND TRANSLATION. The consolidated financial statements
include the accounts of MTS SYSTEMS CORPORATION (the Company) and its wholly
owned subsidiaries. All significant intercompany balances and transactions have
been eliminated.
All balance sheet accounts of foreign subsidiaries are translated at the
current exchange rate as of the end fo the accounting period. Income statement
items are translated at average currency exchange rates. The resulting
translation adjustment is recorded as a separate component of shareholders'
investment. Gains and losses resulting from foreign currency transactions are
included in "Other (income) and expense, net" in the consolidated Statements of
Income.
REVENUE RECOGNITION. Revenue is recognized upon shipment of equipment when
the customer's order can be manufactured and delivered in less than nine months.
Revenue on contracts requiring longer delivery periods (long-term contracts) and
other customized orders which permit progress billings is recognized using the
percentage of completion method based on the cost incurred to date relative to
estimated total cost of the contract (cost-to-cost method). The cumulative
effects of revisions of estimated total contract costs and revenues are recorded
in the period in which the facts become known. When a loss is anticipated on a
contract, the amount thereof is provided currently.
LONG-TERM CONTRACTS. The Company enters into long-term contracts for
customized equipment sold to its customers. Under terms of certain contracts,
revenue recognized using the percent of completion method may not be invoiced
until completion of contractual milestones, upon shipment of the equipment, or
upon installation and acceptance by the customer. Unbilled amounts for such
contracts appear in the consolidated balance sheets as unbilled contracts and
retainage receivable. Amounts unbilled or retained at March 31, 1994 are
expected to be invoiced as follows: $36,236,000 in 1994 and $8,432,000 in 1995.
INCOME TAXES -- CHANGE IN ACCOUNTING METHOD. Income Taxes -- Change In
Accounting Method. Income Taxes -- Change In Accounting Method. Effective
October 1, 1993, the Company adopted Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes (SFAS No. 109), under which deferred income
tax assets and liabilities are recognized for the differences between financial
and income tax reporting bases of assets and liabilities based on enacted tax
rates and laws. Provision for Income Taxes is the tax payable or refundable for
the period plus or minus the change during the period in deferred tax assets and
liabilities.
The cumulative effect of adopting SFAS No. 109 was not significant. The
impact of the Company's change in accounting for income taxes on the results of
operations for the quarters ended December 31, 1993 and March 31, 1994 was also
not significant.
ACQUISITION. During the quarter ended March 31, 1994, the Company acquired
the stock of Adamel-Lhomargy, a French manufacturer of material testing systems,
for cash and assumption of debt. The Consolidated Balance Sheet at March 31,
1994 includes the assets and liabilities of Adamel, and the Consolidated
Statement of Income for the three and six months periods ended March 31, 1994
includes the operations of Adamel from the effective date of the acquisition.
Adamel had revenues of under $10 million in its most recent fiscal year.
Neither the balance sheet nor the results of operations for Adamel's most recent
fiscal year or the quarter ended March 31, 1994 were significant with respect to
the Company's Consolidated Balance Sheets or Consolidated Statements of Income
prepared as of September 30, 1993 or March 31, 1994, respectively.
OTHER FINANCIAL STATEMENT DISCLOSURE. The Notes to Consoli dated Financial
Statements appearing in the Company's September 30, 1993 Annual Report to
Shareholders on pages 22 through 28 are incorporated herein by reference.
MANAGEMENT'S INTERIM FINANCIAL STATEMENT REPRESENTATION. The unaudited
interim financial statements furnished herein reflect all adjustments which are,
in the opinion of management, necessary to a fair statement of the results of
the interim periods presented.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL POSITION AND RESULTS OF OPERATIONS
New Orders and Backlog
New orders for the second quarter of fiscal 1994,
ended March 31, 1994, were $51,418,000, a 32% increase over the comparable
quarter in fiscal 1993. Orders in the Mechanical Testing and Simulation sector
rebounded from a very low first quarter even though Europe remained weak and our
business with Japanese auto manufacturers is at a historic low. Large dollar
orders for the quarter increased 30% over the volume of large orders for the
same period one year ago. Orders in the Measurement and Automation sector
remained strong with gains coming from both North America and Europe.
New orders for the six months ended March 31, 1994 were $90,270,000
compared to $92,393,000 for the same period one year ago. Orders in the
Mechanical Testing and Simulation sector were 9% lower than last year while
orders in the Measurement and Automation sector were 37% ahead of last year.
Large orders comprise 37% of the total in 1994 compared to 45% of the 1993 order
volume. International orders were 51% of the 1994 total compared to 47% for
1993. Orders for 1994 are expected to exceed fiscal the 1993 total of $179
million, however, the automotive simulation and testing markets must improve to
reach this objective.
Backlog of undelivered orders at March 31, 1994 was
$86,848,000 compared to $80,342,000 at December 31, 1993 and $88,731,000 at
September 30, 1993.
Results of Operations
Revenues for the second quarter were $46,357,000 a 7%
increase from the same quarter one year ago. International content of revenue
was 51% and 46% for the quarters ended March 31, 1994 and 1993, respectively.
Income before income taxes increased 49% to $5,015,000 compared to
$3,373,000 for the second quarter ended a year ago. The increase in pretax
earnings resulted from a $3.7 million gain (included in "Other income and
expense, net") on the sale of the Company's old Berlin plant. The gain was
partially offset by reduced gross margins in the Company's Mechanical Testing
and Simulation sector. The decline in margin results from cost increases on
larger custom-content projects and competitive price pressure. Operating
expenses, excluding the effect of the gain, increased nearly $1.6 million,
principally in selling and administration. However, operating expenses as a
percent of revenues were 35% for the quarter ended March 31, 1994 compared to
34% for the same quarter in 1993. The increase reflects investments in domestic
servo motor business and markets in the Far-east and Europe, including the new
French acquisition, which are consistent with revenue growth in those areas.
Net income for the quarter was $3,181,000 a 45% increase compared to the
comparable quarter one year ago. The effective tax rate for the quarter ended
March 31, 1994 was 37% compared to 35% for the quarter ended in March, 1993.
Revenues for the six months ended in March, 1994 were $93,597,000, a 13%
increase from the $83,184,000 reported one year ago. International revenues are
51% compared to 47% for the periods ended in March of 1994 and 1993,
respectively. Revenues in the Material Testing and Simulation sector increased
9% while Measurement and Automation revenues increased 32% over revenues
reported one year ago.
Income before income taxes for the first six months of 1994, increased 46%
to $8,541,000 from $5,835,000 reported in 1993. The increase includes the
non-operating gain from the sale of the Berlin plant, as discussed above. Gross
margins as a percent of sales were 39.3% in 1994 compared to 41.6% in 1993. The
decline in margins is discussed above and is the principal reason for the
decline in operating income. Operating expenses (exclusive of the gain) as a
percent of sales were 34% compared to 35% for the six months ended in March,
1994 and 1993, respectively.
Net income for the first six months of 1994 was $5,541,000 compared to
$3,861,000 reported one year ago. The income tax rates were 35% and 34% for the
six months ended in 1994 and 1993, respectively.
The cumulative effect of the Company's change in accounting to adopt
SFAS No. 109 was not significant. The impact of the change on the
results of operations for the quarters ended December 31, 1993
and March 31, 1994 also was not significant.
Financial Condition and Liquidity
The ratio of current assets to current liabilities at March 31, 1994 was
1.9 compared to 1.8 at September 30, 1993. Cash and cash equivalents were
$9,851,000 at March 31, 1994 compared to $7,597,000 at September 30, 1993. The
Company's borrowing under its $70 million lines of credit was $28 million at
March 31, 1994 compared to $41 million at December 31, 1993 and $29 million at
September 30, 1993.
Capital expenditures, net of retirements for the second quarter totalled
$11,740,000. The purchase of a new Berlin plant facility accounts for most of
the expenditure. The Company's total debt to equity ratio increased to 42% at
March 31,1994 from 36% at September 30,1993 reflecting the use of short and
long-term notes to finance the purchase of the Berlin plant and the acquisition
of Adamel-Lhomargy. The Company reduced short-term borrowings with proceeds from
the sale of its old Berlin facility in March. Negotiations are underway to
secure the remaining indebtedness on the new facility with a mortgage.
The Company's past financial performance, the availability of credit under
its borrowing facilities, available cash and cash equivalents provide sufficient
resources for growth, expansion and diversification.
PART II-------OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company's Annual Meeting of Shareholders was held January 31, 1994.
(b) The following persons were nominated and elected to continue as
directors of the Company until the next Annual Meeting of Shareholders.
Votes For Votes Against
E. Thomas Binger 3,918,720 126,817
George N. Butzow 3,919,192 126,345
Charles A. Brickman 3,918,925 126,612
Bobby I. Griffin 3,918,425 127,112
Thomas E. Holloran 3,919,125 126,412
Thomas E. Stelson 3,918,416 127,121
Donald M. Sullivan 3,918,756 126,781
No voters abstained or were broker/bank non-votes for any of the directors.
(c) Shareholders approved the Company's 1994 Stock Plan with 2,300,815
votes for; 1,483,452 votes against; 23,349 votes abstained; and 237,921 votes
were broker/bank non-votes.
(d) Arthur Andersen & Co. was ratified as the Company's independent auditor
by 4,029,402 votes for; 952 votes against; 15,183 votes abstained; and zero
non-votes by broker/banks.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit:
3.a Restated Articles of Incorporation, adopted January 31, 1994.
(b) Reports on 8-K:
No reports on Form 8-K were filed during the quarter ended March 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MTS SYSTEMS CORPORATION
____________________
/s/ D.M. Sullivan
D.M. Sullivan
President
Chief Executive Officer
_____________________
/s/ M.L. Carpenter
Chief Financial Officer
Dated: May 13, 1994
Exhibit 3.A
RESTATED ARTICLES OF INCORPORATION
OF
MTS SYSTEMS CORPORATION
_______________________
ARTICLE I
The name of this corporation shall be MTS SYSTEMS CORPORATION.
ARTICLE II
The purpose of this corporation shall be:
(a) To engage in the research, experimentation,
development, designing, production, manufacturing, compounding,
processing, fabrication, application, utilization, installation,
repair, servicing, buying, selling, distributing, and dealing in
and with test systems, structural loading systems, plastics and
plastic materials, chemicals, paper products, metals, electronic
and electrical components and products, machinery, instruments,
equipment, devices, implements, tools, and all other articles and
products of commerce; and to engage in such incidental,
convenient, or necessary functions as may be deemed advisable
therewith, either within or without the State of Minnesota or the
United States of America, or both;
(b) To render consultative, engineering and expert advice
and service to others;
(c) To apply for, prosecute, acquire, own, employ,
transfer, sell, license and otherwise deal in or with patents,
trademarks, and copyrights relating in any manner to the business
or activities of the corporation;
(d) To deal in and distribute, either as principal or
agent, and either as manufacturer, jobber, wholesaler or
retailer, commodities, goods, wares and merchandise and other
articles of every kind, character and description;
(e) To acquire, own, hold, manage and operate either
separately or as part of the business of this corporation, other
businesses, firms, corporations or enterprises;
(f) To acquire, hold, pledge, vote, sell and dispose of
shares, bonds, securities and other evidences of indebtedness of
any person or domestic or foreign corporation, firm or
government, whether for the purpose of investment of the funds of
this corporation or for the purpose of exercising control or
management over the affairs of other persons, firms or
corporations, or for both purposes;
(g) To purchase, lease or otherwise acquire, to own, hold,
manage, operate or employ, to mortgage, pledge, or otherwise
encumber, and to sell, let, exchange or otherwise dispose of real
property or personal property or mixed real and personal
property;
(h) To enter into partnerships, joint ventures, and
agreements of all kinds with other persons, firms, partnerships
and corporations;
(i) To borrow money and secure credit upon such terms and
security as may be deemed necessary or advantageous, and if
deemed necessary or appropriate, to pledge or mortgage any or all
of the assets of the corporation to secure such loan or credit;
(j) To do any and all other acts and things in addition to
those enumerated and specified above which may be advantageous,
necessary, expedient or convenient to the conduct of the business
or the attainment of the purposes of the corporation.
The foregoing clauses and statement of purposes shall also
be a statement of the powers of this corporation, but the
declaration of purposes and powers herein set forth shall not be
deemed to limit or restrict in any manner the powers of this
corporation, which shall possess all of the powers bestowed upon
or permitted to it by law which are not inconsistent with those
set forth herein.
ARTICLE III
The duration of this corporation shall be perpetual.
ARTICLE IV
The location and post office address of this corporation in
the State of Minnesota shall be at such place as may be
designated for that purpose by the Board of Directors from time
to time. Until some other place is so designated, the location
and post office address of the office of this corporation is:
14000 Technology Drive, Eden Prairie, Minnesota 55344-2290.
ARTICLE V
The amount of stated capital with which this corporation
will begin business will be not less than $1,000.00.
ARTICLE VI
The number of shares of the total authorized capital stock
of the corporation shall be sixteen million (16,000,000), all of
which are common shares of capital stock. Each common share of
capital stock shall have the par value of twenty-five cents
($.25). Each share shall entitle the holder thereof to one vote
for each share held by the shareholder, but shareholders shall
have no pre-emptive right to subscribe for or purchase securities
of the corporation; and all shares shall be equal in all respects
and shall confer equal rights upon the holders thereof, including
equal rights in and to dividends and distributions and upon
dissolution.
ARTICLE VII
Section 1. The management and conduct of the business of
this corporation shall be vested in a Board of Directors and in
such officers and agents as may be elected or designated by the
Board of Directors. Such officers and agents shall have the
authority and duties in the management of the business of the
corporation as may be prescribed in the By-Laws, or, in the
absence of a controlling provision therein, as determined by the
Board of Directors.
Section 2. The Board of Directors shall consist of such
number of Directors, not less than three, as shall be stated in
the By-Laws, or, in the absence of a controlling provision
therein, as determined by the shareholders at any annual meeting
or meeting called for the purpose of electing a Director or
Directors.
Section 3. The terms of office of the Directors of this
corporation shall be for one year and until their respective
successors are elected and qualified except that the terms of
office of the Directors named herein shall be for the period
stated herein subject to the right of the shareholders to remove
any of said Directors in the manner provided by statute prior to
the end of their respective terms and thereupon to elect a new
Director or Directors for the remainder of such term or terms.
Section 4. The Board of Directors shall have the power and
authority to fill any vacancy caused by the death, resignation or
inability to serve of any director. Newly created directorships
resulting from an increase in the authorized number of directors
by action of the board of directors may be filled by a two-thirds
vote of the directors serving at the time of such increase.
ARTICLE VIII
Section 1. The Board of Directors shall have the general
management and control of the business and affairs of this
corporation and shall exercise all of the powers that may be
exercised or performed by this corporation. The Board of
Directors shall have the power and authority to delegate such
duties, power and authority relating to the management and
conduct of the business and affairs of this corporation to such
officers and agents elected or designated by it as it may deem
proper or appropriate, and as may be permitted by the By-Laws or
applicable statutes or laws.
Section 2. The Board of Directors shall have the authority
to accept or reject subscriptions for shares made before or after
incorporation, and may grant rights to convert any securities of
this corporation into shares of any class or classes or grant
options to purchase or subscribe for shares or other securities
of the corporation. The Board of Directors shall from time to
time fix and determine the consideration for which the
corporation shall issue and sell its shares, and also the
dividends to be paid by the corporation upon its shares.
Section 3. The Board of Directors shall have the authority
to make and alter the By-Laws, subject to the power of the
shareholders to change or repeal such By-Laws.
ARTICLE IX
The holders of a majority of the outstanding voting shares
of capital stock of this corporation shall have power to
authorize the sale, lease, exchange or other disposition of all
or substantially all of the property and assets of this
corporation, including its good will, to amend the Articles of
Incorporation of this corporation, and to adopt or reject an
agreement of consolidation or merger.
ARTICLE X
No director of this Corporation shall be personally liable
to the Corporation or its stockholders 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 stockholders; (ii) for acts or omissions not
in good faith or that involve intentional misconduct or a knowing
violation of law; (iii) under sections 302A.559 or 80A.23 of the
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.
The provision of this Article 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.
If the 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 amended Minnesota Statutes.
