SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Check One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ________________ to ________________
Commission file number 0-16577
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CYBEROPTICS CORPORATION
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(Exact name of registrant as specified in its charter)
Minnesota 41-1472057
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5900 Golden Hills Drive, Minneapolis, Minnesota 55416
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(Address of principal executive offices)
(612) 542-5000
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(Issuer's telephone number)
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 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.
At November 10, 1998, 4,950,320 shares of the issuer's Common Stock, no par
value, were outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CYBEROPTICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
SEPT. 30, 1998 DEC. 31, 1997
(UNAUDITED)
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 8,752 $ 6,160
Marketable securities 13,411 20,577
Accounts receivable, net 7,123 7,697
Inventories 6,089 4,611
Other current assets 1,411 1,343
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Total current assets 36,786 40,388
Marketable securities 15,074 14,290
Equipment and leasehold improvements, net 2,742 2,661
Capitalized patent costs, net 162 106
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Total assets $54,764 $57,445
===========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,555 $ 1,205
Income taxes payable 589 661
Accrued expenses 2,082 2,286
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Total current liabilities 4,226 4,152
Commitments and Contingencies
Stockholders' equity:
Preferred stock, no par value, 5,000 shares
authorized, none outstanding
Common stock, no par value, 25,000 shares
authorized, 4,949 and 5,341 shares issued
and outstanding, respectively 32,658 38,437
Retained earnings 17,880 14,856
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Total stockholders' equity 50,538 53,293
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Total liabilities and stockholders' equity $54,764 $57,445
===========================================================================================
SEE THE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
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<PAGE>
CYBEROPTICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
1998 1997
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<S> <C> <C>
Revenues $ 7,737 $ 9,249
Cost of revenues 3,660 3,896
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Gross margin 4,077 5,353
Research and development expenses 1,558 1,588
Selling, general and administrative expenses 2,447 2,127
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Income from operations 72 1,638
Interest income 532 549
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Income before income taxes 604 2,187
Provision for income taxes 200 700
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Net income $ 404 $ 1,487
====================================================================================
Net income per share - Basic $ 0.08 $ 0.28
Net income per share - Diluted $ 0.08 $ 0.27
====================================================================================
Weighted average shares outstanding - Basic 5,057 5,257
Weighted average shares outstanding - Diluted 5,125 5,607
====================================================================================
NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
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Revenues $28,085 $24,586
Cost of revenues 12,508 11,125
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Gross margin 15,577 13,461
Research and development expenses 5,346 4,566
Selling, general and administrative expenses 7,499 6,231
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Income from operations 2,732 2,664
Interest income 1,722 1,578
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Income before income taxes 4,454 4,242
Provision for income taxes 1,430 1,357
====================================================================================
Net income $ 3,024 $ 2,885
====================================================================================
Net income per share - Basic $ 0.57 $ 0.55
Net income per share - Diluted $ 0.55 $ 0.53
====================================================================================
Weighted average shares outstanding - Basic 5,273 5,210
Weighted average shares outstanding - Diluted 5,461 5,478
====================================================================================
SEE THE ACCOMPANYING NOTES TO INTERIM CONSOLIDTED FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
CYBEROPTICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,024 $ 2,885
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 845 676
Provision for inventory obsolesence 285 379
Changes in operating assets and
liabilities:
Accounts receivable 574 (132)
Inventories (1,763) (1,271)
Other current assets (68) 289
Accounts payable 350 39
Income taxes payable (72) 1,094
Accrued expenses (204) 142
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Net cash provided
by operating activities 2,971 4,101
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of marketable securities 26,021 12,901
Purchases of marketable securities (19,415) (14,673)
Additions to equipment and leaseholds (869) (455)
Additions to patents (113) (60)
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Net cash provided (used) by
investing activities 5,624 (2,287)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 409 465
Proceeds from issuance of common stock
under Employee Stock Purchase Plan 355 285
Repurchase of common stock (6,830) (561)
Other 63
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Net cash provided (used) by
financing activities (6,003) 189
Increase in cash and cash equivalents 2,592 2,003
Cash and cash equivalents - beginning
of period 6,160 3,453
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Cash and cash equivalents - end of period $ 8,752 $ 5,456
==========================================================================================
SEE THE ACCOMPANYING NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
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<PAGE>
CYBEROPTICS CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM REPORTING:
The interim consolidated financial statements presented herein as of September
30, 1998, and for the three and nine month periods ended September 30, 1998 and
1997, are unaudited; however, in the opinion of management, the interim
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of financial
position, results of operations and cash flows for the periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principals
have been condensed or omitted pursuant to SEC rules and regulations.
The results of operations for the three and nine month periods ended September
30, 1998, do not necessarily indicate the results to be expected for the full
year. These unaudited interim consolidated financial statements should be read
in conjunction with the Company's consolidated financial statements and notes
thereto, contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
The December 31, 1997, consolidated balance sheet data was derived from audited
consolidated financial statements, but does not include all disclosures required
by generally accepted accounting principles.
2. STOCK REPURCHASE:
In December 1996, the Company's Board of Directors authorized the repurchase of
up to 500,000 shares of common stock. During the first quarter of 1997, the
Company repurchased 41,000 shares of common stock under that authorization which
expired in December 1997. In February 1998, the Board of Directors authorized
the repurchase of an additional 500,000 shares, at such times and at such prices
as a committee of the Board of Directors determines. As of September 30, 1998,
all 500,000 shares have been repurchased under the February 1998 authorization.
In October 1998, the Company's Board of Directors authorized the repurchase of
an additional 250,000 shares, at such times and at such prices as a committee of
the Board of Directors determines. No shares have been repurchased under this
authorization. Repurchased shares will be utilized for employee compensation
plans and other corporate purposes.
3. INVENTORIES (IN THOUSANDS):
Sept. 30, Dec. 31,
1998 1997
(unaudited)
----------------------
Raw materials $3,934 $3,027
Work in process 1,222 1,106
Finished goods 933 478
----------------------
Total inventories $6,089 $4,611
=====================
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<PAGE>
CYBEROPTICS CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
4. NET INCOME PER SHARE:
Basic net income per share has been computed using the weighted average number
of shares outstanding. The diluted net income per share includes the effect of
common stock equivalents for each period. The number of shares utilized in the
denominator of the diluted net income per share computation as compared to the
basic net income per share computation has been increased by 188,000 and 268,000
equivalent shares for the nine month periods and by 68,000 and 350,000 for the
three month periods ended June 30, 1998 and 1997. Options to purchase 212,000
and 169,000 shares of common stock at a weighted average price of $21.00 and
$19.00 were outstanding but were not included in the computation of diluted net
income per share for the nine month periods ended September 30, 1998 and 1997 as
the exercise price was greater than the average market price of the common
shares during that period. For the three month periods ended September 30, 1998
and 1997, options to purchase 530,000 and 90,000 shares of common stock at a
weighted average price of $18.00 and $22.00 were not included in the computation
of diluted net income per share because the exercise price was greater than the
average price of common shares during the periods.
5. COMPREHENSIVE INCOME:
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130
establishes new rules for the reporting of comprehensive income and its
components. The adoption of SFAS 130 had no impact on the Company's net income.
SFAS 130 requires unrealized gains and losses on the Company's
available-for-sale securities to be included as a component of other
comprehensive income.
During the nine months ended September 30, 1998 and 1997, total comprehensive
income amounted to $3,249,000 and $2,885,000, respectively. During the three
month periods ended September 30, 1998 and 1997, total comprehensive income
amounted to $613,000 and $1,487,000, respectively. Accumulated other
comprehensive income as of September 30, 1998 and December 31, 1997 was $250,000
and $26,000, respectively.
6. RECLASSIFICATIONS:
Certain reclassifications have been made in the statement of cash flows for the
nine month period ended September 30, 1997 to conform to the classifications
used during the nine month period ended September 30, 1998. These
reclassifications had no effect on net income or stockholders' equity.
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<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors that have affected the Company's results and financial position during
the periods included in the accompanying financial statements. This discussion
should be read in conjunction with the financial statements and associated
notes.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. The following management's discussion
and analysis contains "forward looking statements" within the meaning of federal
securities laws which represent management's expectations or beliefs relating to
future events, including statements regarding levels of orders, statements
regarding expected spending levels, taxation levels, the sufficiency of cash to
meet operating and capital expenses and the ability to continue to price foreign
transactions in U.S. currency. These, and other forward looking statements made
by the Company, must be evaluated in the context of a number of factors that may
affect the Company's financial condition and results of operations, including
the following:
-- The cyclical nature of capital expenditures in the electronics
industry;
-- The dependence of such operations on orders from several large
OEM customers;
-- The dependence of the Company's manufacturing on outside
contractors and suppliers;
-- The degree to which the Company is successful in protecting its
technology and enforcing its technology rights in the United States
and other countries;
-- The dependence of the Company's operations on several key
personnel;
-- The speed of changes in technology in the microelectronics
manufacturing industry from which most of the Company's sales are
derived;
-- The significant proportion of the Company's revenue that is derived
from export sales;
-- Competition for the functions that the Company's products perform
by larger "vision" technology companies and by other optical sensor
companies;
-- Quarterly fluctuations in operating results caused by the timing of
shipments and other factors not entirely within the Company's
control.
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<PAGE>
RESULTS OF OPERATIONS
The table below lists certain financial data expressed as a percentage of
revenues for the periods ended September 30, 1998 and 1997.
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------------------------------------
Revenues 100% 100% 100% 100%
Gross margin 53% 58% 55% 55%
Research and development expenses 20% 17% 19% 19%
Selling, general and
administrative expenses 32% 23% 27% 25%
Income from operations 1% 18% 10% 11%
Net income 5% 16% 11% 12%
REVENUES
Revenues increased 14% to $28.1 million during the nine month period ended
September 30, 1998 compared to $24.6 million for the comparable period in 1997.
For the third quarter of 1998, revenues decreased 16% to $7.7 million from $9.2
million in the second quarter of 1997. Both the increase in revenues for the
nine month period and the decrease in revenues for the third quarter, compared
to 1997, are primarily the result of changes in the level of demand for surface
mount technology (SMT) process control sensors, primarily LaserAlign and Laser
Lead Locator, from original equipment manufacturer (OEM) customers. Revenues
from SMT sensor products increased 20% to $19.2 million during the nine months
ended September 30, 1998 compared to 1997, and decreased 42% to $3.8 million for
the third quarter of 1998 compared to the third quarter of 1997. The primary
reason for lower revenues in the third quarter of 1998 compared to the same
period in 1997 was the reduction in revenues from the Company's largest OEM
customer, primarily due to weak economic conditions in Japan and other Asian
countries. The Company anticipates increased revenues from this customer in the
fourth quarter of 1998 compared to the third quarter of 1998. As a result, SMT
and total Company revenues are expected to be higher in the fourth quarter of
1998 than the third quarter of 1998, but not at the levels achieved in the
fourth quarter of 1997.
SMT system revenues increased 6% to $5.8 million during the nine month period
ended September 30, 1998 from the comparable period in 1997, and increased 74%
to $3.0 million for the third quarter of 1998 compared to the third quarter of
1997. SMT system revenues result from shipments of the Company's CyberSentry and
LSM solder paste inspection products. The growth in SMT systems revenues is
primarily due to increased revenues during the third quarter 1998 from shipments
of CyberSentry units, primarily to electronic contract manufacturers. The
increase in SMT system revenues was partially offset by reduced demand from our
North American end-user system customers reflecting reduced capital spending due
primarily to weak demand for their products in Asia.
-8-
<PAGE>
Industrial measurement systems and sensor products revenues decreased 31% to
$1.4 million during the nine month period ended September 30, 1998 from the
comparable period in 1997, and decreased 16% to $594,000 for the third quarter
of 1998 compared to the third quarter of 1997. Revenues from industrial
measurement products have been declining in recent quarters primarily as the
result of product changeovers in both the systems and sensor product lines. A
new family of general measurement sensors was released during the fourth quarter
of 1997, and a new family of general measurement systems was introduced late in
the first quarter of 1998. As a result of these new product introductions and
initial positive effects of efforts to establish improved distribution, the
Company believes that industrial measurement product revenues will increase
during the fourth quarter of 1998 compared to the third quarter of 1998, and
become a larger percentage of revenues.
The Company's two largest customers, Juki Corporation (Juki) and Philips
Electronics, N.V. (Philips), accounted for approximately 24% and 30% of revenues
for the nine months ended September 30, 1998 compared to 24% and 10% during the
same period in 1997. For the third quarter, Juki and Philips accounted for
approximately 16% and 29% of revenues in 1998 compared to 23% and 18% in 1997.
The Company's five principal OEM customers (including Juki and Philips) in the
aggregate accounted for 64% and 54% of revenues for the nine month periods ended
September 30, 1998 and 1997, and 49% and 64% of revenues for the third quarter
of 1998 and 1997.
International revenues comprised approximately 81% and 71% of total revenues
during the nine months ended September 30, 1998 and 1997, and approximately 78%
and 77% of total revenues during the third quarter of 1998 and 1997. Revenues
generated from products used primarily for SMT production have remained at
approximately 90% of revenues during 1998 and 1997.
GROSS MARGIN
Gross margin as a percent of total revenues remained at 55% during the nine
month periods ended September 30, 1998 and 1997. For the third quarter of 1998,
gross margin decreased to 53 % of total revenue compared to 58% in the third
quarter of 1997. Gross margin is highly dependent on the volume of revenues over
which to spread the fixed component of cost of sales and the realization of
manufacturing efficiencies. For the nine month periods, gross margin remained
flat on revenues that increased 14%, primarily due to increased warranty costs
incurred during the third quarter of 1998. These costs were offset by increased
revenues over which to spread fixed costs and a shift in revenue mix towards
higher margin sensor products. Third quarter 1998 gross margins were negatively
impacted by warranty costs and reduced revenues when compared to the same period
in 1997. These factors were offset somewhat in the third quarter by the effects
of a cost containment program implemented by the Company in the third quarter of
1998.
RESEARCH AND DEVELOPMENT
Net research and development expenses increased 17% to $5.3 million during the
nine month period ended September 30, 1998 compared to $4.6 million during the
comparable period in 1997. For the third quarter of 1998, research and
development expenses decreased 2% to $1.6 million from the comparable period in
1997, primarily as the result of the cost containment program implemented by the
Company in the third quarter of 1998. As a percentage of revenues, research and
development expenses remained flat at 19% for the nine months ended September
30, 1998 and 1997, and for the third quarter increased from 17% in 1997 to 20%
in 1998. Research and development expenses during the nine months ended
September 30, 1998 were primarily focused on completion of the new family of
industrial measurement scan stations and sensors introduced during the fourth
quarter of 1997 and the first quarter of 1998, continuing development work on
the LaserAlign technology and the development of additional future product
offerings for solder paste inspection.
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<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 20% to $7.5 million
during the nine month period ended September 30, 1998 compared to $6.2 million
during the comparable period in 1997. For the third quarter of 1998, selling,
general and administrative expenses increased 15% to $2.4 million compared to
$2.1 million in 1997. As a percentage of revenue, selling, general and
administrative expenses increased from 25% in 1997 to 27% in 1998 for the nine
month periods ended September 30, and for the third quarter increased from 23%
in 1997 to 32% in 1998. The increase in selling, general and administrative
expenses is primarily due to increased compensation and related costs associated
with the addition of a new president and other senior executives. These
additions were made to strategically position the Company for future growth by
focusing on each market served by the Company, and to add depth to the senior
management team. There are no significant new personnel additions planned, and
selling, general and administrative costs are expected to stabilize going
forward.
EFFECTIVE INCOME TAX RATE
The Company's effective income tax rate has remained relatively constant at
approximately 32% during the three and nine months ended September 30, 1998 and
1997. Benefits from the Company's foreign sales corporation and the research and
experimentation tax credit were primarily responsible for reducing the effective
tax rate below the statutory federal rate.
ORDER RATE AND BACKLOG
CyberOptics' order rate totaled $26.1 million during the nine month period ended
September 30, 1998 compared to $27.3 million during the same period in 1997. For
the third quarter of 1998, the order rate totaled $9.5 million compared to $11.0
million in 1997. Backlog totaled $6.7 million and $7.1 million at September 30,
1998 and 1997, respectively. The scheduled shipment of the September 30, 1998
backlog is as follows (in thousands):
4th Quarter 1998 $5,132
1st Quarter 1999 835
Other 708
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Total backlog $6,675
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and marketable securities decreased to $37.2 million
as of September 30, 1998 from $41.0 million as of December 31, 1997, primarily
as the result of $6.8 million in cash used to repurchase CyberOptics common
stock and $982,000 in fixed asset and patent additions. These uses of cash were
partially offset by $3.0 million of cash provided by operations and $764,000 of
cash provided by other common stock related financing activities. Marketable
securities generally consist of U.S. Government or U.S. Government agency
obligations with maturities of three years or less.
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<PAGE>
The Company generated $3.0 million of cash from operations during the first nine
months of 1998, primarily due to net income of $3.0 million, including $1.1
million of non-cash expenses for depreciation and amortization and the provision
for inventory obsolescence, a $350,000 increase in accounts payable and a
$574,000 decrease in accounts receivable. These increases in cash from
operations were primarily offset by an increase in inventory of $1.8 million,
resulting from inventory purchases to support a higher than realized revenue
base, new product introductions and volume last time purchases of certain
critical components. During the nine months ended September 30 1997, the Company
generated $4.1 million of cash from operations, primarily due to net income of
$2.9 million, including $1.1 million of non-cash expenses, a $289,000 decrease
in other current assets and an increase in income taxes payable of $1.1 million.
These increases in cash were offset primarily by a $1.3 million increase in
inventories.
The Company generated $5.6 million of cash from investing activities during the
nine month period ended September 30, 1998 and used $2.3 million in the
comparable period in 1997. The majority of the increase in cash is the result of
the timing of purchases and sales of marketable securities, which provided $6.6
million of cash in 1998 and used $1.8 million in 1997. The Company used $869,000
and $455,000 of cash during 1998 and 1997 to purchase additional equipment and
leasehold improvements. The Company anticipates capital expenditures to be
approximately $1.0 million for the year ending December 31, 1998.
The Company used $6.0 million of cash as the result of financing activities in
the nine month period ended September 30, 1998 and generated $189,000 of cash
from financing activities during the comparable period in 1997. During the first
nine months of 1998 and 1997, cash was used for the repurchase of 500,000 and
41,000 shares, respectively, of CyberOptics common stock. These uses of cash
were partially offset by cash generated primarily as the result of proceeds from
the exercise of stock options and issuances of common stock for the Employee
Stock Purchase Plan.
During the fourth quarter of 1997 and the first half of 1998, the Company
implemented a new enterprise business system, which went "live" on July 1, 1998.
Total external cost of implementation was approximately $575,000, the majority
of which was capitalized with depreciation beginning July 1, 1998. The Company
has no material capital commitments. The Company believes current working
capital and anticipated funds from operations will be adequate for anticipated
operating and capital needs.
OTHER
Changes in revenue levels have resulted primarily from changes in the level of
unit shipments and new product introductions. The Company believes that
inflation has not had a significant effect on operations. Substantially all of
the Company's international export sales are negotiated, invoiced and paid in
U.S. dollars.
The Securities and Exchange Commission and other regulatory bodies have
identified the failure of many computer systems and applications to properly
recognize and process date specific information on and after January 1, 2000 as
a significant risk to many companies. Because these "noncompliant" applications
use only two character date fields, many will, unless altered, incorrectly
identify years commencing with the year 2000 as the year 1900, or otherwise
misassign date information. The Company has completed an initial analysis of the
potential effect of the year 2000 issue (expending less than $50,000 on such
analysis) on both the system software included in its products and on
application software licensed or purchased by the Company and used in its
internal operations. During its initial testing, the Company has tested system
software included in its products and received feedback from customers on
testing they have performed on the Company's products used in their production
processes. These initial tests have not identified any material year 2000
non-compliance. Based on the results of initial testing, the Company is
determining if additional testing on its products is required. The cost of
additional product testing, if any, is anticipated to be less than $100,000.
-11-
<PAGE>
In addition, the Company has requested and received documentation from vendors
supplying software for its primary business applications addressing year 2000
compliance, although the Company has not independently tested those
applications. In all cases, vendor responses indicated that their applications
are year 2000 compliant. Based on this analysis, the Company does not anticipate
a material cost associated with its primary business application systems
relative to the year 2000 issue.
Additionally, the Company is in the process of contacting all critical suppliers
of raw materials and component parts for its products to verify year 2000
compliance, and to date has not identified any issues. The Company is not
directly linked to any material supplier computer systems. The Company currently
feels that all recognized actions to address the year 2000 issue and minimize
its effect on the Company have been taken, and while no formal contingency plan
currently exists, appropriate actions will be taken if issues are identified.
-12-
<PAGE>
PART II. OTHER INFORMATION
ITEM 5 - OTHER INFORMATION
On October 22, 1998, the Board of Directors amended the Company's Bylaws to
include provisions governing the introduction of proposals and nomination of
persons for election as a director of the Company. As amended the Bylaws provide
that any shareholder desiring to introduce a proposal or to nominate a person
for director at a regular meeting of the shareholders must (i) have been a
shareholder of record at the time of giving of notice as provided for in the
Bylaws, (ii) be entitled to vote at the meeting and (iii) have given prior
notice of the matter, which must otherwise be a proper matter for shareholder
action, in the manner provided for in the Bylaws. The amended Bylaws also
provide that, if a shareholder desires to introduce a proposal or to nominate a
person for director at a regular meeting of the shareholders, written notice of
such business must be received by the Company not less than 120 days before the
date that is one year after the date of the Company's proxy statement for the
prior year's regular meeting. If the Company does not receive timely notice, the
business may be excluded from consideration at the meeting. This advance notice
provision supersedes the statutory notice period in revised Rule 14a-4(c)(1) of
the federal proxy rules which addresses the discretionary proxy voting authority
of the Board of Directors in connection with such shareholder business. The
foregoing description of the amended Bylaws is qualified in its entirety by
reference to the full text of the Company's Bylaws, as amended, filed as Exhibit
3.1 hereto and incorporated by reference herein.
Based on the Bylaws, as amended, if a shareholder desires to make a proposal or
nominate a person for election as a director at the 1999 Annual Meeting of
Shareholders (and such business is not the subject of a shareholder proposal
timely submitted for inclusion in the proxy statement), written notice of such
business containing the information required under the Company's Bylaws must be
received by the Company at its principal executive office on or before December
8, 1998.
ITEM 6 - EXHIBITS AND REPORTS ON 8-K
a. Exhibits
Exhibit 3.1--Bylaws of CyberOptics Corporation, as amended
Exhibit 27--Financial Data Schedule (For EDGAR filing only)
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1998, or during the period from September 30, 1998 to the date of
this quarterly report on Form 10-Q.
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<PAGE>
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.
CyberOptics Corporation
/s/ Steven M. Quist
-------------------
Steven M. Quist, President
(Principal Executive Officer and
Duly Authorized Officer)
/s/ Richard G. Ballintine
-------------------------
Richard G. Ballintine, Vice President - Finance
(Principal Accounting Officer and
Duly Authorized Officer)
Dated: November 13, 1998
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EXHIBIT 3.1
As adopted: January 18, 1984
and amended: October 22, 1998
BYLAWS
OF
CYBEROPTICS CORPORATION
ARTICLE I.
OFFICES, CORPORATE SEAL
Section 1.01. Registered Office. The registered office of the
corporation in Minnesota shall be that set forth in the Articles of
Incorporation or in the most recent amendment of the Articles of Incorporation
or resolution of the directors filed with the Secretary of State of Minnesota
changing the registered office.
Section 1.02. Other Offices. The corporation may have such other
offices, within or without the State of Minnesota, as the directors shall, from
time to time, determine.
Section 1.03. Corporate Seal. The corporation shall have no seal.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meetings. Except as provided otherwise
by Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at
any place, within or without the State of Minnesota, as may from time to time be
designated by the directors and, in the absence of such designation, shall be
held at the registered office of the corporation in the State of Minnesota. The
directors shall designate the time of day for each meeting and, in the absence
of such designation, every meeting of shareholders shall be held at ten
o'clock a.m.
Section 2.02. Regular Meetings.
(a) A regular meeting of the shareholders shall be held on such date as
the Board of Directors shall by resolution establish.
(b) At a regular meeting the shareholders, voting as provided in the
Articles of Incorporation and these Bylaws, shall designate the number of
directors to constitute the Board of Directors (subject to the authority of the
Board of Directors thereafter to increase or decrease the number of directors as
permitted by law and these Bylaws), shall elect qualified successors for
directors who serve for an indefinite term or whose terms have expired or are
due to expire within six months after the date of the meeting and shall transact
such other business as may properly come before them.
Section 2.03. Special Meetings. Special meetings of the shareholders
may be held at any time and for any purpose and may be called by the President,
Treasurer, any two directors, or by a shareholder or shareholders holding 10% or
more of the shares entitled to vote on the matters to be presented to the
meeting; except that a special meeting for the purpose of considering any action
to directly or indirectly facilitate or affect a business combination, including
any action to change or otherwise affect the composition of the board of
directors for that purpose, must be called by 25% or more of the voting power of
all shares entitled to vote. A shareholder or shareholders holding the requisite
percentage of the voting power of all shares entitled to vote may demand a
special meeting of the shareholders by written notice of demand given to the
chief executive officer or chief financial officer of the corporation and
containing the purposes of the meeting. Within 30 days after receipt of demand
by one of those officers, the board of directors shall cause a special meeting
of shareholders to be called and held on notice no later than 90 days after
receipt of the demand, at the expense of the corporation. Special meetings shall
be held on the date and at the time and place fixed by the chief executive
officer or the board of directors, except that a special meeting called by or at
demand of a shareholder or shareholders shall be held in the county where the
principal
<PAGE>
executive office is located. The business transacted at a special meeting shall
be limited to the purposes as stated in the notice of the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of a majority of
the shares entitled to vote shall constitute a quorum for the transaction of
business at any regular or special meeting. In case a quorum shall not be
present at a meeting, those present may adjourn the meeting to such day as they
shall, by majority vote, agree upon, and a notice of such adjournment and the
date and time at which such meeting shall be reconvened shall be mailed to each
shareholder entitled to vote at least 5 days before such adjourned meeting. If a
quorum is present, a meeting may be adjourned from time to time without notice
other than announcement at the meeting. At adjourned meetings at which a quorum
is present, any business may be transacted which might have been transacted at
the meeting as originally noticed. If a quorum is present, the shareholders may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 2.05. Voting. At each meeting of the shareholders every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the Articles of Incorporation or statute
provide otherwise, shall have one vote for each share having voting power
registered in such shareholder's name on the books of the corporation. Jointly
owned shares may be voted by any joint owner unless the corporation receives
written notice from any one of them denying the authority of that person to vote
those shares. Upon the demand of any shareholder, the vote upon any question
before the meeting shall be by ballot. All questions shall be decided by a
majority vote of the number of shares entitled to vote and represented at the
meeting at the time of the vote except if otherwise required by statute, the
Articles of Incorporation, or these Bylaws.
Section 2.06. Closing of Books. The Board of Directors may fix a time,
not exceeding 60 days preceding the date of any meeting of shareholders, as a
record date for the determination of the shareholders entitled to notice of, and
to vote at, such meeting, notwithstanding any transfer of shares on the books of
the corporation after any record date so fixed. The Board of Directors may close
the books of the corporation against the transfer of shares during the whole or
any part of such period. If the Board of Directors fails to fix a record date
for determination of the shareholders entitled to notice of, and to vote at, any
meeting of shareholders, the record date shall be the 20th day preceding the
date of such meeting.
Section 2.07. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the time and place of each regular meeting and each special meeting,
except where the meeting is an adjourned meeting and the date, time and place of
the meeting were announced at the time of adjournment, which notice shall be
mailed at least five days prior thereto; except that notice of a meeting at
which an agreement of merger or exchange is to be considered shall be mailed to
all shareholders of record, whether entitled to vote or not, at least fourteen
days prior thereto. Every notice of any special meeting called pursuant to
Section 2.03 hereof shall state the purpose or purposes for which the meeting
has been called, and the business transacted at all special meetings shall be
confined to the purpose stated in the notice.
Section 2.08. Waiver of Notice. Notice of any regular or special
meeting may be waived by any shareholder either before, at or after such meeting
orally or in a writing signed by such shareholder or a representative entitled
to vote the shares of such shareholder. A shareholder, by his attendance at any
meeting of shareholders, shall be deemed to have waived notice of such meeting,
except where the shareholder objects at the beginning of the meeting to the
transaction of business because the item may not lawfully be considered at that
meeting and does not participate in the consideration of the item at that
meeting.
Section 2.09. Written Action. Any action which might be taken at a
meeting of the shareholders may be taken without a meeting if done in writing
and signed by all of the shareholders entitled to vote on that action.
Section 2.10 Conduct of Shareholder Meetings. The chairman of the
meeting shall have the right and authority to prescribe such rules, regulations
and procedures and to do all such acts as, in the judgment of such chairman, are
appropriate for conduct of the meeting. To the extent not prohibited by law,
such rules, regulations or procedures may include, without limitation,
establishment of (i) an agenda or order of business for the meeting and the
method by which business may be proposed, (ii) rules and procedures for
maintaining order at the meeting and
<PAGE>
the safety of those present, (iii) limitations on attendance at or participation
in the meeting to shareholders of record of the corporation, their duly
authorized proxies or such other persons as the chairman of the meeting shall
determine, (iv) restrictions on entry to the meeting after the time fixed for
the commencement thereof and (v) limitations on the time allotted to questions
or comments by participants. Any proposed business contained in the notice of a
regular meeting is deemed to be on the agenda and no further motions or other
actions shall be required to bring such proposed business up for consideration.
Unless and to the extent otherwise determined by the chairman of the meeting, it
shall not be necessary to follow Robert's Rules of Order or any other rules of
parliamentary procedure at the meeting of the shareholders. Following completion
of the business of the meeting as determined by the chairman of the meeting, the
chairman of the meeting shall have the exclusive authority to adjourn the
meeting.
Section 2.11 Shareholder Proposals. To be properly brought before a
regular meeting of shareholders, business must be (i) specified in the notice of
the meeting, (ii) directed to be brought before the meeting by the Board of
Directors or (iii) proposed at the meeting by a shareholder who (A) was a
shareholder of record at the time of giving of notice provided for in these
bylaws, (B) is entitled to vote at the meeting and (C) gives prior notice of the
matter, which must otherwise be a proper matter for shareholder action, in the
manner herein provided. For business to be properly brought before a regular
meeting by a shareholder, the shareholder must give written notice to the
Secretary of the corporation so as to be received at the principal executive
offices of the corporation at least 120 days before the date that is one year
after the date of the corporation's proxy statement for the prior year's regular
meeting. Such notice shall set forth (i) the name and record address of the
shareholder and of the beneficial owner, if any, on whose behalf the proposal
will be made, (ii) the class and number of shares of the corporation owned by
the shareholder and beneficially owned by the beneficial owner, if any, on whose
behalf the proposal will be made, (iii) a brief description of the business
desired to be brought before the regular meeting and the reasons for conducting
such business and (iv) any material interest in such business of the shareholder
and the beneficial owner, if any, on whose behalf the proposal is made. The
chairman of the meeting may refuse to acknowledge any proposed business not made
in compliance with the foregoing procedure.
ARTICLE III.
DIRECTORS
Section 3.01. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors, except as otherwise permitted by statute.
Section 3.02. Number, Qualification and Term of Office. The number of
directors of the corporation shall not exceed eight (8), the precise number to
be established by resolution of the shareholders (subject to the authority of
the Board of Directors to increase or decrease, the number of directors as
permitted by law and these bylaws). In the absence of such shareholder
resolution, the number of directors shall be the number last fixed by the
shareholders, the Board of Directors, the incorporator or the Articles of
Incorporation. Directors need not be shareholders. Each of the directors shall
hold office until the regular meeting of shareholders next held after such
director's election and until such director's successor shall have been elected
and shall qualify, or until the earlier death, resignation, removal, or
disqualification of such director; provided, however, that no director shall be
elected to a term in excess of five years.
Section 3.03. Board Meetings. Meetings of the Board of Directors may be
held from time to time at such time and place within or without the State of
Minnesota as may be designated in the notice of such meeting.
Section 3.04. Calling Meetings; Notice. Meetings of the Board of
Directors may be called by the Chairman of the Board by giving at least
twenty-four hours' notice, or by any other director by giving at least five
days' notice, of the date, time and place thereof to each director by mail,
telephone, telegram or in person.
Section 3.05. Waiver of Notice. Notice of any meeting of the Board of
Directors may be waived by any director either before, at, or after such meeting
orally or in a writing signed by such director. A director, by his attendance at
any meeting of the Board of Directors, shall be deemed to have waived notice of
such meeting, except where the director objects at the beginning of the meeting
to the transaction of business because the meeting is not lawfully called or
convened and does not participate thereafter in the meeting.
<PAGE>
Section 3.06. Quorum. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting.
Section 3.07. Absent Directors. A director may give advance written
consent or opposition to a proposal to be acted on at a meeting of the Board of
Directors. If such director is not present at the meeting, consent or opposition
to a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected.
Section 3.08. Conference Communications. Any or all directors may
participate in any meeting of the Board of Directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, such directors
participating pursuant to this Section 3.08 shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication.
Section 3.09. Vacancies; Newly Created Directorships. Vacancies in the
Board of Directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the Board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the Board of Directors as permitted by Section
3.02 may be filled by a two-thirds vote of the directors serving at the time of
such increase; and each director elected pursuant to this Section 3.09 shall be
a director until such director's successor is elected by the shareholders at
their next regular or special meeting.
Section 3.10. Removal. Any or all of the directors may be removed from
office at any time, with or without cause, by the affirmative vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors except, as otherwise provided by Minnesota Statutes Section 302A.223,
as amended, when the shareholders have the right to cumulate their votes. A
director named by the Board of Directors to fill a vacancy may be removed from
office at any time, with or without cause, by the affirmative vote of the
remaining directors if the shareholders have not elected directors in the
interim between the time of the appointment to fill such vacancy and the time of
the removal. In the event that the entire Board or any one or more directors be
so removed, new directors shall be elected at the same meeting.
Section 3.11. Committees. A resolution approved by the affirmative vote
of a majority of the Board of Directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the Board of
Directors, except as provided by Minnesota Statutes Section 302A.243.
A majority of the members of the committee present at a meeting is a
quorum for the transaction of business, unless a larger or smaller proportion or
number is provided in a resolution approved by the affirmative vote of a
majority of the directors present.
Section 3.12. Written Action. Any action which might be taken at a
meeting of the Board of Directors, or any duly constituted committee thereof,
may be taken without a meeting if done in writing and signed by all of the
directors or committee members, unless the Articles provide otherwise and the
action need not be approved by the shareholders.
Section 3.13. Compensation. Directors who are not salaried officers of
this corporation shall receive such fixed sum per meeting attended or such fixed
annual sum as shall be determined, from time to time, by resolution of the Board
of Directors. The Board of Directors may, by resolution, provide that all
directors shall receive their expenses, if any, of attendance at meetings of the
Board of Directors or any committee thereof. Nothing herein
<PAGE>
contained shall be construed to preclude any director from serving this
corporation in any other capacity and receiving proper compensation therefor.
Section 3.14. Nomination of Directors. Nominations of persons for
election as directors may be made at a regular meeting of shareholders (i) by or
at the direction of the Board of Directors or (ii) by any shareholder who (A)
was a shareholder of record at the time of giving of notice provided for in
these bylaws, (B) is entitled to vote at the meeting and (C) gives prior notice
of the nomination in the manner herein provided. For a nomination to be properly
made by a shareholder, the shareholder must give written notice to the Secretary
of the corporation so as to be received at the principal executive offices of
the corporation at least 120 days before the date that is one year after the
date of the corporation's proxy statement for the prior year's regular meeting.
Such notice shall set forth (i) as to the shareholder giving the notice: (A) the
name and record address of the shareholder and of the beneficial owner, if any,
on whose behalf the nomination will be made, and (B) the class and number of
shares of the corporation owned by the shareholder and beneficially owned by the
beneficial owner, if any, on whose behalf the nomination will be made and (ii)
as to each person the shareholder proposes to nominate: (A) the name, age,
business address and residence address of the person, (B) the principal
occupation or employment of the person and (C) the class and number of shares of
the corporation's capital stock beneficially owned by the person. The chairman
of the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
ARTICLE IV.
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of
a Chairman of the Board (if one is elected by the Board), a President, a
Treasurer, a Secretary (if one is elected by the Board) and such other officers
and agents as may, from time to time, be elected or appointed by the Board of
Directors. Any number of offices may be held by the same person.
Section 4.02. Election, Term of Office and Qualifications. The Board of
Directors shall elect or appoint, by resolution approved by the affirmative vote
of a majority of the directors present, from within or without their number, the
President, Treasurer and such other officers as may be deemed advisable, each of
whom shall have the powers, rights, duties, responsibilities, and terms in
office provided for in these Bylaws or a resolution of the Board of Directors
not inconsistent therewith. The President and all other officers who may be
directors shall continue to hold office until the election and qualification of
their successors, notwithstanding an earlier termination of their directorship.
Section 4.03. Removal and Vacancies. Any officer may be removed from
his office by the Board of Directors at any time, with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
Section 4.04. Chairman of the Board. The Chairman of the Board, if one
is elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
Board of Directors.
Section 4.05. President. The President shall be the chief executive
officer and shall have general active management of the business of the
corporation. In the absence of the Chairman of the Board, he shall preside at
all meetings of the shareholders and directors. He shall see that all orders and
resolutions of the Board of Directors are carried into effect. He shall execute
and deliver, in the name of the corporation, any deeds, mortgages, bonds,
contracts or other instruments pertaining to the business of the corporation
unless the authority to execute and deliver is required by law to be exercised
by another person or is expressly delegated by the Articles or Bylaws or by the
Board of Directors to some other officer or agent of the corporation. He shall
maintain records of and, whenever necessary, certify all proceedings of the
Board of Directors and the shareholders, and in general, shall perform all
duties usually incident to the office of the President. He shall have such other
duties as may, from time to time, be prescribed by the Board of Directors.
<PAGE>
Section 4.06. Vice President. Each Vice President, if one or more are
elected, shall have such powers and shall perform such duties as prescribed by
the Board of Directors or by the President. In the event of the absence or
disability of the President, Vice Presidents shall succeed to his power and
duties in the order designated by the Board of Directors.
Section 4.07. Secretary. The Secretary, if one is elected, shall be
secretary of and shall attend all meetings of the shareholders and Board of
Directors and shall record all proceedings of such meetings in the minute book
of the corporation. He shall give proper notice of meetings of shareholders and
directors. He shall perform such other duties as may, from time to time, be
prescribed by the Board of Directors or by the President.
Section 4.08. Treasurer. The Treasurer shall be the chief financial
officer and shall keep accurate financial records for the corporation. He shall
deposit all moneys, drafts and checks in the name of, and to the credit of, the
corporation in such banks and depositories as the Board of Directors shall, from
time to time, designate. He shall have power to endorse, for deposit, all notes,
checks and drafts received by the corporation. He shall disburse the funds of
the corporation, as ordered by the Board of Directors, making proper vouchers
therefor. He shall render to the President and the directors, whenever
requested, an account of all his transactions as Treasurer and of the financial
condition of the corporation, and shall perform such other duties as may, from
time to time, be prescribed by the Board of Directors or by the President.
Section 4.09. Compensation. The officers of this corporation shall
receive such compensation for their services as may be determined, from time to
time, by resolution of the Board of Directors.
ARTICLE V.
SHARES AND THEIR TRANSFER
Section 5.01. Certificates for Shares. All shares of the corporation
shall be certificated shares. Every owner of shares of the corporation shall be
entitled to a certificate, to be in such form as shall be prescribed by the
Board of Directors, certifying the number of shares of the corporation owned by
such shareholder. The certificates for such shares shall be numbered in the
order in which they shall be issued and shall be signed, in the name of the
corporation, by the President and by the Secretary or an Assistant Secretary or
by such officers as the Board of Directors may designate. If the certificate is
signed by a transfer agent or registrar, such signatures of the corporate
officers may be by facsimile if authorized by the Board of Directors. Every
certificate surrendered to the corporation for exchange or transfer shall be
cancelled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
cancelled, except in cases provided for in Section 5.04.
Section 5.02. Issuance of Shares. The Board of Directors is authorized
to cause to be issued shares of the corporation up to the full amount authorized
by the Articles of Incorporation in such amounts as may be determined by the
Board of Directors and as may be permitted by law. No shares shall be allotted
except in consideration of cash or other property, tangible or intangible,
received or to be received by the corporation under a written agreement, of
services rendered or to be rendered to the corporation under a written
agreement, or of an amount transferred from surplus to stated capital upon a
share dividend. At the time of such allotment of shares, the Board of Directors
making such allotments shall state, by resolution, their determination of the
fair value to the corporation in monetary terms of any consideration other than
cash for which shares are allotted.
Section 5.03. Transfer of Shares. Transfer of shares on the books of
the corporation may be authorized only by the shareholder named in the
certificate, or the shareholder's legal representative, or the shareholder's
duly authorized attorney-in-fact, and upon surrender of the certificate or the
certificates for such shares. The corporation may treat as the absolute owner of
shares of the corporation, the person or persons in whose name shares are
registered on the books of the corporation.
Section 5.04. Loss of Certificates. Except as otherwise provided by
Minnesota Statutes Section 302A.419, any shareholder claiming a certificate for
shares to be lost, stolen or destroyed shall make an affidavit or that fact in
such form as the Board of Directors shall require and shall, if the Board of
Directors so requires, give the corporation a bond of indemnity in form, in an
amount, and with one or more sureties satisfactory to the Board of Directors, to
<PAGE>
indemnify the corporation against any claim which may be made against it on
account of the reissue of such certificate, whereupon a new certificate may be
issued in the same tenor and for the same number of shares as the one alleged to
have been lost, stolen or destroyed.
ARTICLE VI.
DIVIDENDS, RECORD DATE
Section 6.01. Dividends. Subject to the provisions of the Articles of
Incorporation, of these Bylaws, and of law, the Board of Directors may declare
dividends whenever, and in such amounts as, in its opinion, are deemed
advisable.
Section 6.02. Record Date. Subject to any provisions of the Articles of
Incorporation, the Board of Directors may fix a date not exceeding 120 days
preceding the date fixed for the payment of any dividend as the record date for
the determination of the shareholders entitled to receive payment of the
dividend and, in such case, only shareholders of record on the date so fixed
shall be entitled to receive payment of such dividend notwithstanding any
transfer of shares on the books of the corporation after the record date. The
Board of Directors may close the books of the corporation against the transfer
of shares during the whole or any part of such period.
ARTICLE VII.
BOOKS AND RECORDS, FISCAL YEAR
Section 7.01. Share Register. The Board of Directors of the corporation
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the board:
(1) a share register not more than one year old, containing the
names and addresses of the shareholders and the number and
classes of shares held by each shareholder; and
(2) a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. Other Books and Records. The Board of Directors shall
cause to be kept at its principal executive office, or, if its principal
executive office is not in Minnesota, shall make available at its registered
office within ten days after receipt by an officer of the corporation of a
written demand for them made by a shareholder or other person authorized by
Minnesota Statutes Section 302A.461, originals or copies of:
(1) records of all proceedings of shareholders for the last three
years;
(2) records of all proceedings of the board for the last three
years;
(3) its articles and all amendments currently in effect;
(4) its bylaws and all amendments currently in effect;
(5) financial statements required by Minnesota Statutes Section
302A.463 and the financial statement for the most recent
interim period prepared in the course of the operation of the
corporation for distribution to the shareholders or to a
governmental agency as a matter of public record;
(6) reports made to shareholders generally within the last three
years;
(7) a statement of the names and usual business addresses of its
directors and principal officers;.
(8) any shareholder voting or control agreements of which the
corporation is aware; and
(9) such other records and books of account as shall be necessary
and appropriate to the conduct of the corporate business.
<PAGE>
Section 7.03. Fiscal Year. The fiscal year of the corporation shall be
determined by the Board of Directors.
ARTICLE VIII.
LOANS, GUARANTEES, SURETYSHIP
Section 8.01. The corporation may lend money to, guarantee an
obligation of, become a surety for, or otherwise financially assist a person if
the transaction, or a class of transactions to which the transaction belongs, is
approved by the affirmative vote of a majority of the directors present and:
(1) is in the usual and regular course of business of the
corporation;
(2) is with, or for the benefit of, a related corporation, an
organization in which the corporation has a financial
interest, an organization with which the corporation has a
business relationship, or an organization to which the
corporation has the power to make donations;
(3) is with, or for the benefit of, an officer or other employee
of the corporation or a subsidiary, including an officer or
employee who is a director of the corporation or a subsidiary,
and may reasonably be expected, in the judgment of the board,
to benefit the corporation; or
(4) has been approved by the affirmative vote of the holders of
two-thirds of the outstanding shares.
The loan, guarantee, surety contract or other financial assistance may be with
or without interest, and may be unsecured, or may be secured in the manner as a
majority of the directors approve, including, without limitation, a pledge of or
other security interest in shares of the corporation. Nothing in this section
shall be deemed to deny, limit, or restrict the powers of guaranty or warranty
of the corporation at common law or under a statute of the State of Minnesota.
ARTICLE IX.
INDEMNIFICATION OF CERTAIN PERSONS
Section 9.01. The corporation shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to such
extent as permitted by Minnesota Statutes Section 302A.521, as now enacted or
hereafter amended.
ARTICLE X.
AMENDMENTS
Section 10.01. These Bylaws may be amended or altered by a vote of the
majority of the whole Board of Directors at any meeting provided that notice of
such proposed amendment shall have been given in the notice given to the
directors of such meeting. Such authority in the Board of Directors is subject
to the power of the shareholders to change or repeal such Bylaws by a majority
vote of the shareholders present or represented at any regular or special
meeting of shareholders called for such purpose, and the Board of Directors
shall not make or alter any, Bylaws fixing a quorum for meetings of
shareholders, prescribing procedures or removing directors or filling vacancies
in the Board of Directors, or fixing the number of directors or their
classifications, qualifications, or terms of office, except that the Board of
Directors may adopt or amend by unanimous action any Bylaw to increase the
number of directors.
ARTICLE XI.
SECURITIES OF OTHER CORPORATIONS
Section 11.01. Voting Securities Held by the Corporation. Unless
otherwise ordered by the Board of Directors, the President shall have full power
and authority on behalf of the corporation (a) to attend any meeting of security
holders of other corporations in which the corporation may hold securities and
to vote such securities on behalf of this corporation; (b) to execute any proxy
for such meeting on behalf of the corporation; or (c) to execute a
<PAGE>
written action in lieu of a meeting of such other corporation on behalf of this
corporation. At such meeting, the President shall possess and may exercise any
and all rights and powers incident to the ownership of such securities that the
corporation possesses. The Board of Directors may, from time to time, grant such
power and authority to one or more other persons and may remove such power and
authority from the President upon any other person or persons.
Section 11.02. Purchase and Sale of Securities. Unless otherwise
ordered by the Board of Directors, the President shall have full power and
authority on behalf of the corporation to purchase, sell, transfer or encumber
any and all securities of any other corporation owned by the corporation, and
may execute and deliver such documents as may be necessary to effectuate such
purchase, sale, transfer or encumbrance. The Board of Directors may, from time
to time, confer like powers upon any other person or persons.
<TABLE> <S> <C>
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 8,752
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0
0
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</TABLE>
