UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-9789
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TECH/OPS SEVCON, INC.
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(Exact name of registrant as specified in its charter)
Delaware 04-2985631
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 North Avenue, Burlington, Massachusetts, 01803-3391
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(Address of principal executive offices and zip code)
(781) 229-7896
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(Registrant's telephone number, including area code:)
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
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 25, 2000
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Common stock, par value $.10 3,114,820
TECH/OPS SEVCON, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
ASSETS
(in thousands)
June 30, Sept 30,
2000 1999
--------- ------------
(unaudited) (derived from
audited
statements)
Current assets:
Cash and cash equivalents $ 2,687 $ 3,675
Accounts receivable, less allowances
of $221,000 at 6/30/2000
and $174,000 at 9/30/99 7,033 5,566
Inventories:
Raw materials 2,283 2,080
Work-in-process 810 1,112
Finished goods 837 1,020
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3,930 4,212
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Total current assets 13,650 13,453
------- -------
Property, plant and equipment, at cost 7,051 7,282
Less: Accumulated depreciation
and amortization 3,999 4,051
------- -------
Net property, plant
and equipment 3,052 3,231
------- -------
Cost of purchased businesses in excess
of net assets acquired 1,435 1,435
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$18,137 $18,119
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The accompanying notes are an integral part of these financial statements.
TECH/OPS SEVCON, INC.
Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' INVESTMENT
(in thousands)
June 30, Sept 30,
2000 1999
--------- ------------
(unaudited) (derived from
audited
statements)
Current liabilities:
Accounts payable $ 2,918 $ 2,650
Dividend payable 561 561
Accrued expenses 2,685 2,950
Accrued taxes on income 495 409
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Total current liabilities 6,659 6,570
------- -------
Deferred taxes on income 124 138
------- -------
Stockholders' investment
Preferred stock - -
Common stock 312 312
Premium paid in on common stock 3,924 3,924
Retained earnings 8,419 7,811
Cumulative translation adjustment (1,301) (636)
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Total stockholders' investment $11,354 $11,411
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$18,137 $18,119
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The accompanying notes are an integral part of these financial statements.
TECH/OPS SEVCON, INC.
Consolidated Statements of Income
(Unaudited)
(in thousands except per share data)
Three Months Ended Nine Months Ended
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June 30, July 3, June 30, July 3,
2000 1999 2000 1999
------- ------- ------- -------
Net sales $ 8,054 $ 7,802 $23,539 $23,811
Costs and expenses:
Cost of sales 4,791 4,568 14,114 13,961
Selling, research and
administrative 2,009 2,037 6,062 5,812
------- ------- ------- -------
6,800 6,605 20,176 19,773
------- ------- ------- -------
Operating income 1,254 1,197 3,363 4,038
Other income (expense), net 61 (25) 86 35
------- ------- ------- -------
Income before income taxes 1,315 1,172 3,449 4,073
Income taxes 445 398 1,159 1,410
------- ------- ------- -------
Net income $ 870 $ 774 2,290 2,663
======= ======= ======= =======
Basic income per share $ .28 $ .25 $ .74 $ .86
======= ======= ======= =======
Fully diluted income per share $ .28 $ .25 $ .73 $ .85
======= ======= ======= =======
Consolidated Statement of Comprehensive Income
(Unaudited)
(in thousands)
Three Months Ended Nine Months Ended
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June 30, July 3, June 30, July 3,
2000 1999 2000 1999
------- ------- ------- -------
Net income $ 870 $ 774 $ 2,290 $ 2,663
Foreign currency
translation adjustment (349) (138) (665) (557)
------- ------- ------- -------
Comprehensive income $ 521 $ 636 $ 1,625 $ 2,106
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The accompanying notes are an integral part of these financial statements.
TECH/OPS SEVCON, INC.
Consolidated Statement of Cash Flows
(Unaudited)
(in thousands)
Nine Months Ended
------------------
June 30, July 3,
2000 1999
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Net cash flow from operating activities:
Net income $ 2,290 $ 2,663
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 380 374
Deferred tax provision (14) (13)
Increase (decrease) in cash resulting from
changes in operating assets & liabilities:
Receivables (1,467) (930)
Inventories 282 (327)
Accounts payable 270 674
Accrued compensation and expenses (265) (181)
Accrued and deferred taxes on income 86 (261)
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Net cash generated from operating activities 1,562 1,999
Cash flow used by investing activities:
Acquisition of property, plant, and
equipment, net (418) (381)
Acquisition of short-term investments - (11)
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Net cash used by investing activities (418) (392)
Cash flow used by financing activities:
Dividends paid (1,682) (1,679)
Exercise of stock options - 22
Purchase of common stock - (49)
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Net cash used by financing activities (1,682) (1,706)
Effect of exchange rate changes on cash (450) (327)
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Net increase decrease in cash (988) (426)
Opening balance - cash and cash equivalents 3,675 3,439
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Ending balance - cash and cash equivalents $ 2,687 $ 3,013
======= =======
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 846 $ 1,620
Cash paid for interest 1 5
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Supplemental disclosure of non-cash
financing activity:
Dividend declared $ 561 $ 560
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The accompanying notes are an integral part of these financial statements.
TECH/OPS SEVCON, INC.
Notes to Consolidated Financial Statements - June 30, 2000
(Unaudited)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting of only normally recurring accruals) necessary to present
fairly the financial position of Tech/Ops Sevcon as of June 30,
2000 and the results of operations and cash flows for the three
months and nine months ended June 30, 2000 and July 3, 1999.
The accounting policies followed by Tech/Ops Sevcon are set
forth in Note 1 to the financial statements in the 1999 Tech/Ops
Sevcon, Inc. Annual Report filed on Form 10-K.
The results of operations for the three-month and nine-month
periods ended June 30, 2000 and July 3, 1999 are not necessarily
indicative of the results to be expected for the full year.
(2) Cash Dividends
On June 20, 2000, the Company declared a quarterly dividend
of $.18 per share for the third quarter of fiscal 2000, which was
paid on July 6, 2000 to stockholders of record on June 21,
2000. The Company has paid regular quarterly cash dividends since
the first quarter of fiscal 1990.
(3) Calculation of Earnings Per Share and Weighted Average Shares
Outstanding
Basic and fully diluted earnings per share were calculated as
follows:
(in thousands, except for per share amounts)
Three Months Ended Nine Months Ended
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June 30 July 3 June 30 July 3
2000 1999 2000 1999
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Net income $ 870 $ 774 $2,290 $2,663
Basic income per share $ .28 $ .25 $ .74 $ .86
Average shares outstanding 3,115 3,111 3,115 3,109
Options outstanding - common
stock equivalents 17 24 18 29
Average common and common
equivalent shares outstanding 3,132 3,135 3,133 3,138
Fully diluted income per share $ .28 $ .25 $ .73 $ .85
====== ====== ====== ======
(4) Segment information
The Company has two reportable segments: electronic controls and
capacitors. The electronic controls segment produces control systems
for battery powered vehicles. The capacitor segment produces electronic
components for sale to electronic equipment manufacturers. Each segment
has its own management team, manufacturing facilities and sales force.
The accounting policies of the segments are the same as those
described in note 1 to the 1999 Annual Report filed on Form 10-K.
Inter-segment revenues are accounted for at current market prices. The
Company evaluates the performance of each segment principally based
on operating income. The Company does not allocate income taxes,
interest income and expense or foreign currency translation gains
and losses to segments. Information concerning operations of these
businesses is as follows:
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(in thousands)
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Three months ended June 30, 2000
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Controls Capacitors Corporate Total
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Sales to external customers $ 7,522 $ 532 - $ 8,054
Inter-segment revenues - 102 - 102
Operating income 1,181 151 (78) 1,254
Identifiable assets 14,692 1,313 2,132 18,137
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Three months ended July 3, 1999
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Controls Capacitors Corporate Total
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Sales to external customers $ 7,365 $ 437 - $ 7,802
Inter-segment revenues - 54 - 54
Operating income 1,182 94 (79) 1,197
Identifiable assets 14,757 1,138 2,511 18,406
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Nine months ended June 30, 2000
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Controls Capacitors Corporate Total
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Sales to external customers $22,017 $ 1,522 - $23,539
Inter-segment revenues - 272 - 272
Operating income 3,162 381 (180) 3,363
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Nine months ended July 3, 1999
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Controls Capacitors Corporate Total
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Sales to external customers $22,562 $ 1,249 - $23,811
Inter-segment revenues - 143 - 143
Operating income 4,004 194 (160) 4,038
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TECH/OPS SEVCON, INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Three months ended June 30,2000
Sales in the third fiscal quarter ended June 30,2000 were $8,054,000
compared to $7,802,000 in the same quarter of the previous year, an increase of
$252,000, or 3%. Third quarter volumes were 7% ahead of last year, however,
foreign currency fluctuations reduced reported sales by $330,000, or 4%. This
was the second successive quarter in which the Company has reported increased
volumes. Revenues in the U.S. Controller business increased by 11% mainly due
to increased demand in the aerial lift and fork lift truck markets, partially
offset by a decrease in the mining market. Sales volumes in the European
Controller markets were 3% higher than last year. Capacitor sales were 22%
higher than last year due to a continuation of the recovery from the difficult
conditions in the European capacitor market during the past two years.
Third quarter gross profit was 40.5% of sales compared to 40.2% of sales
reported in the second quarter of fiscal 2000 and 41.5% in the third quarter of
last year. Gross profit was $29,000 higher than last year. The decrease in
gross profit percentage compared to last year was attributable to foreign
currency fluctuations and adverse sales mix.
Selling, research and administrative expenses for the quarter decreased
by $28,000, or 1%, compared to fiscal 1999. This decrease was mainly due to
foreign currency fluctuations.
Operating income was $1,254,000, an increase of $57,000, or 5%, compared
to the third quarter of last year. Foreign currency fluctuations, mainly the
weakness of the Euro, caused a decrease in operating income of $170,000,
or 14%. Operating income in the capacitor business segment increased by $57,000,
or 61%,mainly due to increased volumes. In the controller business segment
operating income was $1,181,000 compared to $1,182,000 in the same quarter last
year. Higher volumes resulted in a $170,000 increase in operating income, which
was offset by adverse foreign currency fluctuations.
Income before income taxes was $1,315,000, compared to $1,172,000 last
year, an increase of $143,000, or 12%. Other income was $61,000 compared to
other expense of $25,000 in fiscal 1999. The year-to-year increase in other
income of $86,000 was mainly due to foreign currency translation gains. Income
taxes were 33.8% of pre-tax income compared to 34.0% in the same quarter last
year. Net income was $870,000 compared to $774,000 last year, an increase of
$96,000, or 12%. Basic and fully diluted income per share increased by 12%,
from $.25 in the third quarter of fiscal 1999 to $.28 in the current year.
Nine months ended June 30,2000
Sales in the first nine months of fiscal 2000 were $23,539,000, compared
To $23,811,000 in the same period last year, a decrease of $272,000, or 1%.
Foreign currency fluctuations accounted for a $920,000, or 4%, decrease in
Reported sales offset by volume increases of $648,000. Revenues in the US
increased by $593,000, or 7%. This was mainly due to increased demand in
the US aerial lift market partially offset by lower sales to the mining
market. Controller salesin foreign markets decreased by $1,138,000,or 8%.
This was mainly due to foreign currency fluctuations which reduced reported
controller segment sales by $870,000 and lower volumes to the European fork
lift truck market. Capacitor sales increased by $273,000, or 22% compared
to the first nine months of last year.
Gross profit was 40.0% of sales compared to 41.4% in 1999. Gross profit
decreased by $425,000 compared to the first nine months of last year. The lower
gross profit was mainly attributable to foreign currency fluctuations and
adverse sales mix, partially offset by increased volumes.
Operating expenses for the nine-month period were $6,062,000 compared to
$5,812,000 last year, an increase of $250,000, or 4%. Research and development
expenses increased by $192,000. In the second quarter of fiscal 2000 the Company
took a charge of $50,000 relating to a customer seeking protection under
Chapter 11. Implementation of our plan to refocus the company resulted in
increased overhead costs of $100,000 for the most recent nine-month period.
Operating income for the first nine months was $3,363,000, a decrease of
$675,000, or 17% compared to last year. Operating income for the controller
business decreased by 21% to $3,162,000. Foreign currency fluctuations, which
reduced operating income of the controller business segment by $350,000, and
a $192,000 increase in research and development spending were the most
significant reasons for this decrease in operating income. In the capacitor
business segment operating income increased by $187,000, or 96%,to $381,000,
mainly due to increased volumes.
Income before income taxes was $3,449,000, compared to $4,073,000 last
year, a decrease of $624,000, or 15%. Other income was $86,000 compared to
$35,000 in the same period of fiscal 1999. Foreign currency accounted for
$82,000 of this increase offset by reduction in interest income. Income
taxes were 33.6% of pre-tax income, compared to 34.6% last year, mainly
due to lower foreign tax rates. Net income was $2,290,000, a decrease of
$373,000, or 14%, compared to the same period last year. Basic income per
share was 14% lower than last year at $.74 per share compared to $.86 per
share in 1999. Fully diluted net income was $.73 per share, a decrease
of 14% compared to 1999.
Financial Condition
The Company has, since January 1990, maintained a program of regular
cash dividends, which, for the most recent quarter, amounted to $561,000.
Tech/Ops Sevcon's resources, in the opinion of management, are adequate
for projected operations and capital spending programs, as well as
continuation of the cash dividend.
TECH/OPS SEVCON, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report.
(3) By-Laws of the registrant
(27) Financial Data Schedule (EDGAR Filing only)
(b) Reports on Form 8-K - There were no reports on Form 8-K
during the quarter for which this report is filed.
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.
TECH/OPS SEVCON, INC.
Date: July 28, 2000 By: /s/ Paul A. McPartlin
---------------------
Paul A. McPartlin
Chief Financial and Accounting
Officer
Exhibit (a)(3)
BY-LAWS
OF
TECH/OPS SEVCON, INC.
ARTICLE 1
STOCKHOLDERS
SECTION 1.1. Annual Meetings. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such place either within or
without the State of Delaware on such date and at such hour as the Board of
Directors or an officer designated by the Board may determine from time to time.
SECTION 1.2. Special Meetings. Special meetings of stockholders for
any purpose or purposes may be held at any date, time and place within or
without the State of Delaware upon the call of the Chairman of the Board,
if any, or the President or by resolution of a majority of the directors then
in office.
SECTION 1.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting.Unless
otherwise provided by law, the written notice of any meeting shall be given
not less than ten nor more than fifty days before the date of the meeting to
each stockholder entitled to vote at such meeting. If mailed, such notice shall
be deemed to be given when deposited in the mail, postage prepaid, directed to
the stockholder at his address as it appears on the records of the corporation.
SECTION 1.4. Stockholder Nominations of Directors. Only persons
who are nominated in accordance with the following procedures shall be
eligible for election as directors at any annual or special meeting. Nominations
of persons for election as directors may be made by or at the direction of the
Board of Directors, or by any stockholder entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 1.4. Such nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely notice in writing to
the Chairman of the Board, if any, the President, any Vice President, the
Secretary or the Treasurer. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
corporation not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that (except as to an annual meeting held on the date
specified in these by-laws, such date not having been changed since the last
annual meeting), if less than 65 day's notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of business on the
15th day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. Such stockholder's notice shall
set forth (a) as to each person whom the stockholder proposes to nominate
for election or re-election as a director, (i) the name, age, business address
and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of capital
stock of the corporation which are beneficially owned by the person and (iv) any
other information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
corporation which are beneficially owned by such stockholder. No person
shall be eligible for election as a director at any annual or special meeting
to stockholders unless nominated in accordance with the procedures
set forth herein.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 1.5. Advance Notice of Stockholder-Proposed Business at Annual
Meetings. At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
brought properly before an annual meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the President or the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board, or (c)
otherwise properly brought before the meeting by a stockholder. In addition to
any other applicable requirements, for business to be brought properly before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Chairman of the Board, if any, the President,
any Vice President, the Secretary or the Treasurer. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than 50 days nor more
than 75 days prior to the meeting; provided, however, that (except as to an
annual meeting held on the date specified in these by-laws, such date not
having been changed since the last annual meeting), if less than 65 days'
notice or prior public disclosure of the date of the meeting is given or made
to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the 15th day following the day on
which such notice of the date of the annual meeting was mailed or such
public disclosure was made. A stockholder's notice shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (ii) the
name and record address of the stockholder proposing such business, (iii)
the class and number of shares of the corporation which are beneficially
owned by the stockholder, and (iv) any material interest of the stockholder
in such business.
Notwithstanding anything in these by-laws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 1.5, provided, however, that nothing in
this Section 1.5. shall be deemed to preclude discussion by any stockholder of
any business properly brought before the annual meeting in accordance with said
procedure.
The chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 1.5, and if he should
so determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
SECTION 1.6. Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty 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 stockholder of record entitled to vote at the meeting.
SECTION 1.7. Quorum. At each meeting of stockholders, except where
otherwise provided by the law or the Certificate of Incorporation or these by-
laws, the holders of a majority of the outstanding shares of stock entitled to
vote at the meeting, present in person or by proxy, shall constitute a quorum.
In the absence of a quorum, the holders of a majority of the shares present may
adjourn the meeting from time to time in the manner provided in Section 1.6 of
these by-laws until a quorum shall attend. Shares of its own stock belonging to
this corporation, or to another corporation if a majority of the shares
entitled to vote in the election of directors of such other corporation is held,
directly or indirectly, by this corporation, shall neither be entitled to vote
nor be counted for quorum purposes; provided, however, that the foregoing
shall not limit the right of any corporation to vote stock, including but not
limited to its own stock, held by it in a fiduciary capacity.
SECTION 1.8. Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, if any, or in his absence by the Vice
Chairman of the Board, if any, or in his absence by the President, or in his
absence by a Vice President, or in the absence of the foregoing persons by a
chairman designated by the Board of Directors, or in the absence of such
designation by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
SECTION 1.9. Voting; Proxies. Each stockholder entitled to vote at any
meeting of stockholders shall be entitled to one vote for each share of stock
held by him which has voting power upon the matter in question. Each
stockholder entitled to vote at a meeting of stockholders may authorize another
person or persons to act for him by proxy, but no such proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period. A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary of the corporation. Voting at
meetings of stockholders need not be by written ballot and need not be
conducted by inspectors unless the holders of a majority of the outstanding
shares of all classes of stock entitled to vote thereon present in person or by
proxy at such meeting shall so determine. At all meetings of stockholders for
the election of directors a plurality of the votes cast shall be sufficient to
elect.
All other elections and questions shall, unless otherwise provided by law or
by the Certificate of Incorporation or these by-laws, be decided by the vote of
the holders of the majority of the shares of stock entitled to vote thereon
present in person or by proxy at the meeting, provided that (except as
otherwise required by law or by the Certificate of Incorporation) the Board
of Directors may require a larger vote upon any election or question.
SECTION 1.10. Fixing Date for Determination of Stockholders of Record.
In order that the corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any action. If no record date is fixed: (1) the
record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders shall be the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, the close
of business on the day next preceding the day on which the meeting is held;
(2) the record date for determining stockholders for any other purpose shall
be the close of business on the day on which the Board of Directors adopts
the resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
SECTION 1.11. List of Stockholders Entitled to Vote. The Secretary
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during
the whole time thereof and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of
stockholders or the books of the corporation,or to vote in person or by
proxy at any meeting of stockholders.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1. Number; Terms; Manner of Election; Qualifications;
Election; Resignation; Removal. The Board of Directors shall initially consist
of the persons elected as such by the incorporator, who shall determine the
class to which each director is elected. The number, terms and manner of
election of directors thereafter shall be governed by the Certificate of
Incorporation. Directors need not be stockholders. Any director may resign at
any time upon written notice to the corporation. Stockholders may remove
directors only for cause.
SECTION 2.2. Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware
and at such times as the Board of Directors may from time to time determine,
and if so determined notices thereof need not be given.
SECTION 2.3. Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, if any, the President or
by any two members of the Board of Directors. Reasonable notice thereof shall
be given by the person and persons calling the meeting, not later than the
second day before the date of the special meeting.
SECTION 2.4. Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee designated by the Board, may participate in a
meeting of such Board or committee by 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 pursuant to this by-
law shall constitute presence in person at such meeting.
SECTION 2.5. Quorum; Vote Required for Action. At all meetings of the
Board of Directors a majority of the total number of directors shall constitute
a quorum, except that when a vacancy or vacancies exist in the Board, a
majority of the directors then in office (but not less than two directors nor
less than one-third of the total number of directors) shall constitute a
quorum, and except that a lesser number of directors consisting of a
majority of the directors then in office who are not officers (but not less
than two directors nor less than one-third of the total number of
directors) may constitute a quorum for the purpose of acting on any
matter relating to the compensation (including fringe benefits) of any officer
of the corporation. A number of directors which is less than a quorum may
adjourn any meeting from time to time. The vote of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the
Board of Directors, except where a larger vote is required by law, by the
Certificate of Incorporation, or by these by-laws.
SECTION 2.6. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
SECTION 2.7. Action by Written Consent of Directors. Unless otherwise
restricted by the Certificate of Incorporation or these by-laws, 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 or such 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 or committee.
SECTION 2.8. Founder Directors. The Board of Directors may appoint
as a Founder Director any person who was one of the founders of the
corporation's predecessor, Tech/Ops, Inc., and who served for many years
as a member of itsBoard of Directors. Founder Directors shall have no vote
but may participate in all meetings of the Board of Directors. Founder
Directors will be given the same notice of all meetings of the Board as is
given the directors and will be furnished by management of the corporation
with the same information provided by it to the directors. Founder Directors
shall not be taken into consideration for determining the total number of
directors of the corporation and shall not be counted for determining
whether a quorum is present or whether action has been duly taken by the
directors, and the signature of any Founder Director shall not be required
for action taken by written consent of the directors.
ARTICLE III
COMMITTEES
SECTION 3.1. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of the
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall havepower or authority in
reference to amending the Certificate of Incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the Board of Directors as provided in
Section 151(a) of the General Corporation Law, fix any of the preferences or
rights of the shares), adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to
the stockholders a dissolution of the corporation or a revocation of
dissolution, or amending these by-laws; and, unless the resolution expressly so
provides, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
SECTION 3.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may make, alter and repeal
rules for the conduct of its business. In the absence of such rules each
committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to these by-laws.
ARTICLE IV
OFFICERS
SECTION 4.1. Executive Officers; Election; Qualifications; Term of
Office; Resignation; Removal; Vacancies. The Board of Directors shall choose a
President, a Treasurer and a Secretary, and it may, if it so determines, choose
a Chairman of the Board (in which event it shall designate the President or the
Chairman as Chief Executive Officer) and a Vice Chairman of the Board from
among its members. The Board of Directors may also choose one or more Vice
Presidents, one or more Assistant Secretaries, and one or more Assistant
Treasurers. Each such officer shall hold office until the first meeting of the
Board of Directors after the annual meeting of stockholders next succeeding his
election, and until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the corporation. The Board of Directors may remove any officer with or
without cause at any time, but such removal shall be without prejudice to the
contractual rights of such officer, if any, with the corporation. Any number of
offices may be held by the same person. Any vacancy occurring in any office
by death, resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Board of Directors at any regular or special meeting.
SECTION 4.2. Powers and Duties of Executive Officers. The officers of
the corporation shall have such powers and duties in the management of the
corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to their respective offices, subject to
the control of the Board of Directors. The Board of Directors may require any
officer, agent or employee to give security for the faithful performance of his
duties.
ARTICLE V
STOCK
SECTION 5.1. Certificates. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the corporation by the Chairman
or Vice Chairman of the Board of Directors, if any, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary, certifying the number of shares owned by him in
the corporation. Any of or all the signatures on the certificate may be a
facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate 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
were such officer, transfer agent, or registrar at the date of issue.
SECTION 5.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it alleged to have been lost,
stolen or destroyed, and the corporation may require the owner of the lost,
stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of such new certificate.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1. Power to Indemnify in Actions, Suits or Proceedings other
than those by or in the Right of the Corporation. Subject to Section 6.3, the
corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of the fact that
he is or was a director or officer of the corporation, or is or was serving at
the request of the corporation as a director or officer of another
corporation,partnership, joint venture, trust or other enterprise, against
expenses(including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, or, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
SECTION 6.2. Power to Indemnify in Actions, Suits or Proceedings by or
in the Right of the Corporation. Subject to Section 6.3, the corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
he is or was a director or officer of the corporation, or is or was serving at
the request of the corporation as a director or officer of another corporation,
partnership, joint venture trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation; except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstance of the case, such person is fairly
and reasonably entitled to indemnify for such expenses which the Court
of Chancery or such other court shall deem proper.
SECTION 6.3. Authorization of Indemnification. Any indemnification
under this Article VI (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section 6.1
or Section 6.2 of this Article VI, as the case may be. Such determination shall
be made (i) by the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or
(ii) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders. To the extent, however, that a director
or officer of the corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
SECTION 6.4. Good Faith Defined. For purposes of any determination
under Section 6.3, a person shall be deemed to have acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was
unlawful, if his action is based on the records or books of account of the
corporation or another enterprise, or on information supplied to him by the
officers of the corporation or another enterprise in the course of their duties,
or on the advice of legal counsel for the corporation or another enterprise
or on information or records given or reports made to the corporation or
another enterprise by an independent certified public accountant or by
an appraiser or other expert selected with reasonable care by the
corporation or another enterprise. The term "another enterprise"
as used in this Section 6.4 shall mean any other corporation or
any partnership, joint venture, trust or other enterprise of which
such person is or was serving at the request of the corporation as a director
or officer. The provisions of this Section 6.4 shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in
Sections 6.1 or 6.2, as the case may be.
SECTION 6.5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 6.3, and notwithstanding the
absence of any determination thereunder, any director or officer may apply to
any court of competent jurisdiction in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 6.1 and 6.2.
The basis of such indemnification by a court shall be a determination by such
court that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standards of conduct set forth
in Section 6.1 or 6.2, as the case may be. Notice of any application for
indemnification pursuant to this Section 6.5 shall be given to the corporation
promptly upon the filing of such application.
SECTION 6.6. Expenses Payable in Advance. Expenses incurred in
defending or investigating a threatened or pending action, suit or proceeding
may be paid by the corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article VI.
SECTION 6.7. Non-Exclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by or granted pursuant to
this Article VI shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any by-law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of
the corporation that indemnification of the persons specified in Sections 6.1
and 6.2 shall be made to the fullest extent permitted by law. The provisions of
this Article VI shall not be deemed to preclude the indemnification of any
person who is not specified in Sections 6.1 or 6.2 of this Article VI but whom
the corporation has the power or obligation to indemnify under the provisions of
the General Corporation Law of the State of Delaware, or otherwise. The
indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VI shall, unless otherwise provided when authorized or
ratified,continue as to a person who has ceased to be a director or officer
and shall inure to the benefit of the heirs, executors and administrators
of such person.
SECTION 6.8. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the corporation would have the power or the obligation to indemnify him
against such liability under the provisions of this Article VI.
SECTION 6.9. Meaning of "Corporation" for Purposes of Article VI. For
purposes of this Article VI, references to "the corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors or officers so that any person who is or was a director
or officer of such constituent corporation. or is or was serving at the request
of such constituent corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article VI with respect to
the resulting or surviving corporation as he would have with respect to
such constituent corporation if its separate existence had continued.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Fiscal Year. Except as from time to time otherwise
provided by the Board of Directors, the fiscal year of the corporation shall
end September 30.
SECTION 7.2. Seal. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
SECTION 7.3. Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
SECTION 7.4. Amendment of By-Laws. The Board of Directors shall have
the right to adopt, amend or repeal by-laws of the corporation, but the
stockholders may adopt additional by-laws and may amend or repeal any by-law
whether adopted by them or otherwise.
