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UNITED STATES
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 quarterly period ended May 31, 1995
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 No. 0-11488
PENWEST, LTD.
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
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Washington 91-1221360
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(State of Incorporation) (I.R.S. Employer
Identification No.)
777-108th Avenue N.E., Suite 2390, Bellevue, WA 98004-5193
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number (206) 462-6000
Indicate by a 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 June 30, 1994.
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Class Outstanding
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Common stock, par value $1.00 6,752,875
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PENWEST, LTD. AND SUBSIDIARIES
INDEX
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Page No.
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets 3
May 31, 1995 and August 31, 1994
Condensed Consolidated Statements of Income 4
Three Months Ended May 31, 1995
and May 31, 1994
Condensed Consolidated Statements of Income 4
Nine Months Ended May 31, 1995 and
May 31, 1994
Condensed Consolidated Statements of Cash Flow 5
Nine Months Ended May 31, 1995 and
May 31, 1994
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of 7-8
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 9
SIGNATURES 10
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PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
PENWEST, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
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<CAPTION>
May 31, August 31,
1995 1994
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(Unaudited)
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ASSETS
------
Current assets:
Cash and cash equivalents $ 9,920
Receivables 22,955 $ 20,748
Inventories:
Raw materials 3,348 6,074
Work in progress 526 622
Finished goods 10,554 10,038
-------- --------
14,428 16,734
Other current assets 5,528 4,593
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Total current assets 52,831 42,075
Property, plant and equipment, net 111,556 99,973
Deferred income taxes 9,571 9,545
Other non-current assets 19,216 12,764
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Total assets $193,174 $164,357
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Bank overdraft, net $ 635
Accounts payable $ 10,796 8,131
Current portion of long-term debt 4,270 4,100
Accrued liabilities 9,966 7,847
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Total current liabilities 25,032 20,713
Long-term debt 61,600 42,897
Other postretirement benefit 9,907 10,102
Deferred income taxes and other 24,916 23,480
Shareholders' equity:
Common stock 8,586 8,577
Additional paid-in capital 12,545 12,489
Retained earnings 83,846 79,128
Treasury stock (30,637) (29,327)
Note receivable from PENWEST Savings and
Stock Ownership Plan (2,561) (3,340)
Cumulative translation adjustment (60) (362)
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Total shareholders' equity 71,719 67,165
-------- --------
Total liabilities and
shareholders' equity $193,174 $164,357
======== ========
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See accompanying notes to condensed consolidated financial statements.
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PENWEST, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share data)
(Unaudited)
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Three Months Nine Months
Ended May 31 Ended May 31
------------ ------------
1995 1994 1995 1994
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Sales $43,618 $41,347 $128,818 $115,000
Cost of sales 31,153 30,297 93,197 85,240
------- ------- -------- --------
Gross margin 12,465 11,050 35,621 29,760
Operating expenses 8,240 7,783 24,177 22,218
------- ------- -------- --------
Income from operations 4,225 3,267 11,444 7,542
Investment income 201 262 362 685
Interest expense (1,327) (915) (3,593) (2,588)
Other 899
------- ------- -------- --------
Income before taxes 3,099 2,614 9,112 5,639
Income taxes 1,099 840 3,202 1,241
------- ------- -------- --------
Net income $ 2,000 $ 1,774 $ 5,910 $ 4,398
======= ======= ======== ========
Weighted average common shares and
equivalents outstanding 6,957,557 7,080,354 7,057,445 7,095,807
Earnings per common share $ 0.29 $ 0.25 $ 0.84 $ 0.62
====== ====== ====== ======
Dividends declared per common share $ 0.05 $ 0.05 $ 0.15 $ 0.15
====== ====== ====== ======
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See accompanying notes to condensed consolidated financial statements.
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PENWEST, LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in Thousands)
(Unaudited)
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<CAPTION>
Nine Months
Ended May 31
------------
1995 1994
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Operating Activities:
Net income $ 5,910 $ 4,398
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 7,597 7,492
Deferred income taxes 793 2,146
Gain on the sale of assets (899)
Foreign currency translation 103
Change in operating assets and liabilities:
Receivables (2,207) (4,734)
Inventories 2,306 (3,767)
Accounts payable and other 4,629 (385)
------- -------
Net cash flow from operating activities 18,129 5,253
Investing Activities:
Additions to plant and equipment (20,117) (9,151)
Proceeds from sale of assets 2,500
Other (3,530) 324
------- -------
Net cash used by investing activities (21,147) (8,827)
Financing Activities:
Payments on long-term debt (7,512) (13,823)
Proceeds of long-term debt 26,045 16,825
Purchase of treasury stock (1,310) (1,277)
Exercise of stock options 43 52
Purchase of life insurance for officer's benefit plan (2,501) (1,343)
Payment of dividend (1,192) (1,029)
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Net cash from (used by) financing activities 13,573 (595)
------- -------
Net increase in cash and equivalents 10,555 (4,169)
Cash and cash equivalents (bank overdraft) at beginning
of period (635) 5,477
------- -------
Cash and cash equivalents at end of period $ 9,920 $ 1,308
======= =======
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See accompanying notes to condensed consolidated financial statements.
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PENWEST, LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation for
the interim periods presented have been included. Operating results
for the three and nine month periods ended May 31, 1995 are not
necessarily indicative of the results that may be expected for the
year ending August 31, 1995. Certain prior year amounts have been
reclassified to conform to the 1995 classification. For further
information, refer to the consolidated financial statements and
footnotes thereto included in PENWEST's annual report on Form 10-K for
the fiscal year ended August 31, 1994.
2. INCOME TAXES
The effective tax rate for the nine-month period ended May 31, 1994
was 22% compared to the statutory rate of 34%. The effective rate was
lower due to a federal tax benefit related to research and development
expenditures recorded during the first quarter of fiscal 1994.
3. DEBT
On December 15, 1994 the Company received the proceeds from a $20
million private placement of debt. The debt has an average fixed
interest rate of 7.97%, with $10 million due on December 15, 1998, and
$10 million due on December 15, 2006. The interest rate on the $10
million due on December 15, 1998 was swapped to a LIBOR-based floating
rate. The new debt agreement includes certain restrictions related to
limitations on indebtedness, minimum net worth, and working capital
ratios, which are similar to restrictions on previously existing debt.
4. SALE OF COGENERATION ASSETS
On December 31, 1994, the power and thermal contracts at the Company's
cogeneration facility in Vancouver, Washington expired. The Company
completed a sale of the turbine and the boilers constituting the
assets of the facility upon expiration of the contracts. A pretax
gain on the sale was recorded in the second quarter of $899,000, or
$0.08 per share, and is shown as other income.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity
PENWEST's cash and cash equivalents were 5.1% of total assets at quarter end.
Long-term debt consists of borrowings under private placements of debt ($40
million), an unsecured term loan agreement ($17.5 million), and two unsecured
notes ($4.0 million and $3.2 million). In addition, $15 million of an
unsecured revolving line of credit was unused and available at May 31, 1995.
Cash flow from operations for the nine months ended May 31, 1995 was $18.1
million compared to $5.3 million in the corresponding period a year ago. The
increase is primarily due to improved profitability, a decrease in receivables
and inventory levels and an increase in accounts payable.
Working capital increased to $27.8 million at May 31, 1995 from $21.4 million
at August 31, 1994 primarily the result of the cash proceeds from the $20
million private placement of debt funded in December 1994.
The Board of Directors declared a $0.05 per share dividend which was paid on
June 2, 1995, to shareholders of record as of May 19, 1995.
In April 1994, the Board of Directors authorized a stock repurchase program for
the purchase of up to 500,000 shares of the outstanding common stock of the
Company. The Company did not purchase any shares during the third quarter.
Capital Resources
Additions to property, plant and equipment during the nine months ended May 31,
1995 were $20.1 million. The additions were primarily for the completion of
the expansion of the Penwest Foods' facility in Richland, Washington, a
capacity conversion at Penford Products, and the completion of laboratory
facilities for the Penwest Pharmaceuticals Group.
Results of Operations
Net income was $2.0 million, or $0.29 per share for the third quarter, compared
to net income of $1.8 million or $0.25 per share for the corresponding period a
year ago. The prior year period included approximately $0.03 per share of
earnings from Pacific Cogeneration, a PENWEST subsidiary whose assets were sold
earlier this fiscal year. Net income for the nine months was $5.9 million, or
$0.84 per share, compared with $4.4 million, or $0.62 per share in the year
earlier period.
Sales increased in the third quarter and the first nine months of fiscal year
1995 to $43.6 million and $128.8 million, respectively, representing a 5.5% and
12.0% increase respectively, from the corresponding periods a year ago. The
increase is due to increased volumes across all three of PENWEST's basic
businesses. Penford Products increased volumes from a year ago primarily due
to the improving economic conditions and the conversion of alkaline-based
chemistry in the paper industry. Penwest Pharmaceuticals Group continued to
grow volumes out of its microcrystalline cellulose plant in Cedar Rapids.
Penwest Foods also grew volumes over a year ago. The gross margin for the
three month
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period increased to 28.6% compared to 26.7% last year. The improvement
in overall gross margins is primarily the result of improved volumes and
product mix at Penford and improving margins at Penwest Foods due to increasing
potato starch volumes.
Operating expenses in the third quarter rose $457,000, or 5.9% compared to the
same period in the previous year. The increase is primarily due to increased
investment in research and development, especially in pharmaceuticals.
Operating expenses for the nine months increased $2.0 million, or 8.8% over the
same period of the previous year. Previous year operating expenses were
impacted by the curtailment of postretirement health benefits which was
recorded as a $900,000 reduction of operating expenses. The remaining current
year increase is primarily due to increased spending on research and
development.
Net interest expense for the third quarter of fiscal 1995 was $1.1 million
compared to $653,000 for the corresponding period a year ago. The increase
reflects higher debt levels and overall higher interest rates.
8
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PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibit 3.2 - Amended and Restated Bylaws
Exhibit 11 - Statement re: Computation of earnings
per share.
Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
9
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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.
PENWEST, LTD.
---------------------------------
(Registrant)
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7/14/95 /S/ TOD R. HAMACHECK
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Date Tod R. Hamachek
President and
Chief Executive Officer
7/14/95 /S/ JEFFREY T. COOK
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Date Jeffrey T. Cook
Vice President, Finance
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10
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EXHIBIT INDEX
EXHIBIT PAGE
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3.2 Amended and Restated Bylaws
11 Statement re: Computation of Earnings
Per Share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
PENWEST, LTD.
(A Washington Corporation)
(Amended as of June 27, 1995)
ARTICLE I
CAPITAL STOCK
1.1 Stock Certificates.
Stock certificates of the Corporation shall be in such form as the
Board of Directors may from time to time prescribe. Every stock certificate
shall be signed by two officers designated by the Board of Directors and sealed
with the corporate seal. All certificates shall be countersigned by a transfer
agent and a registrar of the Corporation. Any and all signatures on any such
certificate and the corporate seal upon any such certificate may be facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall 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 or she were
such officer, transfer agent, or registrar at the date of issue.
1.2 Transfer of Shares.
The shares of stock of the Corporation shall be transferable on its
books, or other appropriate records, kept for such purpose, by the holder
thereof in person or by his duly authorized attorney upon surrender and
cancellation of such holder's certificates, properly endorsed, accompanied by
authority to transfer. Upon surrender, as above provided, of a stock
certificate, one or more new stock certificates for such aggregate number of
shares of stock as equals the aggregate number of shares represented by the
surrendered stock certificate shall be issued to the parties entitled thereto.
1.3 Holders of Stock of Record.
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock of the Corporation as the holder in fact thereof, and
shall not be bound to recognize any claim to, or interest in, such shares on
the part of any other person, whether or not the Corporation shall have express
or other notice thereof.
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1.4 Rules and Regulations Concerning the Issue, Transfer, and
Registration of Stock Certificates.
The Board of Directors of the Corporation shall have the power and
authority to make all such rules and regulations as the Board may deem proper
or expedient concerning the issue, transfer and registration of stock
certificates for shares of stock of the Corporation. The Board of Directors
shall have the power and authority to appoint from time to time one, or more
than one, transfer agent, and one, or more than one, registrar of transfers,
and may require all stock certificates for shares of stock of the Corporation
to be properly countersigned, and/or otherwise properly authenticated, by such
transfer agent or registrar.
1.5 Rules and Regulations Concerning Lost and Destroyed
Certificate.
A new certificate or certificates of stock may be issued in place of
any certificate or certificates of stock theretofore issued by the Corporation
and alleged to have been lost or destroyed, upon delivery to the Secretary of
the Corporation or any authorized transfer agent of the Corporation of a
written claim in the form of an affidavit stating all pertinent facts relating
to the alleged loss or destruction of such certificate or certificates together
with an open penalty indemnity bond, approved as provided below, written by a
surety company approved by an executive officer of the Corporation and
indemnifying against any claim that may be made against the Corporation for or
in respect of the shares of stock represented by the certificate or
certificates alleged to have been lost or destroyed. The penalty of such bond
shall be unlimited as to time and amount and said bond must be approved by an
executive officer of the Corporation. The Board of Directors may, in the
discretion of a majority of the Board, however, direct the issuance of a
certificate or certificates in place of any certificate or certificates alleged
to have been lost or destroyed upon such lesser conditions or security.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 Place of Meetings of Shareholders.
The Annual Meetings of shareholders of the Corporation shall be held
at such place as the Board of Directors may from time to time designate. The
time and place of the meeting shall be stated in the Notice to Shareholders.
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2.2 Annual Meetings of Shareholders -- Time -- Business.
The Annual Meeting of the shareholders of the Corporation for the
election of Directors and for the transaction of any such other business as
properly may be submitted to such Annual Meeting shall be held at the hour and
on the date designated by the Board of Directors or the Executive Committee of
the Board of Directors, such date to be within 180 days of the end of the
fiscal year.
Any and all business pertaining to the affairs of the Corporation may
be transacted at any such Annual Meeting of its shareholders or at any
adjournment thereof, except only to the extent otherwise expressly proscribed
by law.
2.3 Special Meetings of Shareholders.
Special meetings of the shareholders of the Corporation may be called
at any time by the Board of Directors.
2.4 Quorum at Shareholders' Meetings.
The holders of record of a majority of the issued and outstanding
shares of the stock of the Corporation present in person or represented by
proxy at any shareholders' meeting and entitled to vote thereat shall
constitute a quorum for the transaction of business at any such meeting, except
as may otherwise be provided by law; but if there be less than a quorum present
at any such meeting, the holders of a majority of the shares so present or
represented at such meeting may adjourn the meeting from time to time.
2.5 Notice of Annual or Special Meetings of Shareholders.
Written notice stating the place, day and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called shall be given by or at the direction of the Board of Directors, the
Chairman of the Board of Directors, the President, the Secretary or an
Assistant Secretary to each shareholder entitled to notice of or to vote at the
meeting not less than 10 nor more than 60 days before the meeting, except that
notice of a meeting to act on an amendment to the Articles of Incorporation, a
plan of merger or share exchange, the sale, lease, exchange, or other
disposition of all or substantially all of the Corporation's assets other than
in the regular course of business or the dissolution of the Corporation shall
be given not less than 20 nor more than 60 days before such meeting. Such
notice may be transmitted by mail, private carrier, personal delivery,
telegraph, teletype or communications equipment which transmits a facsimile of
the
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notice to like equipment which receives and reproduces such notice. If these
forms of written notice are impractical in the view of the Board of Directors,
the Chairman of the Board of Directors, the President, the Secretary or an
Assistant Secretary, written notice may be transmitted by an advertisement in a
newspaper of general circulation in the area of the Corporation's principal
office. If such notice is mailed, it shall be deemed effective when deposited
in the official government mail, first-class postage prepaid, properly
addressed to the shareholder at such shareholder's address as it appears in the
Corporation's current record of shareholders. Notice given in any other manner
shall be deemed effective when dispatched to the shareholder's address,
telephone number or other number appearing on the records of the Corporation.
Any notice given by publication as herein provided shall be deemed effective
five days after first publication.
2.6 Voting List of Shareholders and Fixing of Record Date for
Voting and For Other Purposes.
At least 10 days before each meeting of shareholders, an alphabetical
list of the shareholders entitled to notice of such meeting shall be made,
arranged by voting group and by each class or series of shares therein, with
the address of and number of shares held by each shareholder. This record
shall be kept at the principal office of the Corporation for 10 days prior to
such meeting, and shall be kept open at such meeting, for the inspection of any
shareholder or any shareholder's agent.
For the purpose of determining shareholders entitled to (a) notice of
or to vote at any meeting of shareholders or any adjournment thereof, or (b) to
receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors may fix a future
date as the record date for any such determination. Such record date shall be
not more than 70 days, and in case of a meeting of shareholders not less than
10 days, prior to the date on which the particular action requiring such
determination is to be taken. If no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting, the record date
shall be the day immediately preceding the date on which notice of the meeting
is first given to shareholders. Such a determination shall apply to any
adjournment of the meeting unless the Board of Directors fixes a new record
date, which it shall do if the meeting is adjourned to a date more than 120
days after the date fixed for the original meeting. If no record date is set
for the determination of shareholders entitled to receive payment of any stock
dividend or distribution (other than one involving a purchase, redemption, or
other acquisition of the Corporation's shares) the record date shall be the
date the Board of Directors authorizes the stock dividend or distribution.
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2.7 Officers of Meetings of Shareholders.
The President of the Corporation (or in his absence, the Chairman of
the Board of Directors of the Corporation) may call any meeting of shareholders
to order and shall be the Chairman thereof. If the Chairman of the Board of
Directors and the President are absent from any such meeting, then a Vice
President of the Corporation shall be the Chairman thereof and shall preside at
such meeting. The Secretary of the Corporation, if present at any meeting of
its shareholders, shall act as the Secretary of such meeting. If the Secretary
is absent from any such meeting, the Chairman of such meeting may appoint a
Secretary for the meeting.
2.8 Proper Business for Shareholders' Meetings.
At any annual or special meeting of the shareholders of the
Corporation, only business properly brought before the meeting may be
transacted. To be properly brought before an annual or special meeting,
business or other proposals must be (i) specified in the notice of the meeting
(or any supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors, or (iii) otherwise properly brought before
the meeting by a shareholder. For business to be properly brought before an
annual meeting by a shareholder, written notice thereof must have been received
by the Secretary of the Corporation from such shareholder not less than 120
days prior to the date corresponding to the date on which the Corporation
mailed its proxy statement in connection with its previous year's annual
meeting of shareholders. For business to be properly brought before a special
meeting by a shareholder, or in the event the date of the annual meeting has
been changed by more than 30 calendar days from the date contemplated at the
time of the previous year's proxy statement, notice by the shareholder to be
timely must be received by the Secretary of the Corporation not later than the
close of business on the 10th day following the earlier of the day on which
notice of the date of the scheduled meeting was mailed or the day on which
public disclosure of such date was made.
Any such notice shall set forth as to each matter the shareholder
proposes to bring before the meeting (i) a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting, and the language of the proposal, (ii) the name and
address of the shareholder proposing such business, (iii) a representation that
the shareholder is a holder of record of stock of the Corporation entitled to
vote at such meeting, and (iv) any material interest of the shareholder in such
business. Any such notice to the Corporation shall also comply with all
applicable provisions of Regulation 14A under the Securities Exchange Act of
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1934. No business shall be conducted at any meeting of shareholders except in
accordance with this Section, and the Chairman of any meeting of shareholders
and the Board of Directors may refuse to permit any business to be brought
before the meeting without compliance with the foregoing procedures.
ARTICLE III
DIRECTORS
3.1 Number of Directors.
The authorized number of directors of the Corporation shall be not
less than seven, nor more than fifteen. The Board of Directors, by resolution,
shall fix the number of directors to constitute the whole Board of Directors of
the Corporation, within the above limits, which number shall prevail until a
resolution is adopted by the Board of Directors prescribing a different number
of directors to be the authorized number of directors of the Corporation.
3.2 Qualifications of Directors.
No director of the Corporation need be a shareholder therein. Each
director of the Corporation shall be eligible to serve as a director until the
regular meeting of the Board of Directors immediately following his 72nd
birthday.
3.3 Election of Directors -- Terms of Office.
The shareholders shall, at their annual meeting held each year, elect
the class of directors of the Corporation as set forth in the Articles of
Incorporation of the Corporation.
3.4 Nominations of Directors for Election.
Nominations for the election of directors may be made by the Board of
Directors or a committee appointed by the Board of Directors or, if the
shareholders are, at the time, entitled to cumulate their votes in the election
of directors in accordance with Article IX of the Articles of Incorporation of
the Corporation, by a majority of the "Disinterested Directors" or by any
shareholder who is the "Beneficial Owner" of one percent or more of the
outstanding shares of "voting stock" of the Corporation as said terms are
defined in the Articles of Incorporation in accordance with the following
procedures. However, any such one percent shareholder at the time may nominate
one or more persons for election as directors at a meeting only if written
notice of such shareholder's intent to make such nomination or nominations has
been given, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Corporation in accordance with the following
procedures: For a nomination to be properly submitted before an
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annual meeting by a shareholder, written notice thereof must have been received
by the Secretary of the Corporation from such shareholder not less than 120
days prior to the date corresponding to the date on which the Corporation
mailed its proxy statement in connection with its previous year's annual
meeting of shareholders. For a nomination to be properly submitted before a
special meeting by a shareholder, or in the event the date of the annual
meeting has been changed by more than 30 calendar days from the date
contemplated at the time of the previous year's proxy statement, notice by the
shareholder to be timely must be received by the Secretary of the Corporation
not later than the close of business on the 10th day following the earlier of
the day on which notice of the date of the scheduled meeting was mailed or the
day on which public disclosure of such date was made.
Each such notice to the Secretary shall set forth: (i) the name and
address of record of the shareholder who intends to make the nomination; (ii) a
representation that the shareholder is a holder of record of shares of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (iii) the name, age, business and residence addresses, and principal
occupation or employment of each nominee; (iv) 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; (v) such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (vi) the consent of each nominee
to serve as a director of the Corporation if so elected. The Corporation may
require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of such
proposed nominee to serve as a director of the Corporation. The presiding
officer of the meeting may, if the facts warrant, determine that a nomination
was not made in accordance with the foregoing procedure, and if such officer
should so determine, such officer shall so declare to the meeting and the
defective nomination shall be disregarded.
3.5 Failure to Elect Directors at Annual Meeting of the
Shareholders.
If the class of directors of the Corporation to be elected at the
annual meeting shall not be elected as herein provided at the annual meeting in
any year of the shareholders of the Corporation, or at any adjournment of such
annual meeting, then, in such event, the Corporation shall not for that reason
be dissolved, but its directors at the time shall be deemed lawful directors of
the Corporation for all purposes, and shall continue
-7-
<PAGE> 8
to hold office as directors until their successors, respectively, are duly
elected and qualified.
3.6 Authority of the Board of Directors.
The business of the Corporation shall be managed by its Board of
Directors, and such Board shall have and exercise full powers and authority in
the management, control, regulation, and conduct of the property, interests,
business transactions and affairs of the Corporation; provided, however, that
the Executive Committee of the Board of Directors of the Corporation may
exercise the power and authority of such Board pursuant but subject to (a) the
limitations in Section 23B.08.250 of the Washington Business Corporation Act
and (b) restrictions imposed by the Board of Directors pursuant to Article IV
hereof. If the position, Chairman of the Board, is not designated as an office
of the Corporation, then the Board may from time to time elect one of its
members to act as Chairman.
3.7 Action by the Board of Directors or Any of Its Committees
Without a Meeting.
Any action required or permitted to be taken at any meeting of the
Board of Directors or of the Executive Committee or of any other committee of
said Board may be taken without a meeting if a written consent describing the
action taken is signed by all members of the Board or of such committee, as the
case may be, and such written consent is filed with the minutes of said Board
or of said committee. Action taken by such written consent is effective when
the last director signs the consent, unless the consent specifies a later
effective date.
3.8 Regular Meetings of the Board of Directors.
Meetings of the Board of Directors of the Corporation may be held at
its corporate offices, or at such other place or places as may be authorized by
such Board. Such Board shall also fix the time or times of such regular
meetings. No notice of any regularly scheduled meeting need be given. The
Chairman of the Board or the President may change the time and place of any
regular meeting by giving reasonable notice thereof, in writing or by
telephone, not later than 24 hours before the time originally fixed for such
meeting. The Chairman of the Board shall act as Chairman of the meetings, but
in his absence, the President shall act as Chairman. The Secretary of the
Corporation shall act as Secretary of the meetings, but in his absence, the
Chairman of the meeting shall appoint a Secretary of the meeting.
-8-
<PAGE> 9
3.9 Special Meetings of the Board of Directors.
Meetings of the Board of Directors of the Corporation may be held from
time to time on written call thereof by the Chairman of the Board of Directors
or the President made at any time at his or her own instance and discretion or
on call thereof made by such number of its directors as equals a majority of
its whole Board of Directors at the time. Any special meeting of the Board of
Directors may be held at such time or at such place designated in said call.
The time, place and purpose of any special meeting of the Board of Directors to
be held pursuant to call and notice shall be stated both in the call and the
notice thereof, and no business other than that stated in such notice shall be
transacted, or acted upon, at such special meeting. Reasonable notice of a
special meeting shall be given in writing or by telephone by the person or
persons calling the meeting, not later than 72 hours prior to the time set for
the meeting; provided that the minimum notice period shall be 48 hours in the
event of a tender or exchange offer to purchase securities of the Corporation.
Any special meeting of the Board of Directors may be held at any time without
previous call, or previous notice thereof, if all directors of the Corporation
either attend such meeting, or consent in writing thereto, or if each director
not present at such meeting waives notice thereof. Any and all business and
matters pertaining to the affairs of the Corporation may be considered,
transacted and acted on at any special meeting so held without previous call or
previous notice.
3.10 Quorum of Directors.
A majority of the members of the Board of Directors as constituted for
the time being shall constitute a quorum for the transaction of business, but
less than a quorum may adjourn any meeting from time to time until a quorum is
present and without further notice being given.
3.11 Waiver of Notice of Meetings of the Board of Directors.
Any director of the Corporation may waive in writing at any time any
such notice of any meeting of the Board of Directors of the Corporation as may
be provided by the Washington Business Corporation Act or by these Bylaws to be
given; and a written waiver thereof signed by any director entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to such notice legally given to such director. Attendance at any
meeting of the Board of Directors of the Corporation by a director shall
constitute waiver of notice of such meeting, unless such director at the
beginning of the meeting, or promptly upon such director's arrival, objects to
holding the meeting or transacting business thereat and does not thereafter
vote for or assent to action taken at the meeting.
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<PAGE> 10
3.12 Fees to the Directors for Attending Meetings of the Board of
Directors.
The directors of the Corporation shall be entitled, as directors, to
receive an annual fee for service as directors and an attendance fee for
meetings of the Board of Directors and for meetings of committees of the Board
of Directors. Said fees shall be payable in the amounts and under provisions
prescribed from time to time by resolution of the Board of Directors, and the
Corporation is hereby authorized to pay such fees to each of its directors;
provided, however, that no director of the Corporation shall be entitled to
said fee if at the time he is otherwise employed by the Corporation at a
regular monthly or annual salary as a full time employee.
3.13 Meeting by Telephone.
Members of the Board of Directors or any committee designated by the
Bylaws or appointed by the Board of Directors may participate in a meeting of
such Board or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and participation by such means
shall constitute presence at a meeting.
3.14 Rights Agreement.
Notwithstanding anything to the contrary in these Bylaws, any action
stated in the Rights Agreement between the Corporation and First Interstate
Bank of California dated as of June 3, 1988, as such agreement may be amended
from time to time (the "Rights Agreement"), to be taken by the Board of
Directors after a Person has become an Acquiring Person shall require the
presence of Continuing Directors and the concurrence of a majority of the
Continuing Directors. Capitalized terms in this paragraph shall have the
meanings indicated in the Rights Agreement.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
4.1 Creation of Committees
The Board of Directors, by resolution adopted by the greater of a
majority of the directors then in office and the number of directors required
to take action in accordance with these Bylaws, may create one or more
committees, including an Executive Committee, and appoint members to such
committee from its own members. Each committee must have two or more members,
who shall serve at the pleasure of the Board of Directors.
4.2 Authority of Committees
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<PAGE> 11
Each committee shall have and may exercise the authority of the Board
of Directors to the extent provided in the resolution of the Board creating the
committee and any subsequent resolutions pertaining thereto, except that no
committee shall have the authority to: (1) authorize or approve a distribution
except according to a general formula or method prescribed by the Board, (2)
approve or propose to shareholders actions or proposals required by the
Washington Business Corporation Act to be approved by shareholders, (3) fill
vacancies on the Board or on any committee, (4) adopt, amend or repeal Bylaws,
(5) amend the Articles of Incorporation, (6) approve a plan of merger not
requiring shareholder approval, or (7) authorize or approve the issuance or
sale or contract for sale of shares, or determine the designation and relative
rights, preferences and limitations of a class or series of shares, except that
the Board may authorize a committee or a senior executive officer of the
Corporation to do so within limits specifically prescribed by the Board.
ARTICLE V
OFFICERS AND THEIR POWERS AND DUTIES
5.1 Authorized Officers.
The officers of the Corporation shall consist of a President, one or
more Vice Presidents (who may be designated as Vice Presidents, Senior Vice
Presidents or Executive Vice Presidents), and Secretary. The Corporation may
have such additional officers (hereinafter in these Bylaws sometimes referred
to as "additional officers") as its Board of Directors may deem necessary for
its business and may appoint from time to time. The Board of Directors may
designate one of the officers as the chief financial officer of the
Corporation.
The Board of Directors at any meeting of the Board may fill a vacancy
in any office.
The officers of the Corporation shall be elected at the first Board of
Director's meeting held after the annual election of directors and they shall
serve until the next annual election of officers, subject to the right of the
Board of Directors to remove any officer at any time.
The Board of Directors, by resolution duly adopted at any meeting
thereof duly held, may authorize and direct that any office of the Corporation,
except the offices of President and Secretary, may be left unfilled for any
such period of time as the Board may fix in such resolution.
-11-
<PAGE> 12
5.2 Qualifications of Officers.
No officer of the Corporation need be a shareholder therein. No
officer of the Corporation, except the President, need be a director.
5.3 Powers and Duties of Officers.
The respective officers of the Corporation, subject, always, to
control by its Board of Directors, shall have such power and authority and
perform such duties in the management and conduct of its property, business and
affairs, as from time to time may be prescribed with respect to such officers,
respectively, by and under any Section of these Bylaws, by resolution of the
Board of Directors or by the President.
The Board of Directors may by appointment designate either the
Chairman, if an officer of the Corporation, or the President as the Chief
Executive Officer of the Corporation and either of said officers as the Chief
Operating Officer of the Corporation.
5.4 Powers and Duties of the Chief Executive Officer and the Chief
Operating Officer.
The Chief Executive Officer of the Corporation shall have general
charge and supervision of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors and of the Executive
Committee are carried out. The Chief Executive Officer shall designate the
duties of all officers of the Corporation, which designations shall be subject
to review by the Board of Directors; provided, however, that the specific
duties assigned to the Chief Executive Officer, the Chief Operating Officer and
the Secretary shall not be changed except by amendment to these Bylaws and/or
by resolution of the Board of Directors, as appropriate.
The Chief Operating Officer of the Corporation shall have general
supervisory authority and responsibility for the day to day operations of the
Corporation.
In the event of the death of either of the Chief Executive Officer or
the Chief Operating Officer or the permanent disability preventing such officer
from performing his duties, all officers normally reporting to such deceased or
disabled officer shall report to the Executive Committee. The Chairman of the
Board shall call a meeting of the Board to be held within 20 days of the date
of such death or disability for the purpose of electing a new Chief Executive
Officer or Chief Operating Officer, as the case may be.
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<PAGE> 13
Either the Chief Executive Officer or the Chief Operating Officer may
sign in the name of the Corporation all instruments required to be signed by
the Corporation in the ordinary course of its business. Each such officer
shall perform such other duties as may be assigned to such officer by the Board
of Directors or by these Bylaws.
5.5 Compensation to Officers.
The Board of Directors shall have authority (a) to fix the
compensation, whether in the form of salary or otherwise, of all officers and
employees of the Corporation, either specifically or by formula applicable to
particular classes of officers or employees, and (b) to authorize officers of
the Corporation to fix the compensation of subordinate employees. The Board of
Directors shall have authority to appoint a Compensation Committee and may
delegate to such committee authority to review the compensation of all
employees of the Corporation, and its subsidiaries. The Compensation Committee
may also be authorized to make recommendations to the Board with respect to
compensation of the corporate officers.
ARTICLE VI
MISCELLANEOUS
6.1 Corporate Seal.
The corporate seal of the Corporation shall be a seal consisting of
two concentric circles, in the outer of which circles shall appear and be
inscribed the following words: "PENWEST, LTD. WASHINGTON", and in the inner of
which circles shall appear and be inscribed the following words and figures:
"CORPORATE SEAL 1995"; and such seal, as impressed on the margin thereof, shall
be the corporate seal of the Corporation; provided, however, that at any time,
and from time to time, such seal may be altered or a new corporate seal for the
Corporation may be authorized and adopted, at the pleasure of its Board of
Directors, by resolution duly adopted by such Board at any meeting thereof duly
held.
6.2 Fiscal Year.
The fiscal year of the Corporation shall begin on September 1 and end
on August 31 of each year.
6.3 Amendments.
These Bylaws may be amended, altered or repealed, in whole or in part,
or new Bylaws may be made for the Corporation from time to time by the
affirmative vote of the majority of its whole Board of Directors at any meeting
of such Board duly held,
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<PAGE> 14
subject to the right and power of the shareholders of the Corporation to change
or repeal such Bylaws.
6.4 Severability.
In the event that any provision of these Bylaws is determined by a
court to require the Corporation to do or to fail to do an act which is in
violation of applicable law, such provision shall be limited or modified in its
application to the minimum extent necessary to avoid a violation of law, and,
as so limited or modified, such provision and the balance of these Bylaws shall
remain in full force and effect.
-14-
<PAGE> 1
Exhibit 11
PENWEST, LTD. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
May 31 May 31
------ ------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
- --------
Net income $2,000,000 $1,774,000 $5,910,000 $4,398,000
========== ========== ========== ==========
Weighted average number of
shares outstanding 6,748,542 6,796,525 6,767,475 6,821,169
Net effect of dilutive stock options 209,015 283,829 289,970 274,638
---------- ---------- ---------- ----------
Adjusted shares outstanding 6,957,557 7,080,354 7,057,445 7,095,807
========== ========== ========== ==========
Earnings per share $0.29 $0.25 $0.84 $0.62
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at May 31, 1995 (unaudited), the Condensed
Consolidated Statements of Income at May 31, 1995 (unaudited), and the
Condensed Consolidated Statements of Cash Flow at May 31, 1995 (unaudited) and
is qualified in its entirety by reference to such financial statements.
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> MAR-01-1995
<PERIOD-END> MAY-31-1995
<EXCHANGE-RATE> 1
<CASH> 9,920
<SECURITIES> 0
<RECEIVABLES> 22,955
<ALLOWANCES> 0
<INVENTORY> 14,428
<CURRENT-ASSETS> 52,831
<PP&E> 111,556
<DEPRECIATION> 0
<TOTAL-ASSETS> 193,174
<CURRENT-LIABILITIES> 25,032
<BONDS> 0
<COMMON> 8,586
0
0
<OTHER-SE> 63,133
<TOTAL-LIABILITY-AND-EQUITY> 193,174
<SALES> 43,618
<TOTAL-REVENUES> 43,618
<CGS> 31,153
<TOTAL-COSTS> 31,153
<OTHER-EXPENSES> 8,240
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,327
<INCOME-PRETAX> 3,099
<INCOME-TAX> 1,099
<INCOME-CONTINUING> 2,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,000
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
