<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO ___________
Commission File Number: 0-11647
HYCOR BIOMEDICAL INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1437178
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
18800 Von Karman Avenue, Irvine, California 92715-1517
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 440-2000
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
----- ----------------------------
Common Stock, $.01 Par Value 7,575,630
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,176,533 $ 1,033,459
Investments 5,223,304 6,365,995
Accounts Receivable, net of allowance for
doubtful accounts of $178,990 and $136,604 2,800,951 3,679,419
Inventories (Note 2) 3,941,985 3,948,564
Prepaid expenses and other current assets 451,963 685,399
Deferred income tax benefit 1,239,726 1,138,000
----------- -----------
Total current assets 14,834,462 16,850,836
----------- -----------
PROPERTY AND EQUIPMENT, at cost 11,061,630 10,469,775
Less accumulated depreciation (6,287,074) (5,742,459)
----------- -----------
4,774,556 4,727,316
----------- -----------
GOODWILL AND OTHER INTANGIBLES, net of
amortization of $1,156,002 and $1,015,082 4,466,011 4,773,904
DEFERRED INCOME TAX BENEFIT 877,000 877,000
OTHER ASSETS 333,643 346,316
----------- -----------
Total assets $25,285,672 $27,575,372
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 558,820 $ 982,646
Accrued liabilities 569,923 1,252,718
Accrued payroll expenses 755,694 1,000,542
Accrued income taxes (69,431) -
----------- -----------
Total current liabilites 1,815,006 3,235,906
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 75,990 77,303
Paid-in capital 14,039,717 14,806,686
Retained earnings 9,362,417 9,215,989
Foreign currency translation adjustments 78,918 254,445
Unrealized losses on investments, net (86,376) (14,957)
----------- -----------
Total stockholders' equity 23,470,666 24,339,466
----------- -----------
Total liabilities and
stockholders' equity $25,285,672 $27,575,372
=========== ===========
</TABLE>
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HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $5,171,387 $6,764,393 $10,478,267 $13,257,327
COST OF SALES 2,147,380 2,929,991 4,611,735 5,825,004
---------- ---------- ----------- -----------
Gross profit 3,024,007 3,834,402 5,866,532 7,432,323
---------- ---------- ----------- -----------
OPERATING EXPENSES
Selling, general and
administrative 2,348,627 2,335,835 4,506,524 4,670,108
Research and development 645,487 527,484 1,345,914 1,162,045
---------- ---------- ----------- -----------
2,994,114 2,863,319 5,852,438 5,832,153
---------- ---------- ----------- -----------
OPERATING INCOME 29,893 971,083 14,094 1,600,170
INTEREST INCOME, net 103,960 54,647 217,335 115,374
FOREIGN EXCHANGE G/(L) (1,005) (78,290) 11,674 153,037
---------- ---------- ----------- -----------
INCOME BEFORE TAXES 132,848 947,440 243,103 1,868,581
PROVISION FOR INCOME TAXES 54,508 375,358 96,675 746,976
---------- ---------- ----------- -----------
NET INCOME $ 78,340 $ 572,082 $ 146,428 $ 1,121,605
========== ========== =========== ===========
NET INCOME PER SHARE $ .01 $ .07 $ .02 $ .14
========== ========== =========== ===========
AVE. COMMON SHARES OUTSTANDING 7,852,399 8,345,901 7,886,020 8,289,609
</TABLE>
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HYCOR BIOMEDICAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 146,428 $1,121,605
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 946,036 1,185,146
Deferred income tax provision (87,650) 80,962
Gain on foreign currency transactions (11,674) (153,037)
Loss on sale of assets 11,456 -
Change in assets and liabilities, net of effects of
foreign currency adjustments
Accounts receivable 857,122 (33,285)
Inventories (18,622) 33,828
Prepaid expenses and other current assets 243,017 159,000
Accounts payable (412,128) (567,447)
Accrued liabilities (664,873) (250,471)
Accrued payroll expenses (243,284) (59,928)
Accrued income taxes 10,856 832,411
---------- ----------
Total adjustments 630,256 1,227,179
---------- ----------
Net cash provided by (used in) operating activities 776,684 2,348,784
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments 984,298 325,275
Purchases of intangible assets (4,173) (32,273)
Purchases of property, plant and equipment (857,207) (465,033)
Proceeds from collection of notes receivable 2,623 13,606
---------- ----------
Net cash provided by (used in) investing activities 125,541 (158,425)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 76,440 202,470
Purchases of Hycor common stock (844,722) -
---------- ----------
Net cash provided by (used in) financing activities (768,282) 202,470
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 9,131 202,489
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 143,074 2,595,318
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,033,459 1,404,763
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,176,533 $4,000,081
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year - interest - -
- income taxes 204,409 1,171,137
</TABLE>
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HYCOR BIOMEDICAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
1. BASIS OF PRESENTATION
In the opinion of the Company, the accompanying financial
statements contain adjustments necessary to present fairly the financial
position as of June 30, 1996 and December 31, 1995, the results of
operations and the cash flows for the three and six-month periods ended
June 30, 1996 and 1995. The results of operations for any interim period
are not necessarily indicative of results for the full year.
These statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission and do not include
all the information and note disclosures required by generally accepted
accounting principles for complete financial statements and may be
subject to year-end adjustments. The financial information contained in
this report reflects all adjustments which, in the opinion of
management, are necessary for a fair statement of the results of the
interim periods. All adjustments are of a normal recurring nature
except for those costs described in the following Item 2. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations."
The consolidated financial statements include the accounts of
Hycor Biomedical Inc. and its wholly-owned subsidiaries. All material
intercompany amounts and transactions have been eliminated.
Reference is made to the audited financial statements and
related notes included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995. Certain items in the 1995
consolidated financial statements have been reclassified to conform with
the 1996 presentation.
Net income per share is based upon the weighted average number
of shares outstanding during the periods plus common stock equivalents
relating to warrants and options. The number of common stock
equivalents relating to options and warrants is determined using the
treasury stock method. Common stock equivalents are not included when
their effect is antidilutive. Fully diluted net income per share
approximates primary net income per share in each period.
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2. INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out
method) or market. Cost includes material, direct labor and
manufacturing overhead. Inventories at June 30, 1996 and December 31,
1995 consist of:
<TABLE>
<CAPTION>
6/30/96 12/31/95
----------- -----------
<S> <C> <C>
Raw materials $ 1,292,490 $ 1,325,973
Work in process 1,464,970 1,787,292
Finished goods 2,620,269 2,774,801
Allowance for discontinued
product lines and excess,
obsolete and short-dated (1,435,744) (1,939,502)
inventories ----------- -----------
$ 3,941,985 $ 3,948,564
----------- -----------
</TABLE>
FOREIGN CURRENCY
Realized gains or losses from foreign currency transactions
are included in operations as incurred and relate to intercompany
balances amounting to approximately $1,263,000 between Hycor and its
German subsidiary. The Company has hedged the majority of this foreign
currency exchange rate position.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Except for historical information contained herein, the matters discussed in
this report are forward-looking statements which involve risk and
uncertainties, including but not limited to economic, competitive, governmental
and technological factors affecting the Company's operations, markets,
products, services and prices and other factors discussed in the Company's
filings with the Securities and Exchange Commission.
Restructuring Plan
On July 27, 1995, the Company announced plans for a major restructuring
designed to focus operations on high potential clinical immunology segments
which management believes to have the greatest potential for future growth.
The Restructuring Plan (the "Plan"), which was finalized in the fourth quarter
of 1995, included the discontinuation of several product lines, the closure of
the Company's New Jersey facility, and the disposition or relocation of certain
fixed assets.
The total revenues related to the divested or discontinued product lines
accounted for approximately 31%, 36%, and 45% of the Company's total revenues
in 1995, 1994 and 1993, respectively.
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Although the Company believes that the sales growth resulting from the focused
efforts in the clinical immunology markets will more than offset the decrease
in revenues resulting from the restructuring, this is not expected to occur
until after 1996. The Company therefore expects that 1996 revenues will show
a decline from 1995.
In addition to expected declines in total revenues, increased investment in
marketing and research and development provided for in the Plan will cause
increased expense levels in 1996 over 1995.
FINANCIAL CONDITION
The Company decreased its working capital $595,000 as of June
30, 1996, compared to December 31, 1995. This decrease was primarily a result
of capital utilized in the stock repurchase program, offset by increases from
normal operations. The Company expects to be able to fund operations from
current working capital and profits generated from operations.
Cash and cash equivalents, marketable securities and
receivables fluctuate throughout the year based upon the sales of products
through distributors and the timing of the distributors related payments to the
Company. These fluctuations do not have a significant seasonal component.
The Company's principal capital commitments are for lease
payments under non-cancelable operating leases and leasehold improvements.
Working capital and operating profits are anticipated to be sufficient to
satisfy these commitments.
The Company is continuing to evaluate for acquisition
additional product lines and companies in the medical diagnostics field. The
Company could use sources other than cash from operations, such as issuance of
debt or equity securities, to finance any such acquisition. If such an
acquisition were completed, the Company's operating results and financial
condition could change significantly in future periods.
RESULTS OF OPERATIONS
During the three and six-month periods ended June 30, 1996,
sales decreased 24% and 21%, respectively, compared to the same period last
year, primarily due to the discontinuation of several product lines as part of
the Plan. Gross profit as a percentage of product sales increased for the
quarter from approximately 57% to 58% and remained at 56% for the same period
year-to-date.
Selling, general and administrative expenses for the three
and six-month periods ended June 30, 1996 have decreased approximately 1% and
4% over the prior year periods. This decrease is primarily due to the impact
on expenses resulting from the sale of Meridian, partially offset by costs
related to
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the implementation of the Plan which includes expanding marketing and R&D
programs.
Research and development expenses for the three and six-month
periods ended June 30, 1996 have increased approximately 22% and 16%,
respectively, over the prior year periods as the Company increased its
investment in new product development in the areas of clinical immunology.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 30, 1996, Hycor Biomedical Inc. held its Annual Meeting
of Stockholders. At such meeting, the following seven persons were elected as
directors of the Company to serve until the Annual Meeting of Stockholders in
1997 and until their successors are elected and qualified.
The tabulation of the votes cast for the election of the
directors was as follows:
<TABLE>
<CAPTION>
Nominee Votes For Votes Withheld
------- --------- --------------
<S> <C> <C>
Richard D. Hamill 6,243,897 254,567
Samual D. Anderson 6,360,053 138,411
David S. Gordon 6,360,553 137,911
Reginald P. Jones 6,361,736 136,728
James R. Phelps 6,362,267 136,197
Richard E. Schmidt 6,359,707 138,757
David A. Thompson 6,362,267 136,197
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3(ii) - By-Laws, As Amended Thru May 30, 1996
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8K: None
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SIGNATURE
---------
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.
HYCOR BIOMEDICAL INC.
---------------------
Date: August 14, 1996 By: /s/ Armando Correa
------------------------------------
Armando Correa, Director of Finance
(Mr. Correa is the Principal Accounting
Officer and has been duly authorized to
sign on behalf of the registrant.)
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Exhibit List
<TABLE>
<CAPTION>
Page
Exhibit No. Name of Exhibit No.
- ----------- --------------- ----
<S> <C> <C>
3(ii). By-Laws, As Amended Thru May 30, 1996 11-19
27. Financial Data Schedule
(Electronic Filing Only)
</TABLE>
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EXHIBIT 3(ii)
- -------------
BY-LAWS, AS AMENDED THRU MAY 30, 1996
BYLAWS
OF
HYCOR BIOMEDICAL INC.
(A DELAWARE CORPORATION)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation will be entitled to have a certificate signed by, or in the name
of, the corporation by the Chairman or Vice-Chairman of the Board of Directors,
if any, or by the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him in the corporation.
If such certificate is countersigned by a transfer agent other than the
corporation or its employee or by a registrar other than the corporation or its
employee, any other signature on the certificate may be a facsimile. In case
any officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate will have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Whenever the corporation will be authorized to issue more than
one class of stock or more than one series of any class of stock, and whenever
the corporation will issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock will set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series will be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of
any certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
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EXHIBIT 3(ii)
- -------------
BY-LAWS, AS AMENDED THRU MAY 30, 1996
BYLAWS
OF
HYCOR BIOMEDICAL INC.
(A DELAWARE CORPORATION)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
corporation will be entitled to have a certificate signed by, or in the name
of, the corporation by the Chairman or Vice-Chairman of the Board of Directors,
if any, or by the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him in the corporation.
If such certificate is countersigned by a transfer agent other than the
corporation or its employee or by a registrar other than the corporation or its
employee, any other signature on the certificate may be a facsimile. In case
any officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate will have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Whenever the corporation will be authorized to issue more than
one class of stock or more than one series of any class of stock, and whenever
the corporation will issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock will set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series will be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock in place of
any certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost,
stolen, or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new
certificate.
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2. FRACTIONAL SHARE INTERESTS. The corporation may, but will not
be required to, issue fractions of a share. In lieu thereof it will either pay
in cash the fair value of fractions of a share, as determined by the Board of
Directors, to those entitled thereto or issue scrip or fractional warrants in
registered or bearer form over the manual or facsimile signature of an officer
of the corporation or of its agent, exchangeable as therein provided for full
shares, but such scrip or fractional warrants will not entitle the holder to
any rights of a stockholder except as therein provided. Such scrip or
fractional warrants may be issued subject to the condition that the same will
become void if not exchanged for certificates representing full shares of stock
before a specified date, or subject to the condition that the shares of stock
for which such scrip or fractional warrants are exchangeable may be sold by the
corporation and the proceeds thereof distributed to the holders of such scrip
or fractional warrants, or subject to any other conditions which the Board of
Directors may determine.
3. STOCK TRANSFERS. Upon compliance with provisions restricting
the transfer or registration of transfer of shares of stock, if any, transfers
or registration of transfers of shares of stock of the corporation will be made
only on the stock ledger of the corporation by the registered holder thereof,
or by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to or dissent
from any corporate action in writing without a meeting, or for the purpose of
determining stockholders entitled to receive payment of any dividend or other
distribution or the allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion, or exchange of stock, or for the purpose
of any other lawful action, the directors may fix, in advance, a date as the
record date for any such determination of stockholders. Such date will not be
more than sixty days nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. If no record date is
fixed, the record date for the determination of stockholders entitled to notice
of or to vote at a meeting of stockholders will be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held; the record date for determining stockholders for any other
purpose will be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. When a determination of
stockholders of record entitled to notice of or to vote at any
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meeting of stockholders has been made as provided in this paragraph, such
determination will apply to any adjournment thereof, provided, however, that
the Board of Directors may fix a new record date for the adjourned meeting.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such
rights notwithstanding that the certificate of incorporation may provide for
more than one class or series of shares of stock, one or more of which are
limited or denied such rights thereunder; provided, however, that no such right
will vest in the event of an increase or decrease in the authorized number of
shares of stock of any class or series which is otherwise denied voting rights
under the provisions of the certificate of incorporation.
6. STOCKHOLDERS MEETINGS.
TIME. The annual meeting will be held on the date and at the
time fixed, from time to time, by the directors, provided, that the first
annual meeting will be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting will be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting will be held on the date and at the time fixed by
the directors.
PLACE. Annual meetings and special meetings will be held at
such place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of Delaware.
CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, stating the place, date, and hour of the meeting and stating
the place within the city or other municipality or community at which the list
of stockholders of
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the corporation may be examined. The notice of an annual meeting shall state
that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall, (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. If any action is proposed to be taken which would, if
taken, entitle stockholders to receive payment for their shares of stock, the
notice shall include a statement of that purpose and to that effect. Except as
otherwise provided by the General Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor more
than fifty days before the date of the meeting, unless the lapse of the
prescribed period of time shall have been waived, and directed to each
stockholder at his record address or at such other address which he may have
furnished by request in writing to the Secretary of the corporation. Notice by
mail shall be deemed to be given when deposited, with postage thereon prepaid,
in the United States mail. If a meeting is adjourned to another time, not more
than thirty days hence, and/or to another place, and if an announcement of the
adjourned time and/or place is made at the meeting, it shall not be necessary
to give notice of the adjourned meeting unless the directors, after
adjournment, fix a new record date for the adjourned meeting. Notice need not
be given to any stockholder who submits a written waiver of notice by him
before or after the time stated therein. Attendance of a person at a meeting
of stockholders shall constitute a waiver of notice of such meeting, except
when the stockholder attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
STOCKHOLDERS LIST. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city or other municipality or community
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by
any stockholder who is present. The stock ledger shall be the only
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evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the corporation, or to vote
at any meeting of stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting - the Chairman of the Board, if any, the Vice-Chairman of
the Board, if any, the President, a Vice- President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the meeting
shall appoint a secretary of the meeting. Not less than twenty days in advance
of each annual meeting of stockholders, the secretary of the corporation shall
prepare an agenda for such meeting, setting forth the items to be acted upon
and considered at such meeting, which agenda shall include all items disclosed
in the notice of meeting sent to the stockholders of the corporation and any
other items which have been submitted by stockholders of record entitled to
vote at such meeting prior to the submission of the agenda. The secretary
shall submit such agenda to the board of directors, and the agenda shall be
deemed approved unless a majority of the directors in office adopt a different
agenda prior to the commencement of the meeting. The agenda shall be available
for distribution at the annual meeting of stockholders, and items not on the
agenda may not be considered or acted upon without the approval of two-thirds
of the shares represented and voting at such meeting. The agenda for special
meetings of stockholders shall consist only of those items which are included
in the notice of such special meeting distributed to the shareholders.
PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provides for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy
may be made irrevocable regardless of whether the interest with which it is
coupled is an interest in the stock itself or an interest in the corporation
generally.
INSPECTORS AND JUDGES. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may be, to act at the meeting or any
adjournment thereof. If an inspector or inspectors or judge or judges are not
appointed, the person presiding at the meeting may, but need not, appoint one
or more
Page 15
<PAGE> 6
inspectors or judges. In case any person who may be appointed as an inspector
or judge fails to appear or act, the vacancy may be filled by appointment made
by the directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector or judge, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector or judge at such meeting with strict impartiality and
according to the best of his ability. The inspectors or judges, if any, shall
determine the number of shares of stock outstanding and the voting power of
each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors or judge or judges, if any, shall make
a report in writing of any challenge, question or matter determined by him or
them and execute a certificate of any fact found by him or them.
QUORUM. The holders of majority of the outstanding shares of
stock shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum.
VOTING. Each share of voting stock shall entitle the holder
thereof to one vote. In the election of directors, a plurality of the votes
cast shall elect. Any other action shall be authorized by a majority of the
votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power. In the
election of directors, voting need not be by ballot. Voting by ballot shall
not be required for any other corporate action except as otherwise provided by
the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business of the corporation shall
be managed by the Board of Directors of the corporation. The use of the phrase
"whole board" herein refers to the total number of directors which the
corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The number of directors constituting the entire board shall be at
least three, except that if all the shares of stock are owned of record and
beneficially by fewer
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<PAGE> 7
than three stockholders, the number of directors may be less than three, as
fixed by the board of directors. Subject to the limitation in the preceding
sentence, the number of directors may be fixed from time to time by action of
the directors. If the directors have not acted to fix the number of directors,
the number of directors shall be three. No reduction in the size of the board
of directors shall have the effect of removing any director from office prior
to the next meeting of the stockholders at which directors are to be elected.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation,
shall be elected by the incorporator or incorporators and shall hold office
until the first annual meeting of stockholders and until their successors have
been elected and qualified or until their earlier resignation or removal. Any
director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors have been elected and qualified or until their
earlier resignation or removal. In the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election of
directors and/or for the removal of one or more directors and for the filling
of any vacancy in that connection, newly created directorships and any
vacancies in the Board of Directors, including vacancies resulting from the
removal of directors for cause or without cause, may be filled by the vote of a
majority of the remaining directors then in office, although less than a
quorum, or by the sole remaining director.
4. MEETINGS.
TIME. Meetings shall be held at such time as the Board shall
fix, except that the first meeting of a newly elected Board shall be held as
soon after its election as the directors may conveniently assemble.
PLACE. Meetings shall be held at such place within or without
the State of Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at
the direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, or the President, or of a majority of the directors in office.
NOTICE OF ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors
Page 17
<PAGE> 8
thereat. The notice of any meeting need not specify the purpose of the
meeting. Any requirements of furnishing a notice shall be waived by any
director who signs a written waiver of such notice before or after the time
stated therein.
QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevent such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided, that such majority shall constitute at least one-third of the whole
Board. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except as herein
otherwise provided, and except as otherwise provided by the General Corporation
Law, the act of the Board shall be the act by vote of a majority of the
directors present at a meeting, a quorum being present. The quorum and voting
provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law and these Bylaws which govern a
meeting of directors held to fill vacancies and newly created directorships in
the Board.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and
if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the President,
if present and acting, or any other director chosen by the Board, shall
preside.
5. REMOVAL OF DIRECTORS. Any or all of the directors may be
removed for cause or without cause by the stockholders. One or more of the
directors may be removed for cause by the Board of Directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees, each committee
to consist of two or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any
such committee, to the extent provided in the resolution of the Board, shall
have and may exercise the powers of the Board of Directors in the management of
the business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it. In the absence
or disqualification of any member of any such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
7. ACTION IN WRITING. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in
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<PAGE> 9
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III
OFFICERS
The directors shall elect a President, a Secretary, and a Treasurer, and
may elect a Chairman of the Board of Directors, a Vice-Chairman thereof, and
one or more Vice-Presidents, Assistant Secretaries, and Assistant Treasurers,
and may elect or appoint such other officers and agents as are desired. The
President may but need not be a director. Any number of offices may be held by
the same person.
Officers shall have the powers and duties defined in the resolutions
appointing them, provided that the Secretary shall record all proceedings of
the meetings or of the written actions of the Stockholders and of the
directors, and any committee thereof, in a book to be kept for that purpose.
The Board of Directors may remove any officer for cause or without
cause.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
The power to amend, alter, and repeal these Bylaws and to adopt new
Bylaws, except a Bylaw classifying directors for election for staggered terms,
shall be vested in the Board of Directors as well as in the stockholders.
Page 19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,176,533
<SECURITIES> 5,223,304
<RECEIVABLES> 2,979,941
<ALLOWANCES> 178,990
<INVENTORY> 3,941,985
<CURRENT-ASSETS> 14,834,462
<PP&E> 11,061,630
<DEPRECIATION> 6,287,074
<TOTAL-ASSETS> 25,285,672
<CURRENT-LIABILITIES> 1,815,006
<BONDS> 0
0
0
<COMMON> 75,990
<OTHER-SE> 23,394,676
<TOTAL-LIABILITY-AND-EQUITY> 25,285,672
<SALES> 10,478,267
<TOTAL-REVENUES> 10,478,267
<CGS> 4,611,735
<TOTAL-COSTS> 4,611,735
<OTHER-EXPENSES> 5,852,438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 243,103
<INCOME-TAX> 96,675
<INCOME-CONTINUING> 146,428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,428
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
