SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 3, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER 1-2451
NATIONAL PRESTO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0494170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3925 NORTH HASTINGS WAY
EAU CLAIRE, WISCONSIN 54703-3703
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 715-839-2121
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_____
There were 7,344,846 shares of the Issuer's Common Stock outstanding as of the
close of the period covered by this report.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 3, 1999 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
1999 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 78,374 $114,565
Marketable securities 145,615 126,666
Accounts receivable, net 13,575 15,840
Inventories:
Finished goods $ 16,276 $ 7,407
Work in process 2,858 1,822
Raw materials 6,174 5,860
Supplies 1,011 26,319 884 15,973
-------- --------
Prepaid expenses 130 257
-------- --------
Total current assets 264,013 273,301
PROPERTY, PLANT AND EQUIPMENT: 24,465 21,975
Less allowance for depreciation 12,858 11,607 11,411 10,564
-------- --------
OTHER ASSETS 10,897 10,897
-------- --------
$286,517 $294,762
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 3, 1999 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
1999 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ 11,157 $ 11,447
Federal and state income taxes 2,474 6,216
Accrued liabilities 23,542 22,694
-------- --------
Total current liabilities 37,173 40,357
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Common stock, $1 par value:
Authorized: 12,000,000 shares
Issued: 7,440,518 shares $ 7,441 $ 7,441
Paid-in capital 1,030 990
Retained earnings 243,552 248,115
-------- --------
252,023 256,546
Treasury stock, at cost 2,679 2,141
-------- --------
Total stockholders' equity 249,344 254,405
-------- --------
$286,517 $294,762
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
Three Months and Nine Months ended October 3, 1999 and October 4, 1998
(Unaudited)
<TABLE>
<CAPTION>
(In thousands except per share data) THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 25,071 $ 24,306 $ 65,443 $ 59,565
Cost of sales 17,161 16,125 45,440 41,752
-------- -------- -------- --------
Gross profit 7,910 8,181 20,003 17,813
Selling and general expenses 5,262 5,516 14,004 13,589
-------- -------- -------- --------
Operating profit 2,648 2,665 5,999 4,224
Other income, principally interest 2,331 2,153 6,903 6,883
-------- -------- -------- --------
Earnings before provision for income taxes 4,979 4,818 12,902 11,107
Provision for income taxes 1,235 1,083 2,745 1,802
-------- -------- -------- --------
Net earnings $ 3,744 $ 3,735 $ 10,157 $ 9,305
======== ======== ======== ========
Weighted average shares outstanding:
Basic 7,344 7,357 7,350 7,357
======== ======== ======== ========
Diluted 7,345 7,358 7,351 7,358
======== ======== ======== ========
Net earnings per share:
Basic $ 0.51 $ 0.50 $ 1.38 $ 1.26
======== ======== ======== ========
Diluted $ 0.51 $ 0.50 $ 1.38 $ 1.26
======== ======== ======== ========
Cash dividends declared and paid per common share $ -- $ -- $ 2.00 $ 2.00
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended October 3, 1999 and October 4, 1998
(Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
1999 1998
---- ----
- -------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 10,157 $ 9,305
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation 1,598 1,517
Stock compensation expense 116 122
Changes in:
Accounts receivable 2,265 5,822
Inventories (10,346) (9,579)
Prepaid expenses 127 182
Accounts payable and accrued liabilities 558 (3,732)
Federal and state income taxes (3,742) (2,655)
---------- ----------
Net cash provided by operating activities 733 982
---------- ----------
Cash flows from investing activities:
Marketable securities purchased (157,271) (76,316)
Marketable securities - maturities and sales 138,322 94,537
Acquisition of property, plant and equipment (2,749) (2,456)
Other 108 (74)
---------- ----------
Net cash provided by (used in) investing activities (21,590) 15,691
---------- ----------
Cash flows from financing activities:
Dividends paid (14,720) (14,710)
Purchase of treasury stock (18,700 shares) (649) --
Other 35 25
---------- ----------
Net cash used in financing activities (15,334) (14,685)
---------- ----------
Net increase (decrease) in cash and cash equivalents (36,191) 1,988
Cash and cash equivalents at beginning of period 114,565 91,639
---------- ----------
Cash and cash equivalents at end of period $ 78,374 $ 93,627
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NATIONAL PRESTO INDUSTRIES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - EARNINGS PER SHARE
The Company's basic net earnings per share amounts have been computed by
dividing net earnings by the weighted average number of outstanding common
shares. The Company's diluted net earnings per share is computed by dividing net
earnings by the weighted average number of outstanding common shares and common
share equivalents relating to stock options, when dilutive.
- --------------------------------------------------------------------------------
The foregoing information for the periods ended October 3, 1999, and October 4,
1998, is unaudited; however, in the opinion of management of the Registrant, it
reflects all the adjustments, which were of a normal recurring nature, necessary
for a fair statement of the results for the interim periods. The condensed
consolidated balance sheet as of December 31, 1998, is summarized from audited
consolidated financial statements, but does not include all the disclosures
contained therein and should be read in conjunction with the 1998 Annual Report.
Interim results for the period are not indicative of those for the year.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward looking statements in this Quarterly Report are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. There are certain important factors that could cause results to differ
materially from historical results. Investors are cautioned that all forward
looking statements involve risks and uncertainty. The factors that could cause
actual results to differ materially are the following: consumer spending and
debt levels; interest rates; continuity of relationships with and purchases by
major customers; product mix; competitive pressure on sales and pricing, and
increases in material or production cost which cannot be recouped in product
pricing. Additional information concerning those and other factors is contained
in the Company's Securities and Exchange Commission filings, including but not
limited to the Form 10-K, copies of which are available from the Company without
charge.
Comparison Third Quarter 1999 and 1998
Net sales increased by $765,000 from $24,306,000 to $25,071,000 due
primarily to increased unit volume.
Gross profit as a percentage of sales decreased from 34% to 32% largely
due to changes in product mix resulting primarily from differences in shipment
timing.
The Company accrues unexpended advertising costs budgeted for the year
against each quarter's sales. Major advertising commitments are incurred in
advance of the expenditures, and the timing of sales through dealers and
distributors to the ultimate customer does not permit specific identification of
the customers' purchase to the actual time an advertisement appears. Advertising
charges included in selling expense in each quarter represent that percentage of
the annual advertising budget associated with that quarter's shipments.
Revisions to this budget result in periodic changes to the accrued liability for
committed advertising expenditures.
Other income, principally interest, increased from the 1998 level
primarily as a result of a higher level of invested funds at a slightly lower
rate of return.
Earnings before provision for income taxes increased $161,000 from
$4,818,000 to $4,979,000. The provision for income taxes increased from
$1,083,000 to $1,235,000 and the effective income tax rate increased from 22% to
25%, as a result of increased earnings subject to tax. Net earnings increased
$9,000 from $3,735,000 to $3,744,000 and earnings per share increased from $.50
to $.51.
The Company maintains adequate liquidity for all of its anticipated
capital requirements. As of quarter-end, there were no material capital
commitments outstanding.
<PAGE>
Comparison First Nine Months 1999 and 1998
Net sales increased by $5,878,000 from $59,565,000 to $65,443,000 due
primarily to increased unit volume.
Gross profit as a percentage of sales was comparable to the prior year.
The accrual for unexpended advertising costs discussed in the Third
Quarter comparison also applies to the first nine months.
Earnings before provision for income taxes increased $1,795,000 from
$11,107,000 to $12,902,000. The provision for income taxes increased from
$1,802,000 to $2,745,000 and the effective income tax rate increased from 16% to
21%, as a result of increased earnings subject to tax. Net earnings increased
$852,000 from $9,305,000 to $10,157,000, or 9% and earnings per share increased
from $1.26 to $1.38.
YEAR 2000
The year 2000 (Y2K) issue is the result of computer programs using a
two-digit format to indicate the year in any date. Computer systems with such
software will be unable to interpret dates beyond the year 1999, thus causing
computer errors which could lead to disruptions in operations. In 1997 the
Company began the work necessary to address its Y2K exposure and focused
primarily on two areas:
Internal Systems: During 1997 the Company began upgrading or replacing
its affected programs or systems to become Y2K compliant, and this effort was
completed prior to March 31, 1999. In addition, from March 1999 through
September 1999, the Company performed full-scale Y2K simulations to verify the
efficacy of the upgrades and replacements. The positive results from these
simulations confirmed the success of the upgrades and replacements. The
conversion costs have been expensed as incurred, and are not considered
material. At this time the Company believes it is unnecessary to adopt a
contingency plan.
<PAGE>
External (Supplier) Systems: The Company has contacted suppliers of
products and services to assess whether the suppliers are Y2K compliant or to
monitor their progress toward Y2K compliance. The vast majority of the Company's
key suppliers have responded that they either are or will be Y2K compliant prior
to the year 2000. However, there can be no absolute assurance that suppliers and
others will timely resolve their own Y2K compliance issues. Additionally, a
small number of the Company's suppliers have provided inadequate responses as to
their Y2K readiness, and as a result the Company is implementing a contingency
plan to address potential interruption of supplied products or services. The
contingency plan includes use of alternate suppliers and / or stockpiling of
certain supplied items. Costs to-date for the external compliance program have
also been immaterial.
The potential effect of the year 2000 issue on the Company and its
business partners will not be fully determinable until the year 2000 and
thereafter. Notwithstanding the Company's efforts described above, if
complications should arise from Y2K modifications already in place by the
Company or compliance efforts by entities with whom the Company conducts
business, the Company's revenues and financial condition could be adversely
impacted.
QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
While changes in U.S. interest rates could affect the interest earned
on the Company's cash equivalents and investments, such changes will not have a
material affect on the interest earned on the Company's cash equivalents and
investments at this time as these investments are primarily municipal bonds. A
majority of these bonds earn a fixed rate of interest while the remaining
portion earn interest at a variable rate. The Company uses sensitivity analysis
to determine it's exposure to changes in interest rates and does not currently
anticipate that exposure to interest rate market risk will have a material
adverse impact on the Company.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On July 28, 1999, Kenneth Steiner, a New York resident who owns 250
shares of the Company's stock, filed a derivative stockholder lawsuit
against the company and its six directors. This matter is currently
pending in Eau Claire County Wisconsin Circuit Court. The plaintiff
alleges that the directors have breached their fiduciary duties and
seeks unspecified money damages against them. In the opinion of the
Company, its directors, and their respective counsel, the allegations
of the plaintiff are without merit and ultimately the matter will be
disposed of accordingly.
On July 30, 1999, the Company was advised that the Midwest regional
office of the Securities and Exchange Commission (SEC) initiated an
informal investigation regarding the Company. The Company is fully
cooperating with the SEC and has furnished all information requested to
date. It is the policy of the SEC not to identify the subject matter of
its investigations. As of this time, it is not possible to ascertain
what, if any, action may be taken as a result of the investigation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3 (i) - Restated Articles of Incorporation -
incorporated by reference from Exhibit 3 (i)
of the Company's quarterly report on Form
10-Q for the quarter ended July 6, 1997
(ii) - By-Laws
Exhibit 9 - Voting Trust Agreement - incorporated by
reference from Exhibit 9 of the Company's
quarterly report on Form 10-Q for the
quarter ended July 6, 1997
Exhibit 10.1 - 1988 Stock Option Plan - incorporated by
reference from Exhibit 10.1 of the Company's
quarterly report on Form 10-Q for the
quarter ended July 6, 1997
Exhibit 10.2 - Form of Incentive Stock Option Agreement
under the 1988 Stock Option Plan
incorporated by reference from Exhibit 10.2
of the Company's quarterly report on Form
10-Q for the quarter ended July 6, 1997
Exhibit 11 - Statement regarding computation of per share
earnings
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
<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.
NATIONAL PRESTO INDUSTRIES, INC.
Date: November 2, 1999 /S/ M. J. Cohen
-------------------------------------
M. J. Cohen, President
(Principal operating officer)
Date: November 2, 1999 /S/ R. F. Lieble
-------------------------------------
R. F. Lieble, Treasurer
(Principal accounting officer)
<PAGE>
Exhibit
Number Exhibit Description
------ -------------------
3 (ii) By-Laws
11 Computation of Earnings per Share
27 Financial Data Schedule
EXHIBIT 3.(ii)
BY-LAWS OF
NATIONAL PRESTO INDUSTRIES, INC.
--oOo--
ARTICLE I.
OFFICES
The corporation may have such offices, either within or without the
State of Wisconsin, as the business of the corporation may require from time to
time.
The address of the registered office of the corporation required by the
Wisconsin Business Corporation Law may be changed from time to time by the Board
of Directors.
ARTICLE II.
STOCKHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the stockholders
shall be held on the third Tuesday in the month of May in each year, at the hour
of two o'clock P.M., or, on such other date during the month of May and at such
other hour as may be set by resolution of the Board of Directors, for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting or any
adjournments thereof shall be a legal holiday in the State of Wisconsin, such
meeting shall be held on the next succeeding business day. If the election of
directors shall not be held on the day designated for any annual meeting of the
stockholders, or at any adjournment thereof, the Board of Directors shall cause
the election to be held at a special meeting of the stockholders as soon
thereafter as conveniently may be.
Section 2.02 Special Meetings. Special meetings of the stockholders,
for any purpose or purposes unless otherwise prescribed by statute, may be
called by the Chairman or President or by the Board of Directors.
Section 2.03 Place of Meeting. Annual and special meetings of the
stockholders may be held at such place, within or without the State of
Wisconsin, as may be specified by the Chairman or President or Board of
Directors, or in the absence of such specification, as designated by the
Secretary in the notice of the meeting. If no such designation is made, the
place of the meeting shall be the registered office of the corporation in the
State of Wisconsin, but any meeting may be adjourned to reconvene at any place
designated by vote of a majority of the shares represented thereat.
<PAGE>
Section 2.04 Notice of Meeting. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) days before the date of the meeting, (unless a longer period is required by
law), either personally or by mail, by or at the direction of the Chairman or
President, or the Secretary, or the persons calling the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his address as it appears on the stock record
books of the corporation, with postage thereon prepaid.
Section 2.05 Closing of Transfer Books or Fixing of Record Date.
For the purpose of determining stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, or stockholders entitled
to receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed in any case, seventy (70) days. If the stock
transfer books shall be closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of stockholders, such date in
any case to be not more than seventy (70) days and, in case of a meeting of
stockholders, not less than ten (10) days prior to the date on which the
particular action, requiring such determination of stockholders, is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, the
close of business on the date on which notice of the meeting is mailed or on the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall be applied to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
Section 2.06 Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the corporation shall, before each meeting of
stockholders, make a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting for the
purposes of the meeting. The original stock transfer books shall be prima facie
evidence as to which stockholders may be entitled to examine such list, or
transfer books, or to vote at any meeting of stockholders. Failure to comply
with the requirements of this section shall not affect the validity of any
action taken at such meeting.
2
<PAGE>
Section 2.07 Quorum. Except as otherwise provided by law or the
Articles of Incorporation, a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders, and a majority of votes cast
at any meeting at which a quorum is present shall be decisive of any motion or
election. Though less than a quorum of the outstanding shares are represented at
a meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 2.08 Proxies. At all meetings of stockholders, a stockholder
entitled to vote may vote by proxy appointed in writing by the stockholder or
his duly authorized attorney in fact. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven (11) months from the date of its execution, unless
otherwise provided in the proxy.
Section 2.09 Voting of Shares. Each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of the stockholders.
Section 2.10 Voting of Shares by Certain Holders. Shares standing in
the name of another corporation may be voted by the President of such
corporation, or any other officer or proxy appointed by such President, in the
absence of express notice to this corporation, given in writing to the
Secretary, of the designation of some other person by the Board of Directors or
the By-Laws of such other corporation.
Shares held by an administrator, executor, guardian, conservator,
trustee in bankruptcy, receiver or assignee for creditors may be voted by him,
either in person or by proxy, without a transfer of such shares into his names
provided that there is filed with the Secretary before or at the time of the
meeting, proper evidence of his incumbency and the number of shares held. Shares
standing in the name of a fiduciary may be voted by him, either in person or by
proxy.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation shall not be voted
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares entitled to vote at any given time, but
shares of its own stock held by it in fiduciary capacity may be voted and shall
be counted in determining the total number of outstanding shares at any given
time.
3
<PAGE>
Section 2.11 Informal Action by Stockholders. Any action required by
the Articles of Incorporation or By-Laws, or any provisions of law to be taken
at meeting of the stockholders, or any other action which may be taken at a
meeting of the stockholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
stockholders entitled to vote with respect to the subject matter thereof.
Section 2.12 Waiver of Notice by Shareholders. Whenever any notice
whatever is required to be given to any stockholder of the corporation under the
Articles of Incorporation or By-Laws, or any provision of law, a waiver thereof
in writing, signed at any time, whether before or after the time of meeting, by
the stockholder entitled to such notice, shall be deemed equivalent to the
giving of such notice; provided that such waiver in respect to any matter of
which notice is required under any provisions of Chapter 180, Wisconsin
Statutes, shall contain the same information as would have been required to be
included in such notice, except the time and place of meeting.
ARTICLE III.
BOARD OF DIRECTORS
Section 3.01 General Powers. The business and affairs of the
corporation shall be managed by its Board of Directors.
Section 3.02 Number, Tenure and Qualifications. The number and
classification of directors of the corporation shall be as provided in the
Articles of Incorporation. A director may resign at any time by filing his
written resignation with the Secretary of the corporation. Directors need not be
residents of the State of Wisconsin.
Section 3.03 Regular Meetings. A regular annual meeting of the Board of
Directors shall be held, without other notice than this By-Law, immediately
after, and at the same place as, the annual meeting of stockholders and each
adjourned session thereof. The Board of Directors may provide by resolution, the
time and place, either within or without the State of Wisconsin, for the holding
of additional regular meetings.
Section 3.04 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman or President of the
corporation, and shall be called by the Secretary on a written request of any
two directors. The persons authorized to call special meetings of the Board of
Directors may fix any place, within or without the State of Wisconsin, as the
place for holding any special meeting of the Board of Directors called by them.
4
<PAGE>
Section 3.05 Notice. Notice of all regular and special meetings of the
Board of Directors, other than the regular annual meeting of the Board of
Directors, shall be given to each director by telephoning such notice to a
director personally, or by written notice delivered personally at least 24 hours
previously thereto or by mailing or telegraphing such notice to a director at
his business address at least 48 hours previously thereto. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Whenever any notice whatever is required to be given to any
director of the corporation under the provisions of these By-Laws, or under the
provisions of the Articles of Incorporation, or under the provisions of any
statute, a waiver thereof in writing, signed at any time, whether before or
after the time of meeting, by the director entitled to such notice, shall be
deemed equivalent to the giving of such notice. The attendance of a director at
a meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting and objects thereat to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
Section 3.06 Quorum. Except as otherwise provided by law or by these
By-Laws, a majority of the number of directors then in office shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
but though less than such quorum is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice.
Section 3.07 Manner of Acting. The act of the majority of directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by these By-Laws or
by Law.
Section 3.08 Vacancies. Any vacancy occurring in the Board of Directors
caused by resignation, removal, death, or other incapacity shall be filled by a
majority of the directors then in office, whether or not a quorum. Each director
chosen to fill a vacancy shall hold office for the unexpired term in respect of
which such vacancy occurred.
Section 3.09 Presumption of Assent. A director of the corporation who
is present at a meeting of the Board of Directors or a committee thereof at
which action on any corporate matter is taken shall be presumed to have assented
to the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
5
<PAGE>
Section 3.10 Informal Action by Directors. Any action required or
permitted by the Articles of Incorporation or By-Laws, or any provision of law
to be taken by the Board of Directors by a meeting or by resolution, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors then in office.
Section 3.11 Executive Committee. The Board of Directors may, at any
time, elect an Executive Committee from among its own members, consisting of not
less than three (3) directors, which committee shall have and exercise the
powers of the Board of Directors when not in session, except action in respect
of dividends to stockholders, election or removal of officers, filling of
vacancies in the Board of Directors or Executive Committee, and such other
matters as the Board may expressly withhold from the jurisdiction of the
Executive Committee. The rules governing the activities and the manner of
exercise of the authority of the Executive Committee shall be such as may from
time to time be prescribed by the Board of Directors. Unless otherwise ordered
by the Board, a majority of the members of the Executive Committee shall
constitute a quorum. Members of the Executive Committee shall serve as such at
the pleasure of the Board of Directors.
Section 3.12 Committees of Directors. The Board of Directors, by
resolution adopted by the affirmative vote of a majority of the number of
directors then in office, may designate one or more committees in addition to
the Executive Committee, each such committee to consist of three or more
directors elected by the Board of Directors, which to the extent provided in
said resolution as initially adopted and as thereafter supplemented or amended
by further resolution adopted by a like vote, shall have and may exercise, when
the Board of Directors is not in session, the powers of the Board of Directors
in the management of the business and affairs of the corporation, except action
in respect to dividends to stockholders, election or removal of officers, or the
filling of vacancies in the Board of Directors or committees. Each such
committee shall fix its own rules governing the conduct of its activities and
shall make such reports to the Board of Directors of its activities as the Board
of Directors may request. Members of all such committees shall serve as such at
the pleasure of the Board of Directors.
ARTICLE IV.
OFFICERS
Section 4.01 Number. The officers of the corporation shall be chosen by
the Directors, and shall consist of a Chairman of the Board (if one is elected
by the Board), a President, one or more Vice Presidents, a Secretary, a
Treasurer, and such Assistant Secretaries and Assistant Treasurers and such
other officers and agents as the Board of Directors from time to time shall
elect or appoint. Any two offices, except those of President and Vice President,
may be held by one person.
6
<PAGE>
Section 4.02 Election and Term of Office. At each annual meeting of the
Board of Directors or at any special meeting of the Board of Directors called
for such purpose, the Board shall elect, from within or without its number, a
President, Vice President, Secretary, Treasurer, and such other officers as it
may deem advisable. Such officers shall hold office until the next annual
meeting of the Directors or until their successors are elected and qualified.
Section 4.03 Chairman of the Board. The Chairman of the Board, if one
is elected, shall preside at all meetings of the stockholders and directors, if
so designated by the Board of Directors, shall be chief policy officer, and
shall have such other duties as may be prescribed from time to time by the Board
of Directors. The Chairman shall be an ex officio members of all committees and
shall have the powers and duties of supervision and management usually vested in
the office of Chairman of the Board of a corporation. The Chairman may execute
and deliver, in the name of the corporation, any deeds, mortgages, bonds,
contracts, or other instruments pertaining to the business of the corporation.
Section 4.04 President. The President shall be the chief operating
officer of the corporation. In the absence of the Chairman of the Board, he
shall preside at all meetings of stockholders and directors; he shall be
responsible for general and active management of the business of the
corporation; and he shall see that all orders and resolutions of the Board are
carried into effect. He also may execute and deliver, in the name of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments
pertaining to the business of the corporation. The President shall have powers
and duties of supervision and management usually vested in the office of the
President of a corporation.
Section 4.05 Vice President. There shall be one or more Vice
Presidents, as designated and with duties and titles assigned by the Board of
Directors. Any Vice President may, in the absence or disability of the
President, perform the duties and exercise the powers of the President and shall
perform such other duties as the Board of Directors shall prescribe.
Section 4.06 Secretary. The Secretary shall attend all meetings of
stockholders and record all votes and minutes of all proceedings in a book to be
kept for that purpose and shall maintain the record of meetings and actions of
the Board of Directors and any committees. The Secretary shall perform such
other duties and execute such other documents as may be prescribed by the Board
of Directors or the President under whose supervision he shall be. Any Assistant
Secretary may, in the absence or disability of the Secretary, perform such other
duties as the Board of Directors shall prescribe.
7
<PAGE>
Section 4.07 Treasurer. The Treasurer shall have the custody of the
corporate funds and securities; and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation, and shall
deposit all monies and other valuable effects in the name and into the credit of
the corporation in such depositories, and may select banks, trust companies, or
other depositories subject to approval by the Board of Directors. He may
disburse the funds of the corporation as may be ordered by the Board, taking
proper vouchers for such disbursements, and shall render to the President and
directors at the regular meetings of the Board, or whenever they may require it,
an account of all his transactions as Treasurer and of the financial conditions
of the corporation. Any Assistant Treasurer, in the absence or disability of the
Treasurer, may perform the duties and exercise the powers of the Treasurer and
shall perform such other duties as the Board of Directors shall prescribe.
Section 4.08 Vacancies. If the office of any officer or an agent
becomes vacant by reason of his death, resignation, retirement,
disqualification, removal from office or otherwise, the directors then in office
may choose a successor who shall hold the office for the unexpired term of which
such vacancy occurred.
Section 4.09 Honorary Officers. In recognition of services provided to
the corporation, the Board may establish positions as honorary officers and
designate any duties or rights associated therewith.
Section 4.10 Delegation of Duties. In case of the absence of any
officer of the corporation, or for any other reason that the Board may deem
sufficient, the Board may delegate for the time being the powers and duties, or
any of them of such officer to any other officer or to any directors.
Section 4.11 Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the affirmative vote of a majority of the
whole Board of Directors whenever, in its judgment, the best interests of the
corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment shall not of itself create contract rights.
Section 4.12 Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the corporation.
ARTICLE V.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.01 Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authorization may be general or confined to specific instances.
8
<PAGE>
Section 5.02 Loans. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by or under the authority of a resolution of the Board of Directors.
Such authorization may be general or confined to specific instances.
Section 5.03 Checks, Drafts, etc. All checks, drafts, or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by or under the authority of resolution of the Board of Directors.
Section 5.04 Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies, or other depositories as may be selected by or
under the authority of a resolution of the Board of Directors.
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 6.01 Certificates for Shares. Certificates representing shares
of the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the Chairman, President, or a
Vice President and by the Secretary or an Assistant Secretary; and may be sealed
with the seal of the corporation (which may be a facsimile) and countersigned
and registered in such manner, if any, as the Board of Directors may prescribe.
Whenever any certificate is countersigned by a transfer agent or registered by a
registrar, other than the corporation itself or an employee of the corporation,
the signatures of the Chairman, President, Vice President, Secretary, or
Assistant Secretary upon such certificate may be facsimiles. In case any officer
who has signed or whose facsimile signature has been placed upon such
certificate ceases to be such officer before such certificate is issued, it may
be issued with the same effect, as if he were such officer at the date of its
issue. All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be canceled and no
certificates shall be issued until the former certificate for a like number of
shares shall have been surrendered and cancelled, except that in case of a lost,
destroyed, or mutilated certificate a new one may be issued therefor upon such
terms of indemnity to the corporation as these By-Laws may prescribe.
9
<PAGE>
Section 6.02 Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the corporation,
and on surrender for cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the corporation shall be deemed by
the corporation to be the owner thereof for all purposes.
Section 6.03 Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as they may deem
expedient concerning the issue, transfer, and registration of certificates
representing shares of the corporation.
Section 6.04 Lost or Destroyed Certificates. In case any stockholder
shall present to the Secretary evidence satisfactory to the Chairman, President,
or Vice President and Secretary or Assistant Secretary that a certificate
representing shares of this corporation has been lost or destroyed, the officers
of the corporation shall issue a replacement certificate for such shares, which
certificate shall be marked as a replacement, provided, and on condition, that
the stockholder receiving such replacement certificate furnishes a bond in form
satisfactory to the Chairman, President, or Vice President and Secretary or
Assistant Secretary to return the original certificate to the corporation for
cancellation in case the same be found or discovered, and to hold harmless the
corporation, its transfer agents and its registrars, of and from any loss,
damage, costs, or expense from or on account of, or in connection with the
issuance of such replacement certificate.
ARTICLE VII.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 7.01 The corporation shall and does by adoption of these
By-Laws indemnify such persons for such expenses and liabilities in such manner,
under such circumstances, and to the full extent as permitted by the laws of the
State of Wisconsin as now enacted or hereafter amended.
ARTICLE VIII.
SEAL
Section 8.01 The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the words
"NATIONAL PRESTO INDUSTRIES, INC., CORPORATE SEAL".
10
<PAGE>
ARTICLE IX.
AMENDMENT
Section 9.01 These By-Laws may be altered, amended, or repealed at any
regular or special meeting of the stockholders of the corporation by an
affirmative vote of the holders of a majority of the outstanding shares of the
corporation entitled to vote, or at any regular or special meeting of the Board
of Directors by an affirmative vote of a majority of the number of directors
then in office.
11
EXHIBIT 11
The following presents the computation of per share earnings reflecting the
assumption that the granted shares under the 1988 Stock Option Plan will be
exercised.
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
Third Quarter First Nine Months
------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Earnings $ 3,744 $ 3,735 $ 10,157 $ 9,305
======================== ========================
Weighted average common shares outstanding 7,344 7,357 7,350 7,357
Common share equivalents relating to stock options 1 1 1 1
------------------------ ------------------------
Adjusted common and common equivalent
shares for computation 7,345 7,358 7,351 7,358
======================== ========================
Net earnings per share:
Basic $ 0.51 $ 0.50 $ 1.38 $ 1.26
======================== ========================
Diluted $ 0.51 $ 0.50 $ 1.38 $ 1.26
======================== ========================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL
PRESTO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> OCT-03-1999
<CASH> 78,374
<SECURITIES> 145,615
<RECEIVABLES> 13,575
<ALLOWANCES> 0
<INVENTORY> 26,319
<CURRENT-ASSETS> 264,013
<PP&E> 24,465
<DEPRECIATION> 12,858
<TOTAL-ASSETS> 286,517
<CURRENT-LIABILITIES> 37,173
<BONDS> 0
0
0
<COMMON> 7,441
<OTHER-SE> 241,903
<TOTAL-LIABILITY-AND-EQUITY> 286,517
<SALES> 65,443
<TOTAL-REVENUES> 65,443
<CGS> 45,440
<TOTAL-COSTS> 45,440
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,902
<INCOME-TAX> 2,745
<INCOME-CONTINUING> 10,157
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,157
<EPS-BASIC> 1.38
<EPS-DILUTED> 1.38
</TABLE>
