SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-19867
------------------------
ESKIMO PIE CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-0571720
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
901 Moorefield Park Drive
Richmond, VA 23236
(Address of principal executive offices, including zip code)
------------
Registrant's phone number, including area code:
(804) 560-8400
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock.
Class Outstanding at October 31, 1999
Common Stock, $1.00 Par Value 3,464,050
- ----------------------------- ---------
<PAGE>
ESKIMO PIE CORPORATION
Index
Page
Number
------
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income
Three and Nine Months Ended September 30, 1999 and 1998 1
Condensed Consolidated Balance Sheets
September 30, 1999; December 31, 1998 and September 30, 1998 2
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1999 and 1998 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
<TABLE>
ESKIMO PIE CORPORATION
Condensed Consolidated Statements of Income (Unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands, except share data)
<S> <C> <C> <C> <C>
Net sales $ 15,686 $ 15,179 $ 53,961 $ 51,324
Cost of products sold 8,824 9,025 29,822 29,578
------------------------------------------------------------------------------
Gross profit 6,862 6,154 24,139 21,746
Advertising and sales promotion expenses 4,069 4,106 13,777 12,983
Selling, general and administrative expenses 1,930 1,803 6,112 6,293
Expense from restructuring activities - - 191 -
Expense from analysis of strategic alternatives 219 - 600 -
Expense from proxy contest 344 - 344 -
------------------------------------------------------------------------------
Operating income 300 245 3,115 2,470
Interest (income)/expense and other - net 134 141 360 383
------------------------------------------------------------------------------
Income before income taxes 166 104 2,755 2,087
Income tax expense 61 39 1,019 772
------------------------------------------------------------------------------
Net income $ 105 $ 65 $ 1,736 $ 1,315
==============================================================================
Per Share Data
Basic:
Weighted average number of
common shares outstanding 3,463,178 3,458,598 3,462,929 3,458,326
Net income $ 0.03 $ 0.02 $ 0.50 $ 0.38
==============================================================================
Assuming dilution:
Weighted average number of
common shares outstanding 3,463,178 3,458,598 3,463,453 3,458,326
Net income $ 0.03 $ 0.02 $ 0.50 $ 0.38
==============================================================================
Cash dividends $ 0.00 $ 0.05 $ 0.10 $ 0.15
==============================================================================
</TABLE>
1
<PAGE>
<TABLE>
ESKIMO PIE CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
<CAPTION>
September 30, December 31, September 30,
As of 1999 1998 1998
- -----------------------------------------------------------------------------------------------------------------------------------
(In thousands, except share data)
Assets
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,694 $ 530 $ 1,302
Receivables 8,316 6,817 6,470
Inventories 5,367 4,897 6,830
Prepaid expenses 279 889 717
--------------------------------------------------------
Total current assets 16,656 13,133 15,319
Property, plant and equipment - net 6,766 7,665 7,862
Goodwill and other intangibles 16,877 17,645 17,796
Other assets 712 1,645 1,340
--------------------------------------------------------
Total assets $ 41,011 $ 40,088 $ 42,317
========================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,983 $ 2,875 $ 3,726
Accrued advertising and promotion 3,005 1,728 2,059
Accrued compensation and related amounts 436 211 170
Other accrued expenses 1,057 657 824
Current portion of long term debt 1,087 1,317 1,317
--------------------------------------------------------
Total current liabilities 7,568 6,788 8,096
Long term debt 6,943 3,901 4,230
Convertible subordinated notes - 3,800 3,800
Postretirement benefits and other liabilities 2,808 3,373 3,281
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares
authorized, none issued and outstanding - - -
Common stock, $1.00 par value; 10,000,000 shares
authorized, 3,464,050 issued and outstanding at
September 30 1999, 3,458,597 at December 31, 1998
and September 30, 1998 3,464 3,459 3,458
Additional capital 4,464 4,393 4,385
Retained earnings 15,764 14,374 15,067
--------------------------------------------------------
Total shareholders' equity 23,692 22,226 22,910
--------------------------------------------------------
Total liabilities and shareholders' equity $ 41,011 $ 40,088 $ 42,317
========================================================
</TABLE>
2
<PAGE>
<TABLE>
ESKIMO PIE CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
Nine months ended September 30, 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C>
Operating activities
Net income $ 1,736 $ 1,315
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,791 1,896
Change in deferred income taxes and other assets 1,017 (40)
Change in postretirement benefits and other liabilities (569) 80
Change in receivables (1,499) (1,149)
Change in inventories and prepaid expenses (130) (1,588)
Change in accounts payable and accrued expenses 1,059 777
----------------------------------------
Net cash provided by operating activities 3,405 1,291
Investing activities
Acquisition of intangible assets - (944)
Capital expenditures (466) (1,092)
Proceeds from disposal of fixed assets 401 -
Other 158 199
----------------------------------------
Net cash provided by (used in) investing activities 93 (1,837)
Financing activities
Borrowings 3800 -
Redemption of convertible subordinate notes (3800) -
Principal payments on long term debt (988) (988)
Cash dividends (346) (517)
----------------------------------------
Net cash (used in) financing activities (1,334) (1,505)
----------------------------------------
Change in cash and cash equivalents 2,164 (2,051)
Cash and cash equivalents at the beginning of the year 530 3,353
----------------------------------------
Cash and cash equivalents at the end of the quarter $ 2,694 $ 1,302
========================================
</TABLE>
3
<PAGE>
ESKIMO PIE CORPORATION
Notes to Condensed Consolidated Financial Statements
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: In the opinion of management, the accompanying
unaudited condensed consolidated financial statements reflect all adjustments
(consisting of only normal recurring accruals) necessary for a fair presentation
of the Company's financial position as of September 30, 1999 and its results of
operations for the three and nine months ended September 30, 1999 and 1998. The
results of operations for any interim period are not necessarily indicative of
results for the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
Company's 1998 Annual Report. Certain prior period amounts have been
reclassified to conform to current presentation.
NOTE B - INVENTORIES Inventories are classified as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
September 30, 1999 December 31, 1998 September 30, 1998
- -------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Finished goods $ 3,629 $ 3,294 $ 4,762
Raw materials and packaging supplies 2,775 2,642 2,999
--------- --------- ----------
Total FIFO inventories 6,404 5,936 7,761
LIFO reserves (1,037) (1,039) (931)
--------- --------- ---------
$ 5,367 $ 4,897 $ 6,830
========= ========= =========
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE C - FINANCING ARRANGEMENTS
On May 20, 1999, the Company renewed its $10 million committed line of
credit, which is now available for general corporate purposes through April
2001. Borrowings under the line bear interest at the lender's overnight money
market rate plus 100 basis points.
The Company used the line to refinance, on a long-term basis, the
February 1999 redemption of the previously issued $3.8 million in convertible
subordinated notes.
4
<PAGE>
<TABLE>
NOTE D - EARNINGS PER SHARE
The following table sets forth the computation of earnings per share:
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended September 30, Nine months ended September 30,
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 105,000 $ 65,000 $ 1,736,000 $ 1,315,000
========= ======== ============ ============
Weighted average number of common
shares outstanding 3,463,178 3,458,598 3,462,929 3,458,326
Effect of dilutive securities:
Stock options - - 524 -
Weighted average number of common shares
outstanding assuming potential dilution 3,463,178 3,458,598 3,463,453 3,458,326
========= ============ ============ ============
Basic earnings per share $0.03 $0.02 $0.50 $0.38
===== ===== ===== =====
Earnings per share - assuming dilution $0.03 $0.02 $0.50 $0.38
===== ===== ===== =====
- ------------------------------------------------------------------------------------------------------------------------------------
Certain stock options were excluded from consideration for their
dilutive effect because the exercise price of the options exceeded the average
market price for the respective periods, and as such, the effect would be
anti-dilutive.
NOTE E - BUSINESS SEGMENTS
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
National
Business Segments Brands Flavors Foodservice Other Totals
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended September 30, 1999
Sales $9,569 $ 3,188 $ 2,627 $ 302 $ 15,686
====== ======= ======= ======== ========
Segment profitability $1,614 $ 547 $ 609 $ 23 $ 2,793
Selling, general and administrative expenses (1,930)
Expense from analysis of strategic alternatives (219)
Expense from proxy contest
(344)
Interest income and expense - net (134)
---------
Income before income taxes $ 166
=========
- ------------------------------------------------------------------------------------------------------------------------------------
Three months ended September 30, 1998
Sales $9,235 $ 2,958 $ 2,447 $ 539 $ 15,179
====== ======= ======== ========= ========
Segment profitability $1,042 $ 372 $ 751 $ (117) $ 2,048
Selling, general and administrative expenses (1,803)
Interest income and expense - net (141)
---------
Income before income taxes $ 104
=========
- ------------------------------------------------------------------------------------------------------------------------------------
5
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
National
Business Segments Brands Flavors Foodservice Other Totals
- ------------------------------------------------------------------------------------------------------------------------------------
Nine months ended September 30, 1999
Sales $35,337 $ 9,635 $ 7,563 $ 1,426 $ 53,961
======= ======= ======= ======= ========
Segment profitability $ 6,676 $ 1,787 $ 1,776 $ 123 $ 10,362
Selling, general and administrative expenses (6,112)
Expense from restructuring activities (191)
Expense from analysis of strategic alternatives (600)
Expense from proxy contest (344)
Interest income and expense - net
(360)
Income before income taxes $ 2,755
=========
- ------------------------------------------------------------------------------------------------------------------------------------
Nine months ended September 30, 1998
Sales $34,731 $ 8,863 $ 6,392 $ 1,338 $ 51,324
======= ======= ======== ======= ========
Segment profitability $ 5,938 $ 1,335 $ 1,723 $ (233) $ 8,763
Selling, general and administrative expenses (6,293)
Interest income and expense - net (383)
---------
Income before income taxes $ 2,087
=========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE F - RESTRUCTURING EXPENSES
The Company incurred $1,135,000 in non-recurring special charges,
associated with three separate activities, during the first nine months of 1999.
The Company incurred approximately $600,000 in costs (primarily
associated with legal, investment banking and other professional fees) in
connection with the Company's previously announced examination of strategic
alternatives to enhance shareholder value, and the Company's subsequent
development of the Growth and Restructuring Plan.
During the nine months ended September 30, 1999, the Company also
undertook two programs to reduce overhead expenses. In March 1999, the Company
discontinued certain non-core manufacturing operations and as a result,
terminated the employment of seven production employees at its Bloomfield, New
Jersey packaging plant. As a result, the Company incurred related severance
costs of approximately $105,000, all of which was paid as of June 30, 1999.
During the second quarter of 1999, the Company eliminated two vacant positions
and terminated the employment of six employees located at the Company's
corporate headquarters. The severance costs associated with these terminations
totaled $86,000, the majority of which will be paid by the end of 1999.
The Company also incurred proxy contest expenses of approximately
$344,000 (primarily legal and other professional service fees and administrative
expenses) associated with the Company's delayed annual meeting of shareholders
held on September 8, 1999. The Company's Board of Directors was re-elected at
the annual meeting.
6
<PAGE>
ESKIMO PIE CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Eskimo Pie Corporation markets a broad range of frozen novelties, ice
cream and sorbet products under the Eskimo Pie, RealFruit, Welch's, Weight
Watchers Smart Ones, SnackWell's and OREO brand names. These nationally branded
products are generally manufactured by a select group of licensed dairies that
purchase the necessary flavors, ingredients and packaging directly from the
Company. Eskimo Pie Corporation also manufactures soft serve yogurt and premium
ice cream products for sale to the commercial foodservice industry. The Company
also sells a full line of quality flavors and ingredients for use in private
label dairy products in addition to the national brands it licenses.
RESULTS OF OPERATIONS
- ---------------------
Net income for the quarter ended September 30, 1999 was $105,000 or
$0.03 per share, as compared to third quarter 1998 net income of $65,000 or
$0.02 per share. The 1999 results include expenses associated with the Company's
previously announced analysis of strategic alternatives of approximately
$219,000 and proxy contest expenses of approximately $344,000 which, after
related tax effects, reduced net income by $355,000 or $0.10 per share.
Exclusive of special charges incurred in the third quarter, net income would
have been $0.13 per share.
For the nine months ending September 30, 1999, net income was
$1,736,000 or $0.50 per share as compared to $1,315,000 or $0.38 per share in
1998. This reflects a 32% growth in net income and a 5% growth in sales as
compared to the same period in 1998. Expenses associated with the Company's
analysis of strategic alternatives of approximately $600,000, restructuring
charges of approximately $191,000, and proxy contest expenses of approximately
$344,000 are also included in the nine month results which, after related tax
effects, reduced net income by $715,000 or $0.21 per share. Exclusive of the
year to date special charges, 1999 net income would have increased by
approximately 86% over 1998 results.
It is not the Company's intent to imply that alternate measures of
performance are more meaningful than net income as determined in accordance with
generally accepted accounting principles. Management believes, however, that
investors should consider the effects of non-recurring special charges as they
assess the results of the Company's on-going operations.
Net Sales And Gross Profit
- --------------------------
Sales for the third quarter of 1999 increased by approximately $500,000
or 3% as compared to the same period a year ago. Sales for the quarter ending
September 30, 1999 were $15.7 million. For the nine-month period ending
September 30, 1999, sales increased by 5% to $54.0 million as compared with
$51.3 million during the comparable period in 1998.
Revenues in the National Brands Division increased slightly during 1999
due largely to increased sales of Welch's and Weight Watchers Smart Ones brand
products. The Company has received favorable responses to the introduction of
two new Welch's Double Dare ice pops which capitalize on the youthful popularity
of "sour" treats. The repositioning of the Weight Watchers novelties under the
Smart One's banner also continues to attract new consumer attention. Also
contributing to the year to date 1999 revenue growth was a $660,000 increase
($220,000 increase during the quarter ended September 30, 1999) in licensing
fees earned from the new licensing agreements entered into with the Company's
six largest customers effective January 1, 1999.
7
<PAGE>
The Foodservice Division accounted for almost half of the overall
Company's increase in net sales as a result of new business secured under its
innovative "Right Choice" sales and marketing program. Under the Right Choice
program, foodservice operators can offer consumers a choice between branded
premium ice cream and frozen yogurt and, as a result, capture soft serve sales
that would have been lost without alternative choices. The foodservice industry
continues to grow as more and more consumers chose to "eat out" and the Company
expects to capitalize on this momentum as it continues to build upon its
Foodservice division.
The Company's gross margins also increased in 1999 and, as a percent of
sales continued the improvement begun in recent years. The improved gross margin
reflects the results of increased sales, improved product mix, the benefits
associated with the additional licensing fees and, as discussed below, the
discontinuance of certain unprofitable packaging operations in the first quarter
of 1999.
Expenses And Other Income
- -------------------------
Advertising and sales promotion for the nine-month period ending
September 30, 1999 is consistent with 1998 spending as a percent of sales.
Management's intent to increase spending under its previously announced Growth
and Restructuring Plan has been curtailed as a result of the Company's
announcement at the annual meeting of shareholders as discussed below.
Selling, general and administrative expenses are below 1998 levels for
the nine-month period, as a result of management's continued efforts to control
these costs including the reduction of corporate headquarters staff discussed
below.
For the nine-month period ending September 30, 1999 the Company has
incurred $1,135,000 of non-recurring special charges.
The Company incurred approximately $600,000 in expenses related to the
previously announced examination of strategic alternatives to enhance
shareholder value and the subsequent development of the Company's Growth and
Restructuring Plan. Implementation of this plan has been curtailed as a result
of the Company's announcement following the annual meeting of shareholders as
discussed below.
The Company undertook two reduction-in-force programs in the first half
of the year to reduce overhead expenses, resulting in restructuring charges of
approximately $191,000.
In March 1999, the Company discontinued certain non-core manufacturing
operations and terminated the employment of seven production employees at its
Bloomfield, New Jersey packaging plant who were not involved in the production
of products for the Company's licensing businesses. As a result, the Company
incurred related severance costs of approximately $105,000, all of which was
paid as of June 30, 1999. As a result of this action, year to date profitability
in the Packaging Division, exclusive of the severance costs, has improved by
approximately $250,000 over 1998 results.
During the second quarter of 1999, the Company eliminated two vacant
positions and terminated the employment of six employees located at the
Company's corporate headquarters. The severance costs associated with these
terminations totaled approximately $86,000; however, when combined with the
savings from the eliminated positions, these actions are anticipated to provide
annualized savings of approximately $300,000 per year.
8
<PAGE>
During the third quarter of 1999, the Company incurred approximately
$344,000 of proxy contest expenses, including legal and other professional
service fees and administrative expenses associated with the Company's delayed
annual meeting of shareholders. The Company's Board of Director was re-elected
at the annual meeting on September 8, 1999.
At the annual meeting of shareholders the Board of Directors announced
that they had concluded it is in the best interests of the Company and all of
its shareholders to move promptly and aggressively to pursue all strategic
alternatives to maximize shareholder value, including a sale of the Company as a
whole or one or more sales of the Company's strategic assets.
LIQUIDITY, CAPITAL RESOURCES AND OTHER MATTERS
- ----------------------------------------------
The Company's liquidity and capital resources have continued to
strengthen as improved profitability has led to an increase in cash from
operations. Working capital is being managed closely and long term debt is being
reduced by over $300,000 each quarter. As a result, the Company's working
capital at September 30, 1999 exceeded its outstanding debt obligations. This
continues the trend established as of June 30, 1999, which was the first time
working capital exceeded debt obligations in over five years.
On May 20, 1999, the Company renewed its $10 million committed line of
credit, which is now available for general corporate purposes through April
2001. Borrowings under the line bear interest at the lender's overnight money
market rate plus 100 basis points. The Company has used the line to refinance,
on a long-term basis, the February 1999 redemption of the previously issued $3.8
million in convertible subordinated notes.
For the reasons explained below, the Company's Board of Directors voted
not to declare the third quarter dividend, which would have otherwise been paid
on October 1, 1999. The declaration of dividends is subject to the discretion of
the Company's Board of Directors, based on the general business conditions
encountered by the Company, as well as the financial condition, earnings and
capital requirements of the Company and other factors deemed relevant by the
Board.
The Board's decision to terminate its dividend was made in light of the
announcement made at the annual meeting of shareholders to pursue all strategic
alternatives to maximize shareholder value, including a sale of the Company as a
whole or one or more sales of the Company's strategic assets. Management
believes that the elimination of the dividend will enhance the Company's
financial flexibility as it pursues a sale of the Company.
The Company believes that the annual cash generated from operations and
funds available under its credit agreements will provide the Company with
sufficient funds and the financial flexibility to support its ongoing business,
strategic objectives and debt repayment requirements.
EARNINGS OUTLOOK
- ----------------
The Company expects results for the fourth quarter of 1999 to be
comparable to or to slightly exceed fourth quarter results of 1998 exclusive of
any non-recurring special charges that may occur.
IMPACT OF YEAR 2000
- -------------------
Considerable attention has been given to the effect of the Year 2000
(Y2K) on various computer systems. This concern stems from the inability of
certain computerized applications and devices (hardware, software and equipment)
to process dates after December 31, 1999. The Company's efforts to address the
Y2K issue have consisted of three main components; the implementation of new
management information systems, review of other internal systems and equipment,
and inquiries of external trading partners (key licensees, customers, suppliers,
and service providers).
9
<PAGE>
The Company's implementation of its new management information systems
has been divided into two phases. One phase of the project has been the
installation and continued integration of the Company's production management
system. This phase of the project, which is not critical to the Company's Y2K
capabilities, has been slowed as a result of the Company's decision to seek a
sale of the Company in whole or in parts. The second phase relates to the
implementation of newly acquired software which the Company will use to run its
daily financial operations beyond December 31, 1999. Implementation of this
software package is scheduled to be completed by December 1, 1999.
Project expenditures relating to the new management information systems
of approximately $1.8 million have been capitalized under the provisions of the
AICPA's Statement of Position 98-1 and will be amortized to expense over the
expected useful life. The Company expects to incur an additional $150,000 in
1999, and approximately $400,000 in total to complete these projects.
The Company has also reviewed other internal systems and equipment to
assess their exposure to the Y2K issue. Most of the Company's plant and office
equipment is mechanical in nature and therefore is not subject to the Y2K issue.
At this time, all identified issues have been resolved without material cost,
however, no guarantee can be made that subsequent problems will not be
identified which will require material costs to remedy. The Company will develop
remedies and contingent plans to address any future problems when, and if, they
are identified.
Finally, the Company made inquiries with its significant external
trading partners to assess their readiness to the Y2K issue. Such inquiries have
resulted in the collection and appraisal of voluntary statements made by
external parties with limited opportunity for independent factual verification.
Although the Company has undertaken reasonable efforts to determine the
readiness of its trading partners, no assurance can be given to the validity or
reliability of information obtained. During the remainder of the year, the
Company will develop initial contingency plans to address the potential failure
of its key trading partners to be Y2K compliant. Management believes, based on
past experience, that it could locate suitable replacements if any partners were
lost due to Y2K issues. However, the Company can not reliably predict the
readiness of all of its partners (as well as the readiness of their respective
external trading partners) and as such, the Company could be affected by the
disruption of other business interests outside of the Company's control.
The Company believes its approach to the Y2K issue is adequate to
maintain the continuation of its business operations with limited financial or
operational impact. However, the Y2K issue has many aspects and potential
consequences, some of which may not be reasonably anticipated, and there can be
no assurance that unforeseen consequences will not arise.
FORWARD LOOKING STATEMENTS
- --------------------------
Statements contained in this Report on Form 10-Q regarding the
Company's future plans and expected performance are forward looking statements
within the meaning of federal securities laws and are based upon management's
current expectations and beliefs about future events and their effect upon
Eskimo Pie Corporation. There can be no assurance that future developments will
mirror those currently anticipated by management. These forward looking
statements involve risks and uncertainties including but not limited to, the
level of consumer interests in the Company's products, product costing, the
weather, performance of the Company's management team, the Company's
relationships with its licensees and licensors, the highly competitive nature of
the frozen dessert market, as well as government regulation and the Y2K issue.
The risks and uncertainties are further discussed in the Company's Annual Report
on Form 10-K as filed with the Securities and Exchange Commission for the year
ended December 31, 1998. Actual results may vary materially from those included
herein and the Company assumes no responsibility for updating these statements.
10
<PAGE>
PART II, OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) At the Company's Annual Meeting of Shareholders held on
September 8, 1999, 2,847,847 of the Company's 3,462,850 shares
were present in person or by proxy and entitled to vote, which
constituted a quorum.
(b) At the Annual Meeting, the following nominees were elected to
serve until the 2000 Annual Meeting having received the
following vote:
<TABLE>
<CAPTION>
BROKER
FOR ABSTAIN NON-VOTES
--- ------- ---------
<S> <C> <C> <C>
Arnold H. Dreyfuss 1,543,263 268,822 0
Wilson H. Flohr, Jr. 1,770,705 41,380 0
F. Claiborne Johnston, Jr. 1,771,705 40,380 0
David B. Kewer 1,771,805 40,280 0
Daniel J. Ludeman 1,770,803 41,282 0
Judith B. McBee 1,771,403 40,682 0
Robert C. Sledd 1,771,803 40,282 0
Other nominees not elected received the following vote:
Michael Serruya 1,029,963 5,799 0
Aaron Serruya 1,029,963 5,799 0
David Prussky 1,029,963 5,799 0
David M. Smith 1,029,963 5,799 0
David J. Stein 1,029,963 5,799 0
Benjamin Raphan 1,029,963 5,799 0
Edward Obadiah 1,029,963 5,799 0
</TABLE>
(c) At the Annual Meeting, designation of Ernst & Young LLP as
auditors for the Company was ratified, having received the
following vote:
FOR 1,553,354
AGAINST 25,191
ABSTAIN 233,540
BROKER NON-VOTES 0
(d) At the Annual Meeting, shareholders voted on a shareholder
proposal to add a new Section 14 to Article III of the Company's
Bylaws, as follows:
14. Shareholder Instructions. The Board of
Directors, in exercising its rights and duties with
respect to the administration of the Shareholder
Rights Agreement, dated January 21, 1993, between
this corporation and Mellon Securities Trust Company,
as rights agent (the "Rights Agreement") and any
rights, options or warrants for the purchase of
shares of Eskimo or other instrument of a similar
11
<PAGE>
type or kind, will carry out a resolution authorizing
the partial or complete redemption of, or amendment
to, the Rights Agreement, if such resolution is
authorized and approved by the affirmative vote of
shareholders owning or having the right to vote a
majority of the capital stock of Eskimo. The
provisions of this Section 14 may be repealed or
amended only with the affirmative vote of holders of
owning or having the right to vote a majority of the
shares of this corporation entitled to vote thereon.
This shareholder proposal was ratified, having received the
following vote:
FOR 1,503,729
AGAINST 1,321,794
ABSTAIN 8,347
BROKER NON-VOTES 0
(e) At the Annual Meeting, shareholders voted on a shareholder
proposal to amend Section 3 of Article II of the Company's
Bylaws to allow persons holding at least 15% of the capital
stock of the Company to call a special meeting of shareholders.
This shareholder proposal was not ratified, having received the
following vote:
FOR 462,755
AGAINST 1,329,099
ABSTAIN 6,254
BROKER NON-VOTES 0
Item 5. Other Information
(a) At the Annual Meeting of Shareholders, held on September 8,
1999, the Board of Directors announced that it had concluded
that it is in the best interests of the Company and all of its
shareholders to move promptly and aggressively to pursue all
strategic alternatives to maximize shareholder value, including
a sale of the Company as a whole or one or more sales of the
Company's strategic assets. A copy of a resolution adopted by
the Board of Directors on that date to this effect is included
as Exhibit 99.1 to this Report on Form 10-Q.
(b) In connection with the Board of Directors' decision to seek a
sale of the Company, it has undertaken to restructure its
overall severance program for both salaried and hourly
employees, with the goal of providing incentives for key
employees to continue their employment with the Company during
the period of transition. By undertaking this restructuring of
the Company's overall severance program, the Company aims to
keep its employees focused on managing the ongoing business and
executing the sale of the Company. The restructured severance
programs are no more expensive, and in some cases, less costly
to the Company, than the programs they replace.
(c) As previously announced, during the proxy contest in which the
Company was engaged in connection with the delayed Annual
Meeting, held on September 8, 1999, Shamrock Farms Company, an
affiliate of one of the Company's licensees, acquired an
approximate 14.9% interest in the Company through private
transactions negotiated with three institutional investors.
Prior to entering into these purchases, Shamrock Farms Company
made a request to the Company's Board of Directors to approve,
under the Virginia Affiliated Transactions Act, the acquisition
of more than 10% of the Company's common stock. The Company's
Board granted approval on September 3, 1999, for Shamrock Farms
Company to acquire up to a 20% stock interest in the Company.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.2 Amended and Restated Bylaws, amended through September 8,
1999, filed herewith.
27. Financial Data Schedules, filed herewith.
99.1 Board Resolution, adopted September 8, 1999, filed
herewith.
(b) Reports on Form 8-K:
Current report on Form 8-K dated August 23, 1999-Item 5, to file
the Company's press release announcing the receipt of a proposal
from a private investor to purchase 100% of the outstanding
capital stock of the Company for cash.
Current report on Form 8-K dated August 25, 1999-Item 5, to file
the Company's press release announcing that the Company signed a
non-binding letter of intent to sell the assets of its Flavors
Division. (The Company announced on October 4, 1999 the
termination of these negotiations to sell its Flavors Division.)
Current report on Form 8-K dated September 8, 1999-Item 5, to
file the Company's press release announcing the results of the
annual meeting of shareholders held on September 8, 1999.
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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.
ESKIMO PIE CORPORATION
Date: November 10, 1999 By /s/ David B. Kewer
---------------------------------
David B. Kewer
President and Chief Executive
Officer
Date: November 10, 1999 By /s/ Thomas M. Mishoe, Jr.
---------------------------------
Thomas M. Mishoe, Jr.
Chief Financial Officer, Vice
President, Treasurer and
Corporate Secretary
Date: November 10, 1999 By /s/ Kathryn L. Tyler
---------------------------------
Kathryn L. Tyler
Controller
14
(Amended through 9/8/99)
Exhibit 3.2
Amended and Restated Bylaws
of
ESKIMO PIE CORPORATION
ARTICLE I - Stock
1. Certificates for Stock. Certificates of Stock shall be issued in
numerical order, be signed by the Chairman of the Board of Directors, the
President or a Vice President, and by the Secretary or an Assistant Secretary,
or the Treasurer or an Assistant Treasurer, and sealed with the corporate seal;
provided, that where any Certificate of Stock is signed by a duly appointed and
authorized Transfer Agent or Registrar the signatures of the Chairman of the
Board of Directors, the President, Vice President, Secretary, Assistant
Secretary, Treasurer or Assistant Treasurer may be facsimile, engraved or
printed, and the seal of the corporation on any such Certificate of Stock may be
facsimile, engraved or printed. 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.
2. Transfers of Stock. Transfers of stock shall be made only upon the
books of the corporation, and only by the person named in the certificate or by
attorney, lawfully constituted in writing, and only upon surrender of the
certificate therefor. The directors may by resolution make reasonable
regulations for the transfers of stock. To the extent that any provision of the
Rights Agreement between the corporation and First Union National Bank, as
Successor Rights Agent, dated as of January 21, 1993, is deemed to constitute a
restriction on the transfer of any securities of the corporation, including,
without limitation, the Rights, as defined therein, such restriction is hereby
authorized by the bylaws of the corporation.
3. Holders of Record. Registered shareholders only shall be entitled to
be treated by the corporation as the holders in fact of the stock standing in
their respective names and the corporation shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
expressly provided by the laws of Virginia.
4. Lost or Destroyed Certificates. In case of loss or destruction of
any certificate of stock another may be issued in its place upon satisfactory
proof of such loss or destruction and upon the giving of a satisfactory bond of
indemnity to the corporation, all as determined either expressly by the
directors or pursuant to general authority granted by them.
<PAGE>
ARTICLE II - Shareholders' Meetings
1. Place of Meetings. Meetings of the shareholders shall be held at
such place, within or outside the Commonwealth of Virginia, as the Board of
Directors may determine.
2. Annual Meeting. The annual meeting of the shareholders of the
corporation, for the election of directors to succeed those whose terms expire,
and for the transaction of such other business as may come before the meeting,
shall be held on the first Wednesday in May of each year, if not a legal
holiday, and if a legal holiday, then on the first business day following, at
ten o'clock in the forenoon, or on such other date and at such other time as may
be fixed by the Board of Directors. If the annual meeting of the shareholders be
not held as herein prescribed, the election of directors may be held at any
meeting thereafter called pursuant to these Bylaws.
3. Special Meetings. Special meetings of the shareholders may be called
by the Chairman of the Board, if one is elected, or the President or the Board
of Directors.
4. Notice of Meetings. Written notice of the place, date and hour of
the annual and of all special meetings of the shareholders and, in the case of
special meetings, of the purpose or purposes for which such special meeting is
called, shall be given in the manner specified in Section 1 of Article VII of
these Bylaws not less than ten (10) nor more than sixty (60) days prior to the
meeting (except that notice of a shareholders' meeting to act on an amendment of
the articles of incorporation, a plan of merger or share exchange, a proposed
sale of assets other than in the ordinary course of business, or the dissolution
of the corporation shall be given not less then twenty-five nor more than 60
days before the meeting date), to each shareholder of record of the corporation
entitled to vote thereat. Business transacted at all special meetings shall be
confined to the purposes stated in the notice.
5. Quorum. A quorum at any annual or special meeting of the
shareholders shall consist of shareholders holding a majority of the capital
stock of this corporation outstanding and entitled to vote thereat, represented
either in person or by proxy, except as otherwise specifically provided by law
or in the Articles of Incorporation.
6. Adjourned Meetings. A properly called shareholders' meeting may be
adjourned from time to time by a majority in interest of those present in person
or by proxy and entitled to vote thereat. At any such adjourned meeting at which
a quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified. If the adjournment is for more
than 120 days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting; otherwise, no notice of
such adjourned meeting need be given if the time and place thereof are announced
at the meeting at which the adjournment is taken. The absence from any meeting
of shareholders holding the number of shares of stock of the corporation
required by law, the Articles of Incorporation or these Bylaws for action upon
any given matter shall not prevent action at such meeting upon any other matter
or matters which may properly come before the meeting, if there shall be present
thereat in person or by proxy shareholders holding the number of shares of stock
of the corporation required in respect of such other matter or matters.
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<PAGE>
7. Inspectors of Election. In advance of any meeting of shareholders,
the Chairman of the Board, President, Treasurer or Secretary of the corporation
shall appoint one or more inspectors of election to serve at such meeting and to
make a written report with respect thereto. In addition, any such officer may,
but shall not be required to, designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of shareholders, the presiding officer at
such meeting shall appoint one or more inspectors to act at the meeting. Each
inspector shall discharge his or her duties in accordance with applicable law
and shall, before entering upon the discharge of his or her duties, take and
sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability.
8. List of Shareholders. A complete list of the shareholders entitled
to vote at each annual or special meeting of the shareholders of the
corporation, arranged in alphabetical order, showing the address of record of
each and the number of voting shares held by each, shall be prepared by the
Secretary or the transfer agent, who shall have charge of the stock ledger, and
at least ten (10) days before every such meeting shall be kept on file at the
principal office of the corporation or at the office of its transfer agent or
registrar, and shall, during the usual hours for business, be open to the
examination of any shareholder in accordance with Virginia law, and during the
whole time of said meeting be open to the examination of any shareholder for the
purposes thereof.
9. Voting. Subject to the provisions of Section 10 of this Article II
of these Bylaws, each holder of stock of a class which is entitled to vote in
any election or on any other questions at any annual or special meeting of the
shareholders shall be entitled to one vote, in person or by written proxy, for
each share of such class held of record. Except where, and to the extent that, a
different percentage of votes and/or a different exercise of voting power is
prescribed by law, the Articles of Incorporation or these Bylaws, the following
applies:
(i) Any corporate action, except the election of directors, an
amendment or restatement of the Articles of Incorporation, a merger, a
statutory share exchange, sale or other disposition of all or
substantially all the corporation's assets otherwise than in the usual
and regular course of business, or dissolution shall, for each voting
group entitled to vote on the matter, be approved at a meeting at which
a quorum of the voting group is present if the votes cast in favor of
the action exceed the votes cast against the action;
(ii) Directors shall be elected by a plurality of the votes
cast by the shares entitled to vote in the election at a meeting at
which a quorum is present; and
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<PAGE>
(iii) An amendment or restatement of the Articles of
Incorporation, a merger, statutory share exchange, sale or other
disposition of all or substantially all the corporation's assets
otherwise than in the usual and regular course of business, or
dissolution shall be approved by a majority of the votes present and
entitled to vote by each voting group entitled to vote on the
transaction at a meeting at which a quorum of the voting group is
present.
10. Determination of Shareholders of Record. The share transfer books
may be closed by order of the board of directors for not more than 70 days for
the purpose of determining shareholders entitled to notice of or to vote at any
meeting of the shareholders or any adjournment thereof (or entitled to receive
any distribution or in order to make a determination of shareholders for any
other purpose). In lieu of closing such books, the board of directors may fix in
advance as the record date for any such determination a date not more than 70
days before the date on which such meeting is to be held (or such distribution
made or other action requiring such determination is to be taken). If the books
are not thus closed or the record date is not thus fixed, the record date shall
be the close of business on the day before the effective date of the notice to
shareholders.
11. Matters to be Brought Before Shareholders' Meetings. Except as
otherwise provided by law, at any annual or special meeting of shareholders only
such business shall be conducted as shall have been properly brought before the
meeting in accordance with this Section.
In order to be properly brought before the meeting, such business must
have either been (i) specified in the written notice of the meeting (or any
supplement thereto) given to shareholders of record on the record date for such
meeting by or at the direction of the Board of Directors, (ii) brought before
the meeting at the direction of the Board of Directors or the officer presiding
over the meeting, or (iii) specified in a written notice given by or on behalf
of a shareholder of record on the record date for such meeting entitled to vote
thereat or a duly authorized proxy for such shareholder, in accordance with all
the following requirements.
A notice referred to in clause (iii) hereof must be delivered
personally to, or mailed to and received at, the principal executive office of
the corporation, addressed to the attention of the Secretary, not more than ten
(10) days after the date of the initial notice referred to in clause (i) hereof,
in the case of business to be brought before a special meeting of shareholders,
and not less than thirty (30) days prior to the first anniversary date of the
initial notice referred to in clause (i) hereof of the previous year's annual
meeting, in the case of business to be brought before an annual meeting of
shareholders, except that any such notice given by or on behalf of a shareholder
beneficially owning 15% or more of the corporation's common stock must be so
delivered or received not later than June 18th of the year in which the annual
meeting is to be held and further provided, however, that such notice shall not
be required to be given more than ninety (90) days prior to an annual meeting of
shareholders. Such notice referred to in clause (iii) hereof shall set forth:
4
<PAGE>
(a) a full description of each such item of business proposed
to be brought before the meeting;
(b) the name and address of the person proposing to bring such
business before the meeting;
(c) the class and number of shares held of record, held
beneficially and represented by proxy by such person as of the record
date for the meeting (if such date has been made publicly available)
and as of the date of such notice;
(d) if any item of such business involves a nomination for
director, all information regarding each such nominee that would be
required to be set forth in a definitive proxy statement filed with the
Securities and Exchange Commission pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended, or any successor thereto
and the written consent of each such nominee to serve if elected; and
(e) all other information that would be required to be filed
with the Securities and Exchange Commission if, with respect to the
business proposed to be brought before the meeting, the person
proposing such business was a participant in a solicitation subject to
Section 14 of the Securities Exchange Act of 1934, as amended, or any
successor thereto.
Any matter brought before a meeting of shareholders upon the affirmative
recommendation of the Board of Directors where such matter is included in the
written notice of the meeting (or any supplement thereto) and accompanying proxy
statement given to shareholders of record on the record date for such meeting by
or at the direction of the Board of Directors is deemed to be properly before
the shareholders for a vote and does not need to be moved or seconded from the
floor of such meeting. No business shall be brought before any meeting of
shareholders of the corporation otherwise than as provided in this Section.
ARTICLE III - Board of Directors
1. Number; Term of Office; Powers. The business and affairs of the
corporation shall be under the direction of a Board of Directors, consisting of
a minimum of five (5) and a maximum of eight (8) persons, with the number to be
fixed or changed from time to time, within such minimum and maximum range, by
resolution of the Board of Directors. In the absence of a specific resolution to
the contrary, the number of directors shall be fixed at the number of persons
nominated by the Board of Directors for election as directors in connection with
the annual meeting of shareholders. Directors shall be elected for one year, and
shall hold office until their successors are elected and qualified. Directors
need not be shareholders. In addition to the power and authority expressly
conferred upon them by the Bylaws and the Articles of Incorporation, the Board
of Directors may exercise all such powers of the corporation and do all such
lawful acts and things as are not by law or by the Articles of Incorporation or
by these Bylaws directed or required to be exercised or done by the
shareholders.
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<PAGE>
2. Eligibility to Serve. No person shall be eligible to stand for
election or re-election to the Board of Directors in the corporation's fiscal
year in which such person shall have his or her 70th birthday, except that any
director serving at January 1, 1996 who was then 65 years old or older shall
continue to be eligible to serve until age 72.
3. Resignations. Any director may resign at any time by giving written
notice of resignation to the Board of Directors, to the Chairman of the Board of
Directors or to the Secretary of the corporation. Any such resignation shall
take effect at the time specified therein, or if the time be not specified
therein, the upon receipt thereof. The acceptance of such resignation shall not
be necessary to make it effective.
4. Vacancies. Except as otherwise specifically provided by law, the
Articles of Incorporation or these Bylaws, all vacancies in the Board of
Directors, whether caused by resignation, death, increase in the number of
authorized directors or otherwise, may be filled by a majority of the Board of
Directors then in office, even though less than a quorum, or by the shareholders
at a special meeting. A director thus elected to fill any vacancy shall hold
office until the next annual meeting of shareholders and until a successor is
elected and qualified.
5. Annual Meeting. The annual meeting of the Board of Directors, for
the election of officers and the transaction of other business, shall be held on
the same day and at the same place as, and as soon as practicable following, the
annual meeting of shareholders, or at such other date, time or place within or
outside the Commonwealth of Virginia as the directors may by resolution
designate.
6. Regular Meetings. Regular meetings of the Board of Directors shall
be held at such times, and at such place within or outside the Commonwealth of
Virginia, as the Board of Directors may from time to time by resolution
designate.
7. Special Meetings. Special meetings of the directors may be called at
any time by the Chairman of the Board of Directors or the President; or by the
Secretary upon written request of one-third of the directors, such request
stating the purpose for which the meeting is to be called. Special meetings
shall be held at the principal office of the corporation or at such office
within or outside the Commonwealth of Virginia as the directors may from time to
time designate.
8. Notice of Meetings. Except as otherwise required by law or a
resolution of the Board of Directors, notice of special meetings of the Board of
Directors or of any committee of the Board of Directors shall be given to each
director or to each committee member, as the case may be, by mail at least two
days before the day on which the meeting is to be held or by personal delivery,
word-of-mouth, telephone, telegraph, radio, cable or other comparable means at
least six hours before the time at which the meeting is to be held. Such notice
shall state the time and place of such meeting, but need not state the purposes
thereof unless otherwise required by law. No notice need be given of the annual
meeting of directors or of regular meetings of directors or of committees of the
Board of Directors, provided that, whenever the time or place of such meetings
shall be fixed or changed, notice of such action shall be given promptly to each
director or to each committee member, as the case may be, who shall not have
been present at the meeting at which such action was taken.
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9. Quorum; Adjourned Meetings; Required Vote. A majority of the Board
of Directors as constituted from time to time shall be necessary and sufficient
at all meetings to constitute a quorum for the transaction of business. In the
absence of a quorum, a majority of those present may adjourn the meeting from
time to time and the meeting may be held as adjourned without further notice
provided a quorum be present at such adjourned meeting. Unless otherwise
specifically provided by the Articles of Incorporation or law, the act of a
majority of the directors present at any properly convened meeting at which
there is a quorum shall be the act of the Board of Directors.
10. Committees. Standing or Temporary Committees may be appointed from
their own number by the Board of Directors from time to time, and the directors
may from time to time vest such committees with such powers as the directors may
see fit, subject to such conditions as the directors may prescribe or as may be
prescribed by law. All committees shall consist of two or more directors. The
term of office of the members of each committee shall be as fixed from time to
time by the Board of Directors; provided, however, that any committee member who
ceases to be a director shall ipso facto cease to be a committee member. Any
member of any committee may be removed at any time with or without cause by the
Board of Directors, and any vacancy in any committee may be filled by the Board
of Directors. All committees shall keep regular minutes of their transactions
and shall cause them to be recorded in books kept for that purpose in the office
of the corporation, and shall report the same to the Board of Directors at their
regular meetings. Subject to this Section 9 and except as otherwise determined
by the Board of Directors, each committee may make rules for the conduct of its
business.
11. Compensation. Directors, as such, may receive, pursuant to
resolution of the Board of Directors, fixed fees, other compensation and
expenses for their services as directors, including, without limitation,
services as chairmen or as members of committees of the directors; provided,
however, that nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
12. Consents in Writing. Any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if all members of the Board of Directors or committee,
as the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or committee.
13. Participation by Conference Telephone. Members of the Board of
Directors or of any committee may participate in a meeting of such Board of
Directors or committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting by such means
shall constitute presence in person at the meeting.
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14. Shareholder Instructions. The Board of Directors, in exercising its
rights and duties with respect to the administration of the Shareholder Rights
Agreement, dated January 21, 1993, between this corporation and Mellon
Securities Trust Company, as rights agent (the "Rights Agreement") and any
rights, options or warrants for the purchase of shares of Eskimo or other
instrument of a similar type or kind, will carry out a resolution authorizing
the partial or complete redemption of, or amendment to, the Rights Agreement, if
such resolution is authorized and approved by the affirmative vote of
shareholders owning or having the right to vote a majority of the capital stock
of Eskimo. The provisions of this Section 14 may be repealed or amended only
with the affirmative vote of holders of (sic) owning or having the right to vote
a majority of the shares of this corporation entitled to vote thereon.
ARTICLE IV - Officers
1. Officers. The officers of the corporation shall be a Chairman of the
Board of Directors, a President, one or more Vice Presidents, one or more of
whom may be an Executive Vice President, a Secretary, a Treasurer, and such
other officers and assistant officers as the Board of Directors shall deem
appropriate, all of whom shall be elected annually by the Board of Directors.
One person may hold more than one office.
2. Chairman of the Board. The Chairman of the Board of Directors shall
preside at all meetings of shareholders and directors, shall be the chief
executive officer of the corporation and, subject to the direction of the Board
of Directors, shall have general supervision and management of the business and
affairs of the corporation and shall perform all such other duties as are
incident to such office or are properly required by the Board of Directors.
3. President. The President shall be the chief operating officer of the
corporation and shall, subject to the direction of the Board of Directors and
the Chairman of the Board of Directors, direct and supervise the business and
affairs of the corporation and shall perform all such other duties as are
incident to such office or as are properly required by the Board of Directors or
the Chairman of the Board of Directors. During the absence or disability of the
Chairman of the Board of Directors, the President shall exercise all powers and
discharge all the duties of the Chairman of the Board of Directors.
4. Executive Vice Presidents and Other Vice Presidents. Each of the
Executive Vice Presidents and other Vice Presidents shall perform such duties as
are properly required by the Board of Directors, the Chairman of the Board of
Directors or the President.
5. Treasurer. The Treasurer shall have the custody of all moneys and
securities of the corporation and shall keep or cause to be kept accurate
accounts of all money received or payments made in books kept for that purpose.
The Treasurer shall deposit or cause to be deposited funds of the corporation in
accordance with Article V, Section 2 of these Bylaws and shall disburse the
funds of the corporation by checks or vouchers as authorized by the Board of
Directors. The Treasurer shall keep or cause to be kept all books of accounts
and accounting records of the corporation and shall keep and maintain, or cause
to be kept and maintained, adequate and correct accounts of the properties and
business transactions of the corporation. The Treasurer shall prepare or cause
to be prepared appropriate financial statements for the corporation and shall
have such other powers and perform such other duties as may be incident to the
office of Treasurer.
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6. Secretary. The Secretary shall keep the minutes of the meetings of
the shareholders and of the Board of Directors, and, when required, the minutes
of the meetings of the committees, and shall be responsible for the custody of
all such minutes. The Secretary shall be responsible for the custody of the
stock ledger and documents of the corporation. The Secretary shall have custody
of the corporate seal and shall affix and attest such seal to any instrument
whose execution under seal shall have been duly authorized and enjoy all other
powers incident to the office of Secretary.
7. Other Officers and Assistant Officers. All other officers and
assistant officers shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors, the Chairman of the
Board of Directors or the President.
8. Term of Office; Vacancies. Each officer shall hold office until the
annual meeting of the Board of Directors following the end of the term of the
Board by which such officer is elected, except in the case of earlier death,
resignation or removal. Vacancies in any office arising from any cause may be
filled by the directors at any regular or special meeting.
9. Removal. Any officer elected or appointed by the Board of Directors
may be removed at any time, with or without cause, by the Board of Directors.
10. Proxies. Unless otherwise prescribed by the Board of Directors, the
Chairman of the Board of Directors or the President may from time to time
himself, by such proxy or proxies, attorney or attorneys, agent or agents of the
corporation as he shall designate in the name and on behalf of the corporation,
cast the votes to which the corporation may be entitled as a shareholder or
otherwise in any other corporation, at meetings, or consent in writing to any
action by any such other corporation; and he may instruct the individual or
individuals so appointed as to the manner of casting such votes or giving such
consent, and execute or cause to be executed on behalf of the corporation such
written proxies, consents, waivers or other instruments as he may deem necessary
or desirable.
ARTICLE V - Dividends and Finance
1. Dividends. Dividends may be declared to the full extent permitted by
law at such times as the Board of Directors shall direct.
2. Deposits; Withdrawals; Notes and Other Instruments. The moneys of
the corporation shall be deposited in the name of the corporation in such banks
or trust companies as shall be designated by, and shall be drawn out only by
check signed by, persons designated from time to time, by the Board of Directors
or by an officer of this corporation to whom the Board of Directors has
delegated such authority. All notes and other instruments for the payment of
money shall be signed or endorsed by officers or other person authorized from
time to time by the Board of Directors or by an officer of this corporation to
whom the Board of Directors has delegated such authority.
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3. Fiscal Year. The fiscal year of the corporation shall date from the
first day of January in each year.
ARTICLE VI - Books and Records; Offices
1. Books and Records. The books, accounts and records of the
corporation, except as may be otherwise required by the laws of the Commonwealth
of Virginia, may be kept within or outside of the said State at such places as
the Board of Directors may from time to time appoint.
2. Offices. The corporation may have offices in the City of Richmond,
Virginia and at such other places as the Board of Directors may from time to
time designate or the business of the corporation may require.
ARTICLE VII - Notices
1. Notices. Whenever any provision of law or these Bylaws requires
notice to be given to any director, officer or shareholder, such notice may be
given in writing by mailing the same to such director, officer or shareholder at
his or her address as the same appears in the books of the corporation, unless
such shareholder shall have filed with the Secretary a written request that
notices intended for him or her be mailed to some other address, in which case
it shall be mailed to the address designated in such request. The time when the
same shall be mailed shall be deemed to be the time of the giving of such
notice. This section shall not be deemed to preclude the giving of notice by
other means if permitted by the applicable provision of law or these Bylaws.
2. Waivers of Notice. A waiver of any notice in writing, signed by a
shareholder or director, whether before or after the time stated in said waiver
for holding a meeting, shall be deemed equivalent to a notice required to be
given to any shareholder or director.
A shareholder's or director's attendance at or participation in a
meeting waives any required notice to him of the meeting unless he at the
beginning of the meeting or promptly upon his arrival objects to the holding of
the meeting or the transaction of business at the meeting and does not
thereafter vote for or assent to the action taken at the meeting.
ARTICLE VIII - Conflict of Interest
1. Interested Directors or Officers. No contract or transaction between
the corporation and one or more of its directors or officers, or between the
corporation and any other corporation, partnership, association or other
organization in which one or more of the directors or officers of the
10
<PAGE>
corporation are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer of the corporation is present at or participates in the meeting of the
Board of Directors or committee thereof which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if:
(i) the material facts of the transaction and the director's
or officer's interest are disclosed or known to the board of directors
or a committee of the board of directors, and the transaction was
authorized, approved or ratified by the affirmative vote of a majority
of the directors on the board of directors, or on the committee, who
have no direct or indirect personal interest in the transaction;
provided, however, that a transaction shall not be authorized, approved
or ratified by a single director; or
(ii) the material facts of the transaction and the director's
or officer's interest are disclosed to the shareholders entitled to
vote, and the transaction is authorized, approved or ratified by the
vote of a majority of the shares other than shares owned by or voted
under the control of a director or officer who has a direct or indirect
interest in the transaction; or
(iii) the transaction is fair to the corporation.
ARTICLE IX - Seal
1. Seal. The corporate seal of the corporation shall be a flat-face
circular die containing the name of the corporation, of which there may be any
number of counterparts or facsimiles, in such form as the Board of Directors
shall from time to time adopt.
ARTICLE X - Amendments
1. Amendments. These bylaws may be amended or repealed by the Board of
Directors except to the extent that: (i) this power is reserved exclusively to
the shareholders by law or the articles of incorporation; or (ii) the
shareholders in adopting or amending particular bylaws provide expressly that
the Board of Directors may not amend or repeal the same. These bylaws may be
amended or repealed by the shareholders even though the same also may be amended
or repealed by the Board of Directors.
319054v3
11
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,694
<SECURITIES> 0
<RECEIVABLES> 8,316
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<INVENTORY> 5,367
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 41,011
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<TOTAL-REVENUES> 53,961
<CGS> 29,822
<TOTAL-COSTS> 50,846
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 2,755
<INCOME-TAX> 1,019
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Exhibit 99.1
RESOLUTION ADOPTED BY THE BOARD OF DIRECTORS
OF ESKIMO PIE CORPORATION ON SEPTEMBER 8, 1999
RESOLVED, that the Board of Directors has concluded that it is in the
best interest of the Company and all of its shareholders to pursue all strategic
alternatives to maximize shareholder value on an expedited basis, including sale
of the Company as a whole, or of strategic parts; and further
RESOLVED, that in order to implement this strategy the Board will
pursue immediately negotiations with the Lieberman group with respect to their
offer and will cause the Company's investment bankers to pursue other possible
bidders for the Company, as a whole, or any of its strategic parts provided the
after-tax effect of a strategic breakup is deemed to be at least as beneficial
to shareholders as a sale of the Company as a whole; and further
RESOLVED, that the Board's objective would be to have binding
agreements relating to the sale of the Company or a significant part of its
assets in effect by December 15, 1999; and
RESOLVED, that if consummation of the sale of the Company or a
significant part of its assets cannot be achieved prior to the Company's next
annual meeting in April, 2000, the directors would provide any holder of at
least five percent of the outstanding shares the opportunity to nominate
directors for election at that annual meeting with the understanding that none
of the current directors would stand for re-election unless nominated by at
least one of such shareholders.
