Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1997 - Commission file Number 0-17038
Concord Camera Corp.
(Exact names of registrant as specified in its charter)
New Jersey 13-3152196
(State or other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
35 Mileed Way, Avenel, New Jersey 07001
(Address of principal executive office) (Zip code)
732/499-8280
(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_____ Indicate the number of
shares outstanding of each of the issuer's classes of common stock, as of the
latest practicable date. ----------
Common Stock, no par value -- 10,880,473 shares as of January 21, 1998
------------------------------
Page 1 of 17
Exhibit Index on Page 16
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<TABLE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
Concord Camera Corp.
Consolidated Balance Sheets
December 31,
1997 June 30,
unaudited 1997
<S> <C> <C>
Current assets:
Cash $ 4,042,981 $ 5,297,820
Accounts receivable, net 18,328,676 9,866,962
Inventories 20,995,369 15,752,402
Prepaid expenses and other current assets 4,439,923 3,091,669
Total current assets 47,806,949 34,008,853
Plant and equipment, net 14,772,592 13,865,777
Goodwill, net 941,782 1,089,217
Other assets 3,635,306 4,124,396
Total assets $67,156,629 $53,088,243
Current liabilities:
Short-term debt $ 6,953,105 $ 7,976,315
Current portion of long-term debt 35,183 33,349
Current obligations under capital leases 834,088 790,426
Accounts payable 18,769,607 8,665,622
Accrued expenses 3,807,384 2,232,289
Income taxes payable 327,810 2,831
Other current liabilities 170,604 313,965
Total current liabilities 30,897,781 20,014,797
Deferred income taxes 572,538 572,492
Long-term debt 378,593 396,570
Obligations under capital leases 1,852,842 2,000,002
Other long-term liabilities 917,005 602,549
Total liabilities 34,618,759 23,586,410
Stockholders' equity:
Common stock, no par value, 40,000,000 authorized; 10,944,026 issued
as of December 31 and June 30, 1997 39,361,893 36,361,893
Paid in capital 850,786 850,786
Deficit (4,527,433) (7,635,654)
Notes receivable arising from common stock purchase agreements (2,694,457) (2,622,273)
32,990,789 29,954,752
Less: treasury stock, at cost; 63,553 shares (452,919) (452,919)
Total stockholders' equity 32,537,870 29,501,833
Total liabilities and stockholders' equity $67,156,629 $53,088,243
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Concord Camera Corp.
Consolidated statements of income
(unaudited)
for the three months ended December 31,
1997 1996
<S> <C> <C>
Net sales $ 31,329,131 $19,677,268
Cost of products sold 23,016,433 13,004,008
Gross profit 8,312,698 6,673,260
Selling expenses 2,654,637 2,037,700
General and administrative expenses 2,716,581 2,463,677
Financial expenses 405,264 374,637
Other (income), net (52,720) (31,903)
Legal expenses and settlement costs 55,868 95,202
Income before income taxes 2,533,068 1,733,947
Provision for income taxes 196,266 602
Net Income $2,336,802 $ 1,733,345
Common shares outstanding 10,880,473 10,880,473
Incremental shares using treasury stock method 600,589 13,280
Dilutive potential common shares 11,481,062 10,893,753
Basic earnings per share $0.21 $0.16
Diluted earnings per share $0.20 $0.16
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Concord Camera Corp.
Consolidated statements of income
(unaudited)
for the six months ended December 31,
1997 1996
<S> <C> <C>
Net sales $51,135,413 $34,809,822
Cost of products sold 37,529,015 24,450,978
Gross profit 13,606,398 10,358,844
Selling expenses 4,351,104 3,737,558
General and administrative expenses 5,101,770 4,625,931
Financial expenses 804,185 739,152
Other (income), net (122,892) (24,730)
Legal expenses and settlement costs 97,462 155,244
Income before income taxes 3,374,769 1,125,689
Provision for income taxes 266,548 602
Net Income $3,108,221 $ 1,125,087
Common shares outstanding 10,880,473 10,880,473
Incremental shares using treasury stock method 522,582 57,464
Dilutive potential commons shares 11,403,055 10,937,937
Basic earnings per share $0.29 $0.10
Diluted earnings per share $0.27 $0.10
See accompanying notes to consolidated financial statements
4
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Concord Camera Corp.
Consolidated statements of cash flows
For the six months ended December 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $3,108,221 $ 1,125,087
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,624,807 1,545,080
Net (gain) on sale of property and equipment (30,697) -
Interest income on notes receivable arising from common stock agreements (72,184) (72,184)
Change in assets and liabilities:
(Increase) in accounts receivable (8,461,714) (1,095,688)
(Increase) in inventories (5,242,967) (1,171,281)
(Increase) in prepaid expenses and other current assets (1,348,254) (533,383)
Decrease (increase) in other assets 613,557 (673,116)
Increase in accounts payable 10,103,985 4,335,616
Increase in accrued expenses 1,575,095 303,692
Increase (decrease) in income taxes payable 324,979 (76,216)
(Decrease) in other current liabilities (143,361) (514,855)
Increase in deferred income taxes 45 26,655
Total adjustments (1,056,709) 2,074,320
Net cash provided by operating activities 2,051,512 3,199,407
Cash flows from investing activities:
Purchase of property, plant and equipment (2,163,501) (975,192)
Net cash (used in) investing activities (2,163,501) (975,192)
Cash flows from financing activities:
Net borrowings (repayments) under short-term debt agreements (1,023,210) 308,947
Net (repayments) of long-term debt (16,143) (14,748)
Principal payments under capital lease obligations (103,497) (297,490)
Net cash (used in) financing activities (1,142,850) (3,291)
Net increase (decrease) in cash (1,254,839) 2,220,924
Cash at beginning of period 5,297,820 4,996,770
Cash at end of period $4,042,981 $7,217,694
See accompanying notes to consolidated financial statements. See Note 3 -
Supplemental Disclosure of cash flow information.
</TABLE>
5
<PAGE>
CONCORD CAMERA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(unaudited)
In the opinion of Concord Camera Corp. ("the Company"), the accompanying
unaudited financial statements contain all adjustments, including normal
recurring adjustments, necessary for the fair presentation of the Company`s
financial position as of December 31, 1997, and the results of operations and
cash flows for the periods ended December 31, 1997 and 1996. The Notes to
Consolidated Financial Statements, which are included in the Company's 1997 Form
10-K Annual Report, should be read with the accompanying financial statements.
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, Earnings per Share. Statement 128 replaced the
previously reported primary and fully-diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share, basic earnings
per share excludes any dilutive effects of options, warrants, and convertible
securities. Diluted earnings per share is very similar to the previously
reported fully-diluted earnings per share. All earnings per share amounts for
all periods have been presented, and where necessary, restated to conform to the
Statement 128 requirements. The Company operates on a worldwide basis and its
results may be adversely or positively affected by fluctuations of various
foreign currencies against the U.S. Dollar, specifically, the Canadian Dollar,
German Mark, British Pound Sterling, Hungarian Forints, French Francs, and
Japanese Yen. Each of the Company's foreign subsidiaries purchases its
inventories in U.S. Dollars and sells them in local currency, thereby creating
an exposure to fluctuations in foreign currency exchange rates. Certain
components needed to manufacture cameras are purchased in Japanese Yen. The
impact of foreign exchange transactions is reflected in the profit and loss
statement. The Company continues to analyze the benefits and costs associated
with hedging against foreign currency fluctuations.
----------
Note 2 - Inventories
Inventories are comprised of the following:
December 31, June 30,
1997 1997
Raw materials and components $ 14,421,554 $ 10,517,322
Finished goods 6,573,815 5,235,080
$20,995,369 $15,752,402
6
<PAGE>
Note 3 - Supplemental Disclosures of Cash Flow Information:
For the Six months ended December 31,
1997 1996
Cash paid for interest $ 640,176 $ 530,649
Cash paid for taxes $ 40,000 $ 22,578
There were no capital lease obligations incurred during the six months
ended December 31, 1997. During the six months ended December 31, 1996, capital
lease obligations of approximately $565,000 were incurred when the Company
entered into leases for the purchase of equipment.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Results of Operations
Three months ended December 31, 1997 compared to the three months ended
December 31, 1996.
Total revenues for the three months ended December 31, 1997 and 1996 were
approximately $31,329,000 and $19,677,000, respectively, an increase of
approximately $11,652,000 or 59.2%. The increase is primarily attributable to
increases in original equipment manufacturer ("OEM") revenues from sales to the
Company's new and preexisting OEM customers. The increase in traditional camera
revenues included shipments of a new Advanced Photo System traditional camera to
a previously announced large new OEM customer. Furthermore, sales revenues from
traditional and single-use product lines in the second quarter exceeded the
revenues in the same quarter last year. The Company expects the increased
production and sales levels to continue throughout Fiscal 1998 and anticipates
achieving its previously announced sales projection of $100 million to $110
million and its net profit expectation of between $5 million to $7 million for
the current fiscal year which ends June 30, 1998. Sales for the Company's third
quarter ended March 31, 1998 (traditionally the Company's worst quarter) are
presently projected to be in excess of $18 million with a modest loss for the
quarter compared to sales of $12.3 million and a loss of approximately $1.5
million for the same quarter in the prior year. The Company's co-development and
manufacturing agreement with one of the world's leading, specialized film and
camera manufacturers is proceeding on course. Tooling for the specialized
single-use cameras to be manufactured exclusively by the Company under this
arrangement is in the process of being ordered, and the arrangement is
anticipated to result in up to $20 million of incremental revenues during Fiscal
1999. The Company is also engaged in discussions with certain existing OEM
customers for the addition, in the future, of new products to the Company's
manufacturing arrangements with such customers.
Sales by Concord Camera HK Limited ("Concord HK") for the three months
ended December 31, 1997 and 1996 were approximately $24,666,000 and $12,733,000,
respectively, an increase of approximately $11,933,000 or 93.7%. The increase is
due to the increase in OEM sales. OEM sales for the three months ended December
31, 1997 and 1996 were approximately $20,992,000 and $8,938,000, respectively,
an increase of approximately $12,054,000 or 134.9%. The increase was due to
increases in traditional and single-use camera revenues by the Company's new and
preexisting OEM customers. The increase in traditional camera revenues included
shipments of a new Advanced Photo System traditional camera to a previously
announced large new OEM customer.
Consolidated sales of the Company's United States, Canadian, and Panamanian
operations, collectively "Concord Americas," for the three months ended December
31, 1997 and 1996 were approximately $4,142,000 and $4,771,000, respectively, a
decrease of approximately $629,000 or 13.2%. In addition, certain Concord
Americas customers decreased merchandise purchases on an F.O.B. Hong Kong basis
from Concord HK. During the three months ended December 31, 1997 and 1996
Concord Americas customers purchased approximately $2,780,000 and $2,924,000,
respectively, from Concord HK, a decrease of approximately $144,000 or 4.9%. If
this decrease were added to the three months ended December 31, 1997 American
sales, sales of traditional cameras to Concord Americas customers would have
decreased by 10.0%. This decrease in sales to Concord Americas resulted from an
aging product line of traditional cameras and intensified competition in the
sale of single-use cameras.
8
<PAGE>
Consolidated sales of Concord Camera GmbH ("Concord Germany"), Concord
Camera Europe (formerly Concord Camera UK Limited) ("Concord UK"), and Concord
Camera France ("Concord France"), collectively "Concord Europe", for the three
months ended December 31, 1997 and 1996, were approximately $2,521,000 and
$2,173,000, respectively, an increase of approximately $348,000 or 16.0%. In
addition, certain Concord Europe customers increased merchandise purchases on an
F.O.B. Hong Kong basis from Concord HK. During the three months ended December
31, 1997 and 1996 European customers purchased approximately $656,000 and
$582,000, respectively, from Concord HK, an increase of approximately $74,000 or
12.7%. If this increase were added to the sales for the three months ended er
31, 1997, European sales to European customers would have increased by
15.3%.December 31, 1997, European sales to European customers would have
increased by 15.3%.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 26.5% for
the three months ended December 31, 1996 from 33.9% for the three months ended
December 31, 1996. This decrease was due to increases in license and royalty
expenses attributable to a higher proportion of sales of products for which
licensed technology is used. Product development costs for the three months
ended December 31, 1997 and 1996, were approximately $950,000 and $985,000,
respectively, a decrease of approximately $35,000, or 3.6%. As new products
continue to be introduced and manufacturing volume and efficiencies increase,
the Company expects margins to increase.
Expenses
As a percentage of sales, operating expenses decreased to 18.4% in the
three months ended December 31, 1997 from 24.7% in the three months ended
December 31, 1996. Operating expenses consisting of selling, general and
administrative and financial expenses, increased to $5,776,000 in the three
months ended December 31, 1997 from $4,876,000 in the three months ended
December 31, 1996, an increase of $900,000.
As a percentage of sales, selling expenses decreased to 8.5% in the three
months ended December 31, 1997 from 10.4% in the three months ended December 31,
1996. Selling expenses increased to $2,655,000 in the three months ended
December 31, 1997 from $2,038,000 in the three months ended December 31, 1996.
The increase was primarily attributable to the Company's increased sales volume
and increases in freight costs, royalty expenses and promotion allowances net of
benefits from the consolidation of warehouse facilities undertaken by the
Company in Fiscal 1996.
As a percentage of sales, general and administrative expenses decreased to
8.7% in the three months ended December 31, 1997 from 12.5% in the three months
ended December 31, 1996. General and Administrative expenses increased to
$2,717,000 in the three months ended December 31, 1996 from $2,464,000 in the
three months ended December 31, 1996. The increase is primarily attributable to
increases in professional fees and expenses related to the new OEM contracts.
As a percentage of sales, financial expenses decreased to 1.3% in the three
months ended December 31, 1997 from 1.9% in the three months ended December 31,
1996. Financial expenses increased to $405,000 in the three months ended
December 31, 1996 from $375,000 in the three months ended December 31, 1996.
Such increase was primarily a result of an increase in average debt outstanding
during the three months ended December 31, 1997.
9
<PAGE>
Litigation and settlement costs in the three months ended December 31, 1997
and 1996 were approximately $56,000 and $95,000, respectively, a decrease of
approximately $39,000, or 41.1%. The decrease in litigation and settlement
expenses reflects the disposition of a number of outstanding matters in Fiscal
1996. The Company incurred legal expenses and settlement costs in the three
months ended December 31, 1997 and 1996 in connection with non-operating
matters, primarily the demand for arbitration and other litigation against Jack
Benun.
Other (Income), Net
Other income, net includes foreign exchange gains and losses and interest
income net of directors fees and certain public relations costs.
Income Taxes
The Company's provision for income taxes for the three months ended
December 31, 1997 is primarily related to the earnings of the Company's Far East
and domestic operations, net of benefits relating to operating loss
carryforwards and overpayments/refunds on the Company's other subsidiaries.
10
<PAGE>
Six months ended December 31, 1997 compared to the six months ended
December 31, 1996.
Total revenues for the six months ended December 31, 1997 and 1996 were
approximately $51,135,000 and $34,810,000, respectively, an increase of
approximately $16,325,000 or 46.9%. The increase is primarily attributable to
increases in original equipment manufacturer ("OEM") revenues from sales to the
Company's new and preexisting OEM customers. The increase in traditional camera
revenues included shipments of a new Advanced Photo System traditional camera to
a previously announced large new OEM customer. Furthermore, sales revenues from
all product lines in the six month period ended December 31, 1997 exceeded the
revenues in the period last year. The Company expects the increased production
and sales levels to continue throughout Fiscal 1998 and anticipates achieving
its previously announced sales projection of $100 million to $110 million and
its net profit expectation of between $5 million to $7 million for the current
fiscal year which ends June 30, 1998. Sales for the Company's third quarter
ended March 31, 1998 (traditionally the Company's worst quarter) are presently
projected to be in excess of $18 million with a modest loss for the quarter
compared to sales of $12.3 million and a loss of approximately $1.5 million for
the same quarter in the prior year. The Company's co-development and
manufacturing agreement with one of the world's leading, specialized film and
camera manufacturers is proceeding on course. Tooling for the specialized
single-use cameras to be manufactured exclusively by the Company under this
arrangement is in the process of being ordered, and the arrangement is
anticipated to result in up to $20 million of incremental revenues during Fiscal
1999. The Company is also engaged in discussions with certain existing OEM
customers for the addition, in the future, of new products to the Company's
manufacturing arrangements with such customers.
Sales by Concord Camera HK Limited ("Concord HK") for the six months ended
December 31, 1997 and 1996 were approximately $40,501,000 and $22,632,000,
respectively, an increase of approximately $17,869,000 or 79.0%. The increase is
due primarily to the increase in OEM sales. OEM sales for the six months ended
December 31, 1997 and 1996 were approximately $32,055,000 and $14,656,000,
respectively, an increase of approximately $17,399,000 or 118.7%. The increase
was due to increases in traditional and single-use camera revenues by the
Company's new and preexisting OEM customers. The increase in traditional camera
revenues included shipments of a new Advanced Photo System traditional camera to
a previously announced large new OEM customer.
Consolidated sales of the Company's United States, Canadian, and Panamanian
operations, collectively "Concord Americas," for the six months ended December
31, 1997 and 1996 were approximately $6,643,000 and $7,836,000, respectively, a
decrease of approximately $1,193,000 or 15.2%. In addition, certain Concord
Americas customers decreased merchandise purchases on an F.O.B. Hong Kong basis
from Concord HK. During the six months ended December 31, 1997 and 1996 Concord
Americas customers purchased approximately $5,412,000 and $5,844,000,
respectively, from Concord HK, a decrease of approximately $432,000 or 7.4%. If
this decrease were added to the six months ended December 31, 1997 American
sales, sales of traditional cameras to Concord Americas customers would have
decreased by 11.8%. This decrease in sales to Concord Americas resulted from an
aging product line of traditional cameras and intensified competition in the
sale of single-use cameras.
Consolidated sales of Concord Camera GmbH ("Concord Germany"), Concord
Camera Europe (formerly Concord Camera UK Limited) ("Concord UK"), and Concord
Camera France ("Concord France"), collectively "Concord Europe", for the six
months ended December 31, 1997 and 1996, were approximately $3,991,000 and
$4,342,000, respectively, a decrease of approximately $351,000 or 8.1%. In
addition, certain Concord Europe customers increased merchandise purchases on an
F.O.B. Hong Kong basis from Concord
11
<PAGE>
HK. During the six months ended December 31, 1997 and 1996 European
customers purchased approximately $2,537,000 and $1,673,000, respectively, from
Concord HK, an increase of approximately $864,000 or 51.6%. If this increase
were added to the sales for the six months ended December 31, 1997, European
sales to European customers would have decreased by 8.5%.
Gross Profit
Gross profit, expressed as a percentage of sales, decreased to 26.6% for
the six months ended December 31, 1997 from 30% for six months ended December
31, 1996. This decrease was due to increases in license and royalty expenses
attributable to a higher proportion of sales of products for which licensed
technology is used. Product development costs for the six months ended December
31, 1997 and 1996, were approximately $1,713,000 and $1,756,000, respectively, a
decrease of approximately $43,000, or 2.4%. As new products continue to be
introduced and manufacturing volume and efficiencies increase, the Company
expects margins to increase.
Expenses
As a percentage of sales, operating expenses decreased to 20.0% in the six
months ended December 31, 1997 from 26.1% in the six months ended December 31,
1996. Operating expenses consisting of selling, general and administrative and
financial expenses, increased to $10,257,000 in the six months ended December
31, 1997 from $9,103,000 in the six months ended December 31, 1996, an increase
of $1,154,000.
As a percentage of sales, selling expenses decreased to 8.5% in the six
months ended December 31, 1997 from 10.7% in the six months ended December 31,
1996. Selling expenses increased to $4,351,000 in the six months ended December
31, 1997 from $3,738,000 in the six months ended December 31, 1996. The increase
was primarily attributable to the Company's increased sales volume and increases
in freight costs, royalty expenses and promotion allowances net of benefits from
the consolidation of warehouse facilities undertaken by the Company in Fiscal
1996.
As a percentage of sales, general and administrative expenses decreased to
10.0% in the six months ended December 31, 1997 from 13.3% in the six months
ended December 31, 1996. General and Administrative expenses increased to
$5,102,000 in the six months ended December 31, 1996 from $4,626,000 in the six
months ended December 31, 1996. The increase is primarily attributable to
increases in professional fees and expenses related to the new OEM contracts.
As a percentage of sales, financial expenses decreased to 1.6% in the six
months ended December 31, 1997 from 2.1% in the six months ended December 31,
1996. Financial expenses increased to $804,000 in the six months ended December
31, 1996 from $739,000 in the six months ended December 31, 1996. Such increase
was primarily a result of an increase in average debt outstanding during the six
months ended December 31, 1997.
Litigation and settlement costs in the six months ended December 31, 1997
and 1996 were approximately $97,000 and $155,000, respectively, a decrease of
approximately $58,000, or 37.4%. The decrease in litigation and settlement
expenses reflects the disposition of a number of outstanding matters in Fiscal
1996. The Company incurred legal expenses and settlement costs in the six months
ended December 31, 1997 and
12
<PAGE>
1996 in connection with non-operating matters, primarily the demand for
arbitration and other litigation against Jack Benun.
Other (Income), Net
Other income, net includes foreign exchange gains and losses and interest
income net of directors fees and certain public relations costs.
Income Taxes
The Company's provision for income taxes for the six months ended December
31, 1997 is primarily related to the earnings of the Company's Far East and
domestic operations, net of benefits relating to operating loss carryforwards
and overpayments/refunds on the Company's other subsidiaries.
Liquidity and Capital Resources
At December 31, 1997, the Company had working capital of $16,909,000 as
compared to $13,994,000 at June 30, 1997. Cash flow provided by operating
activities for the six months ended December 31, 1997 and 1996 was approximately
$2,052,000 and $3,199,000, respectively. Capital expenditures, excluding assets
financed under capital leases, for the six months ended December 31, 1997 and
1996 were approximately $2,164,000 and $975,000, respectively. The Company's
principal funding requirement has been, and is expected to continue to be, the
financing of accounts receivable and inventory.
The Bank of East Asia, Limited New York ("BOEA NY")
On December 20, 1994, the Company obtained a one-year, $1,500,000 revolving
credit facility with BOEA NY (the "BOEA NY Facility") . On September 20, 1995,
the Company executed an amendment increasing the BOEA NY Facility to $3,000,000.
The BOEA NY Facility has also been extended to February 19, 1998. The BOEA NY
Facility is secured by certain accounts receivable of the Company's Hong Kong
operations and bears interest at 2% above BOEA NY's prime lending rate, which
was 8.5% at December 31, 1997. Availability under the BOEA NY Facility is
subject to advance formulas based on eligible accounts receivable with no
minimum borrowing. At December 31, 1997, approximately $3,000,000 was
outstanding and classified as short-term debt under the BOEA NY Facility.
The CIT Group/Credit Finance, Inc ("CIT")
The Company has a $4,500,000 credit facility with CIT (the "CIT Facility")
which expires on May 31, 1999. The CIT Facility is secured by accounts
receivable, inventory and other related assets of the Company's United States
operations and bears interest at 2% above CIT's prime lending rate, which was
8.5% at December 31, 1997. Availability under the CIT Facility is subject to
advance formulas based on eligible inventory and accounts receivable with
minimum borrowing of $1,500,000. At December 31, 1997, approximately $1,458,000
was outstanding and classified as short-term debt under the CIT Facility.
13
<PAGE>
Bank of East Asia, Limited ("BOEA") -- Hong Kong
Concord HK has a credit facility (the "BOEA HK Facility") with BOEA that
provides Concord HK with up to $6,900,000 of financing as follows: letters of
credit and standby letters of credit up to $2,825,000, overdraft and packing
loans of up to $3,600,000 and an installment loan of $475,000. The installment
loan was utilized in part to repay the outstanding mortgage obligation on the
Hong Kong office property to the Bank of China. As of December 31, 1997,
approximately $4,383,000 was utilized under the BOEA HK Facility. Approximately
$1,655,000 of the total $4,383,000 utilized was in the form of trade finance,
including but not limited to import letters of credit. The BOEA HK Facility,
which is payable on demand, bears interest at 2% above BOEA's prime lending rate
for letters of credit and 2.25% above BOEA's prime lending rate for overdraft
and packing loans. At December 31, 1997 BOEA's prime lending rate was 8.5%. In
connection with the BOEA HK Facility, Concord HK has placed a $1,234,000 time
deposit with BOEA, which is included in prepaid and other current assets at
December 31, 1997 and such deposit is pledged as collateral for the BOEA HK
Facility. In addition, all amounts outstanding under the BOEA HK Facility are
guaranteed by Concord.
Toronto Dominion Bank ("TDB")
On November 25, 1996, the Company obtained a $1,090,000 working capital
facility with TDB (the "TDB Facility") which expires on October 31, 1998. The
TDB Facility is secured by accounts receivable, inventory and other related
assets of the Company's Canadian operations and bears interest at 1% above TDB's
prime lending rate, which was 4.75% at December 31, 1997. Availability under the
TDB Facility is subject to advance formulas based on eligible accounts
receivable and seasonable inventory eligibility with no minimum borrowings. At
December 31, 1997, approximately $840,000 was outstanding and classified as
short-term debt.
Other Arrangements and Future Cash Commitments
Management believes that anticipated cash flow from operations together
with financing from BOEA, CIT and TDB or replacement facilities will be
sufficient to fund its operating cash needs over the next twelve months.
Forward-Looking Statements
The statements contained in this report that are not historical facts are
"forward-looking statements" (as such term is defined in the Private Securities
Litigation Reform Act of 1995) which can be identified by the use of
forward-looking terminology such as; "estimates," "projects," "anticipates,"
"expects," "intends," "believes," or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including those set forth in the Company's Form 10-K Annual Report for
its Fiscal Year ended June 30, 1997. Management wishes to caution the reader
that these forward-looking statements, such as statements regarding development
of the Company's business, the Company's anticipated capital expenditures and
other statements contained in this report regarding matters that are not
historical facts are only estimates or predictions. No assurance can
14
<PAGE>
be given that future results will be achieved; actual events or results
may differ materially as a result of risks facing the Company or actual results
differing from the assumptions underlying such statements. In particular,
expected revenues could be adversely affected by production difficulties or
economic conditions adversely affecting the market for the Company's products.
To obtain the results expected from the introduction of the Company's new
products will require timely completion of development, successful ramp-up of
full-scale production on a timely basis and customer and consumer acceptance of
those products. In addition, the OEM agreements require an ability to meet high
quality and performance standards, successful implementation of production at
greatly increased volumes and an ability to sustain production at greatly
increased volumes as to all of which there can be no assurance. There also can
be no assurance that products under development will be successfully developed
or that once developed such products will be commercially successful.
15
<PAGE>
PART 2. OTHER INFORMATION
Item 1.
On December 30, 1997, the Company commenced in the Untied States District
Court of the Southern District of New York (the "Court") an action against Fuji
Photo Film Co., Ltd. ("Fuji") seeking to enforce the terms of a Settlement
Agreement between the Company and Fuji (the "Settlement Agreement") and restrain
Fuji from terminating the Settlement Agreement. Under the terms of the
Settlement Agreement, the Company has to use certain Fuji technology in
connection with the manufacture and sale of single-use cameras. On January [9],
1998, the Court granted the Company's request for an order restraining Fuji from
terminating the Settlement Agreement. Pending a final judicial determination of
the dispute, the restraining order will continue in effect as long as the
Company refrains from making any further shipments pursuant to the purchase
order which gave rise to the dispute. been granted a worldwide (subject to
certain geographic limitations), non-exclusive license to use certain Fuji
technology in connection with the manufacture and sale of single-use cameras. On
January [9], 1998, the Court granted the Company's request for an order
restraining Fuji from terminating the Settlement Agreement. Pending a final
judicial determination of the dispute, the restraining order will continue in
effect as long as the Company refrains from making any further shipments
pursuant to the purchase order which gave rise to the dispute.
Item 6.
a. Exhibits
Exhibit No. Exhibit
27 Financial Data Schedule
3 (11) By-laws
b. Reports on Form 8-K
None
16
<PAGE>
S I G N A T U R E
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.
CONCORD CAMERA CORP.
(Registrant)
BY: /s/ Harlan I. Press
(Signature)
Harlan I. Press
Corporate Controller and Assistant Secretary
DULY AUTHORIZED AND PRINCIPAL ACCOUNTING
OFFICER
DATE: February 12, 1998
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Concord
Camera Corp.'s Consolidated financial statements as of December 31, 1997 and the
results of operations for the six months ended December 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1998
<CASH> $4,042,981
<SECURITIES> 0
<RECEIVABLES> 19,021,571
<ALLOWANCES> 692,895
<INVENTORY> 20,995,369
<CURRENT-ASSETS> 47,806,949
<PP&E> 28,809,525
<DEPRECIATION> (14,036,933)
<TOTAL-ASSETS> 67,156,629
<CURRENT-LIABILITIES> 30,897,781
<BONDS> 378,593
0
0
<COMMON> 39,361,893
<OTHER-SE> (6,824,023)
<TOTAL-LIABILITY-AND-EQUITY> 67,156,629
<SALES> 51,135,413
<TOTAL-REVENUES> 51,135,413
<CGS> 37,529,015
<TOTAL-COSTS> 10,354,521
<OTHER-EXPENSES> (122,892)
<LOSS-PROVISION> 35,109
<INTEREST-EXPENSE> 645,543
<INCOME-PRETAX> 3,374,769
<INCOME-TAX> 266,548
<INCOME-CONTINUING> 3,108,221
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,108,221
<EPS-PRIMARY> $0.29
<EPS-DILUTED> $0.27
</TABLE>
Restated to 7/1/93
BY-LAWS
OF
CONCORD CAMERA CORP.
ARTICLE I
OFFICES
Section 1. Principal Office
The registered office of the Corporation shall be at 28 West State Street,
Trenton, New Jersey 08608. The registered agent at said office is the
Corporation Trust Company.
Section 2. Additional Offices
The Corporation may also have offices and places of business at such other
places, within or without the State of New Jersey, as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place
The annual meeting of the shareholders of the Corporation and all special
meetings of shareholders may be held at such place within or without the State
of New Jersey as shall be fixed from time to time by resolution of the Board of
Directors.
Section 2. Annual Meeting
The annual meeting of shareholders shall be held on such a date as the
Board of Directors may from time to time fix by resolution, and the shareholders
shall then elect a Board of Directors and transact such other business as may
properly be brought before the meeting.
1
<PAGE>
Section 3. Notice of Annual Meeting
Written notice of the place, date and hour of the annual meeting of
shareholders shall be given, as provided in Article V of these By-Laws, to each
shareholder of record entitled to vote thereat, not less than 10 nor more than
60 days prior to the meeting. Subject to the provisions of Section 6 of this
Article II, when a meeting is adjourned to another time or place, it shall not
be necessary to give notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and, at the adjourned meeting, only such business is
transacted as might have been transacted at the original meeting. However, if
after the adjournment the Board of Directors fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record on the new record date entitled to notice.
Section 4. Special Meetings
Special meetings of the shareholders, for any purpose or purposes, unless
otherwise prescribed by law or by the Certificate of Incorporation, may be
called by the President or by action of the Board of Directors, and shall be
called by the President on the written request of the holders of 10% of all the
shares written to vote at such meeting. Such request shall state the purpose or
purposes of the proposed meeting.
Section 5. Notice of Special Meeting
Written notice of any special meeting of shareholders stating the place,
date and hour of the meeting, and the purpose or purposes for which the meeting
is called, shall be given, as provided in Article V of these By-Laws, to each
shareholder of record entitled to vote thereat, not less than 10 nor more than
60 days prior to the meeting. Subject to the provisions of Section 7 of this
Article II, when a meeting is adjourned to another time or place, it shall not
be necessary to give notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and, at the adjourned meeting, only such business is
transacted as might have been transacted at the original meeting. However, if
after the adjournment the Board of Directors fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record on the new record date entitled to notice.
Section 6. List of Shareholders Entitled to Vote at Meetings
The Secretary of the Corporation shall make and certify a complete list of
shareholders entitled to vote at any shareholders' meeting or any adjournment
thereof. Such a list (which may consist of cards arranged alphabetically) shall
be arranged alphabetically within each class, series, or group of shareholders
maintained by the Corporation for convenience of reference,
2
<PAGE>
and shall include the address of, and the number of shares held by, each
shareholder. Such list shall be produced at the time and place of each
shareholders' meeting, and shall be subject to the inspection of any shareholder
during the whole time of the meeting. If the requirements of this Section 6 have
not been complied with, the meeting shall, upon the demand of any shareholder in
person or by proxy, be adjourned until such requirements are complied with,
however, failure to comply therewith shall not affect the validity of any action
taken at such meeting prior to the making of any such demand.
Section 7. Quorum, Adjourned Meetings
Except as otherwise provided by law or in the Certificate of Incorporation,
the holders of shares entitled to cast a majority of the votes at a meeting of
shareholders shall constitute a quorum for the transaction of business at any
such meeting.
If a quorum shall not be present at any meeting of the shareholders, the
shareholders entitled to vote thereat present in person or represented by proxy
shall have power to adjourn the meeting from time to time until a quorum shall
be present. At least two days prior to the adjourned meeting, notice thereof
shall be given, as provided in Article V of these By-Laws, to each shareholder
entitled to vote thereat who was not present in person at the meeting at the
time originally called and, unless announced at the meeting, to the other
shareholders. At any such adjourned meeting at which a quorum may be present,
any business may be transacted which might have been transacted at the meeting
as originally called.
The shareholders present in person or by proxy at a duly organized meeting
may continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum.
Section 8. Voting
(a) At any meeting of the shareholders, every shareholder having the right
to vote shall be entitled to vote in person or by proxy, and each share shall be
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders.
(b) Except as otherwise provided by law or the Certificate of
Incorporation, all elections of Directors shall be decided by a plurality of the
votes cast by the holders of shares entitled to vote thereon, and all other
matters shall be decided by a majority of the votes cast by the holders of
shares entitled to vote thereon.
(c) At each meeting of the shareholders, the polls shall be opened and
closed, the proxies and ballots shall be received and be taken in charge, and
all questions touching the number of shares outstanding and the voting power of
each, the shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, the qualification of voters, and the
3
<PAGE>
acceptance or rejection of votes may be decided by one or more inspectors.
Such inspectors may be appointed by the Board of Directors in advance of the
shareholders' meeting or, if not so appointed, the chairman of the meeting may,
and on the request of any shareholder entitled to vote thereat shall, appoint
one or more such inspectors. If, for any reason, any of the inspectors appointed
shall fail to appear or act, inspectors in place of any so failing to attend or
refusing or unable to serve shall be appointed in like manner. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The Board may also
appoint one or more inspectors in advance of the tabulation of written consents
of shareholders without a meeting, to tabulate such consents and make a written
report thereof. The duties of such inspectors shall be the same as or equivalent
to those of inspectors appointed to act at a meeting. On request of the chairman
of the meeting or any shareholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by
them, and execute a certificate of any fact found by them. The requirement of
inspectors at any shareholders' meeting shall be deemed to have been waived
unless compliance therewith is requested by a shareholder present in person or
by proxy and entitled to vote at such meeting.
Section 9. Proxies
Every shareholder entitled to vote at a meeting of shareholders or to
express consent without a meeting may authorize another person or persons to act
for him by proxy. Every proxy shall be executed in writing by the shareholder or
his agent, except that a proxy may be given by a shareholder or his agent by
telegram or cable or the equivalent thereof. No proxy shall be valid for more
than 11 months from the date thereof, unless a longer time is expressly provided
therein, but in no event shall a proxy be valid after three years from the date
of execution. Unless the proxy states that it is irrevocable and it is coupled
with an interest or an irrevocable proxy is otherwise permitted by law, every
proxy shall be revocable at the will of the shareholder executing it. A proxy
shall not be revoked by the death or incapacity of a shareholder but such proxy
shall continue in force until revoked by the personal representative or guardian
of the shareholder. The presence at any meeting of any shareholder who has given
a proxy shall not revoke such proxy until the shareholder shall file written
notice of such revocation with the secretary of the meeting prior to the voting
of such proxy.
A person named in a proxy as the attorney or agent of a shareholder may, if
the proxy so provides, substitute another person to act in his place, including
any other person named as an attorney or agent in the same proxy. The
substitution shall not be effective until an instrument effecting it is filed
with the Secretary of the Corporation.
4
<PAGE>
Section 10. Consents
(a) The annual election of Directors of the Corporation may be accomplished
without a meeting if all the shareholders of the Corporation entitled to vote
thereon consent to said election in writing.
(b) Any action required or permitted to be taken at a meeting of
shareholders by law, the Certificate of Incorporation or these By-Laws with
respect to any proposal for (i) a merger or consolidation of the Corporation
with one or more other corporations, (ii) an acquisition by the Corporation of
all the capital shares of another corporation, or (iii) a sale or other
disposition of all or substantially all of the Corporation's assets other than
in the usual and regular course of its business, may be taken without a meeting,
if (1) all the shareholders of the Corporation consent thereto in writing or (2)
all the shareholders of the Corporation entitled to vote thereon consent thereto
in writing and, unless otherwise permitted by law, the Corporation provides to
all other shareholders of the Corporation notification of the action consented
to, the proposed effective date of such action, and any conditions precedent to
such action. Such notification shall be given at least 20 days in advance of the
proposed effective date of such action. Any shareholder who by law or the
Certificate of Incorporation has a right to dissent from such action shall in
such notice also be informed that he has the right to dissent and to be paid the
fair value of his shares, provided that he files with the Corporation a written
notice of dissent as required by S 14A:11-2(l) of the New Jersey Business
Corporation Act within 20 days from the date of the giving of the notice, or
such greater period of time as may be granted by the Corporation, and outlining
briefly, with particular reference to the time periods within which such actions
must be taken, the procedures set forth in Chapter 11 of the New Jersey Business
Corporation Act with which he must comply in order to assert and enforce such
right.
(c) Except as otherwise provided above in Subsections (a) and (b) of this
Section 10, or by law or the Certificate of Incorporation, any action required
or permitted by law, the Certificate of Incorporation or these By-Laws to be
taken at a meeting of shareholders, may be taken without a meeting upon the
written consent of shareholders who would be entitled to cast the minimum number
of votes which would be necessary to authorize such action at a meeting at which
all shareholders entitled to vote thereon were present and voting.
(d) (1) If any shareholder shall have the right to dissent, pursuant to
Chapter 11 of the New Jersey Business Corporation Act, from any action proposed
to be taken by written consent in lieu of meeting, the Board of Directors shall,
and in any other case may, fix a date on which the written consents are to be
tabulated; if no date is fixed, such consents may be tabulated as they are
received. No written consent shall be counted which is received more than 60
days after the date of the action of the Board of Directors authorizing the
solicitation of written consents or, in a case in which written consents, or
proxies for such consents, are solicited from all shareholders
5
<PAGE>
who would have been entitled to vote at a meeting called to take such
action, more than 60 days after the date of mailing of such solicitation.
(2) Except as may otherwise be permitted by law, the Corporation, upon
receipt and tabulation of the requisite number of written consents, shall
promptly notify all nonconsenting shareholders, who would have been entitled to
notice of a meeting to vote upon such action, of the action consented to, the
proposed effective date of such action, and any conditions precedent to such
action. Such notification shall be given at least 10 days in advance of the
proposed effective date of such action.
(3) Except as otherwise provided by law, any written consent may be revoked
at any time prior to the day on which the proposed action could be taken upon
compliance with paragraph (2) of this Subsection (d). No revocation shall be
effective unless in writing and until received by the Corporation at the place
fixed for receipt of consents or, if none, at the main business office or
headquarters of the Corporation.
(e) Whenever action is taken by written consent in lieu of meeting pursuant
to his Section 10, the written consents of the shareholders consenting thereto
or the written reports of inspectors appointed to tabulate such consents shall
be filed with the minutes of proceedings of shareholders.
ARTICLE III
DIRECTORS
Section 1. Number; Term
The number of Directors constituting the entire Board of Directors shall be
eight (8), or such greater number as may be fixed from time to time by the Board
of Directors. Directors shall be elected at the annual meeting of the
shareholders, except as provided in Section 3 of this Article III, and each
Director shall be elected to serve until the earliest to occur of his
resignation or removal or when his successor shall have been elected and has
qualified.
Section 2. Resignation; Removal
Any Director may resign at any time by giving written notice to the
Corporation, and such resignation shall be effective upon receipt thereof by the
Corporation or at such subsequent time as may be specified in the notice of
resignation. One or more of the Directors may be removed for cause by the
shareholders by the affirmative vote of the majority of the votes cast by the
holders of shares entitled to vote for the election of Directors. If the
Certificate of Incorporation of the Corporation so provides, one or more of the
Directors may be removed without cause by like vote
6
<PAGE>
of the shareholders. If the Certificate of Incorporation of the
Corporation, of a by-law adopted by the shareholders, so provides, the Board of
Directors shall have the power to remove one or more Directors for cause and to
suspend one or more Directors pending a final determination that cause exists
for removal.
Section 3. Vacancies
Any directorship not filled at the annual meeting, and any vacancy, however
caused, occurring in the Board may be filled by the affirmative vote of a
majority of the remaining Directors, even though less than a quorum of the
Board, or by a sole remaining Director, and each Director so chosen shall hold
office until the next annual meeting of the shareholders and until his successor
shall have been elected and qualified.
Any directorship to be filled by reason of an increase in the number of
Directors shall be filled either by the affirmative vote of a majority of the
Directors or by election at an annual or at a special meeting of the
shareholders called for that purpose, and each Director so chosen shall hold
office until the next annual meeting of the shareholders and until his successor
shall have been elected and qualified.
When one or more Directors shall resign from the Board of Directors
effective at a future date, a majority of the Directors then in office,
including those who have so resigned, shall have the power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each Director so chosen shall hold
office until the next annual meeting of the shareholders and until his successor
shall have been elected and qualified.
If for any reason the Corporation has no Directors in office, any
shareholder or the executor or administrator of a deceased shareholder may call
a special meeting of shareholders for the election of Directors, and, over his
own signature shall give notice of said meeting in accordance with these By-Laws
and the laws of the State of New Jersey.
Section 4. Executive Committee and Other Committees
(a) The Board of Directors, by resolution adopted by a majority of the
entire Board, may appoint from among its members an executive committee and one
or more other committees, each consisting of one or more Directors, and each of
which, to the extent provided in said resolution, the Certificate of
Incorporation or these By-Laws, and except as limited by law or the Certificates
of Incorporation of the Corporation, shall have and may exercise all the
authority of the Board of Directors, except that no such committee shall (i)
make, alter, or repeal any by-law of the corporation; (ii) elect or appoint any
director, or remove any officer or director; (iii) submit to shareholders any
action that requires shareholders' approval; or (iv) amend or repeal any
resolution
7
<PAGE>
theretofore adopted by the Board of Directors which by its terms is
amendable or repealable only by the Board.
(b) The Board of Directors by resolution adopted by a majority of the
entire Board, may (i) fill any vacancy in any such committee; (ii) appoint one
or more Directors as alternate members of any such committee, to act in the
absence or disability of members of any such committee with all the powers of
such absent or disabled members; (iii) abolish any such committee at its
pleasure and (iv) remove any Director from membership or such committee at any
time, with or without cause. Each of such committees shall keep regular minutes
of its proceedings and shall report thereon to the Board of Directors at its
next meeting following such committee meeting; except that, when the meeting of
the Board is held within two days after the committee meeting, such report may
be made at the second meeting of the Board following such committee meeting.
ARTICLE IV
MEETINGS OF THE BOARD
Section 1. Place
The Board of Directors of the Corporation may hold meetings, both regular
and special, either within or without the State of New Jersey.
Section 2. Regular Meetings
Regular meetings of the Board of Directors may be held without notice at
such time and at such place as shall from time to time be prescribed by these
By-Laws.
Section 3. Special Meetings
Special meetings of the Board of Directors may be called by the Chairman of
the Board, if any, or by the President, on five days' notice to each Director as
provided in Article V of these By-Laws; special meetings shall be called by the
Chairman of the Board, President or Secretary in like manner and on like notice
on the written request of two Directors.
Section 4. Quorum
Except as provided in Section 3 of Article III of these By-Laws, (i) at all
meetings of the Board of Directors a majority of the entire Board of Directors
shall be necessary to constitute a quorum for the transaction of business, and
(ii) at all meetings of any committee, a majority of the members thereof shall
be necessary to constitute a quorum for the transaction of business. Except as
may be otherwise specifically provided by law or by the Certificate of
Incorporation, the act of the majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors or any
committee thereof. If a quorum shall not be present at any meeting of the
8
<PAGE>
Board of Directors, a majority of the Directors present thereat may adjourn
the meeting from time to time until a quorum shall be present. Notice of any
such adjournment need not be given if the time and place are fixed at the
meeting at which the adjournment is taken and if the period of adjournment does
not exceed 10 days in any one adjournment; in the event that notice is given, it
shall be given to each Director as provided in Article V of these By-Laws.
Section 5. Action in Lieu of Meeting
Any action required or permitted to be taken pursuant to authorization
voted at a meeting of the Board of Directors or any committee thereof may be
taken without a meeting if, prior or subsequent to such action, all members of
the Board of Directors or the committee, as the case may be, consent thereto in
writing and such written consents are filed with the minutes of the proceedings
of the Board of Directors or committee. Section 6. Compensation
Directors who are not officers or employees of the Corporation shall,
effective and beginning July 1, 1989, receive a salary of $9,000 per annum for
their services to the Board and on any committee thereof. By resolution of the
Board of Directors, a fixed fee and expense of attendance, if any, may also be
allowed any Director for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 7. Participation at Meetings by Means of Communications Equipment
Unless otherwise provided in the Certificate of Incorporation or these
By-Laws, one or more members of the Board of Directors may participate in a
meeting of the Board of Directors or any committee thereof by means of a
conference telephone or any means of communication by which all persons
participating in the meeting are able to hear each other.
ARTICLE V
NOTICES
Section 1. Form; Delivery
Whenever under the provisions of any applicable law, the Certificate of
Incorporation or these By-Laws, notice is required to be given to any director
or shareholder, such notice shall be prepared in writing and personally
delivered or mailed, postage prepaid, to such director of shareholder at his
address as it appears on the records of the Corporation, and shall be deemed
given when personally delivered or deposited in the United States mail, as the
case may be; provided, that
9
<PAGE>
such notice may also be given by telegram and in such case shall be deemed
given when ordered or, if a delayed delivery is ordered, as of such delayed
delivery time.
Section 2. Waiver of Notice or of Lapse of Time
Whenever a notice is required to be given by law, the Certificate of
Incorporation or these By-Laws, such notice need not be given to any shareholder
who signs a waiver of such notice, in person or by proxy, whether before or
after the meeting. In addition, any shareholder attending a meeting of
shareholders in person or by proxy without protesting prior to the conclusion of
the meeting the lack of notice thereof to him, and any Director attending a
meeting of the Boards of Directors without protesting such lack of notice prior
to the conclusion of the meeting, shall be conclusively seemed to have waived
notice of such meeting.
Whenever the shareholders of the Corporation are authorized to take any
action after the lapse of a prescribed period of time, the action may be taken
without such lapse if such requirement is waived in writing, in person or by
proxy, before or after the taking of such action, by every shareholder entitled
to vote thereon as at the date of the taking of such action.
ARTICLE VI
OFFICERS
Section 1. Officers
The officers of the Corporation shall be a President and Chief Operating
Officer, President-United States Operations, one or more Vice-Presidents, a
Secretary, one or more Assistant Secretaries, a Treasurer, one or more Assistant
Treasurers, and such other officers, including a Chairman of the Board and Chief
Executive Officer, as may be prescribed by these By-Laws. Any two or more
offices may be held by the same person, but no officer shall execute,
acknowledge, or verify any instrument in more than one capacity if such
instrument is required by law or by these By- Laws to be executed, acknowledged,
or verified by two or more officers. No officer except the Chairman of the Board
need be a member of the Board of Directors.
Section 2. Authority and Duties
All officers, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may be
provided in these By- Laws, or, to the extent not so provided, by resolution of
the Board of Directors not inconsistent with these By-Laws, or, as to all other
officers except the Chairman of the Board, by the President.
10
<PAGE>
Section 3. Term of Office; Removal
All officers shall be elected by the Board of Directors and shall hold
office for such time as may be prescribed by the Board. Any officer or agent
elected or appointed by the Board may be removed with or without cause at any
time by the Board. The removal of an officer without cause shall be without
prejudice to his contractual rights, if any. The election or appointment of an
officer shall not of itself create any contractual rights.
Section 4. Compensation
The compensation of all officers of the Corporation shall be fixed by the
Board of Directors, and the compensation of agents shall either be so fixed or
shall be fixed by officers thereunto duly authorized.
Section 5. Vacancies
If an office becomes vacant for any reason, the Board of Directors may fill
the vacancy, and any officer so appointed or elected by the Board shall serve
only until the expiration of the term of his predecessor unless reelected by the
Board of Directors.
Section 6. The Chairman of the Board and Chief Executive Officer
The Chairman of the Board of Directors and Chief Executive Officer, if
there be any, shall preside at all meetings of the shareholders and Board of
Directors at which he is present, and shall have overall planning and policy
making powers and duties with respect to the Corporation and such other duties
as may from time to time be assigned by the Board of Directors. He shall possess
the same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors, except where, by law, the signature of the President is required.
During the absence or disability of the President, the Chairman of the Board and
Chief Executive Officer shall exercise all the powers and discharge all the
duties of the President.
Section 7. The President and Chief Operating Officer
The President and Chief Operating Officer shall have general and active
management and control of the day-to-day business and affairs of the
Corporation, subject to the control of the Board of Directors, and shall see
that all orders and resolutions of the Board and of the Chairman and Chief
Executive Officer are carried into effect; in the absence of the Chairman of the
Board, or if there be no Chairman, he shall preside at all meetings of the
shareholders or Board of Directors at which he is present, and shall have such
other powers and duties as may from time to time be assigned by the Board of
Directors.
11
<PAGE>
Section 8. The President-United States Operations
The President-United States Operations shall have primary responsibility
for the North American affairs of the Corporation subject to the control of the
Board of Directors, the President and the Chairman of the Board and, in the
absence or disability of the President, perform the duties and exercise the
powers of the President and shall generally assist the President and perform
such other duties as the Board of Directors shall prescribe. Section 9. The
Vice-President
The Vice-President or, if there be more than one, the Vice-Presidents in
the order or priority determined by the Board of Directors, shall, in the
absence or disability of the President and the President-United States
Operations, perform the duties and exercise the powers of the President and the
President-United States Operations, and shall generally assist the President and
the President-United States Operations and perform such other duties as the
Board of Directors shall prescribe. Section 10. The Secretary
The Secretary shall record, or cause to be recorded, all votes at meetings
of the Board of Directors or for the shareholders, and shall keep or cause to be
kept minutes of all corporate proceedings, and shall perform like duties for the
standing committees when required. He shall give, or cause to be given, notice
of all meetings of the shareholder, and special meetings of the Board, and shall
perform such other duties as may be prescribed by the Board of Directors or the
President. He shall keep in safe custody the seal of the Corporation and, when
authorized by the Board, affix the same to any instrument requiring it and, when
so affixed, it shall, if required, be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary or Assistant Treasurer. He
shall keep in safe custody the certificate books and shareholder records and
such other books and records as the Board may direct and shall perform all other
duties incident to the office of the Secretary.
Section 11. The Assistant Secretary
During the absence or disability of the Secretary, the Assistant Secretary,
or, if there be more than one, the one so designated by the Secretary or by the
Board of Directors, shall have all the powers and functions of the Secretary.
Section 12. The Treasurer
The Treasurer shall have the care and custody of the corporate funds and
other valuable effects, including securities, shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated
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by the Board of Directors. The Treasurer shall 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
meeting of the Board, or whenever they may require it, an accounting of all his
transactions as Treasurer and of the financial condition of the Corporation.
Section 13. The Assistant Treasurer
During the absence or disability of the Treasurer, the Assistant Treasurer,
or, if there be more than one, the one so designated by the Treasurer or by the
Board of Directors, shall have all the powers and functions of the Treasurer.
Section 14. Bonds
If the Board of Directors shall so require, any officer or agent of the
Corporation shall give the Corporation a bond for such term, in such sum and
with such surety or sureties as shall be satisfactory to the Board, for the
faithful performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
ARTICLE VII
SHARE CERTIFICATES
Section 1. Form; Signature
The certificate for shares of the Corporation shall be in such form as
shall be determined by the Board of Directors and shall be numbered
consecutively and entered in the books of the Corporation as they are issued.
Each certificate shall state: (i) that the Corporation has been organized under
the laws of the State of New Jersey, and (ii) the registered holder's name and
the number and class of shares, and the designation of the series, if any, which
such certificate represents, and shall be signed by the chairman or
Vice-Chairman of the Board, or the President or a Vice-President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary,
and may bear the seal of the Corporation or a facsimile thereof. Where any such
certificate is countersigned by a transfer agent or registrar, who is not an
officer or employee of the Corporation, any and all other signatures may be
facsimiles. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon any such certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may nevertheless be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of its
issue.
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Section 2. Lost Certificates
The Board of Directors may direct that a new share certificate or
certificates be issued in place of any certificate or certificates theretofore
issued by the Corporation alleged to have been lost or destroyed, upon the
furnishing to the Corporation of an affidavit to that effect by the person
claiming the certificate has been lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or his legal representative, to give the
Corporation and its transfer agent(s) and registrar(s) a bond in such sum as it
may direct (including a bond without limit as to amount) as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
Section 3. Registration of Transfer
Upon surrender to the Corporation or any transfer agent of the Corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation or such transfer agent to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon its
books.
Section 4. Registered Shareholders
Except as otherwise provided by law, the Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends or other distributions and to vote as such owner,
and the Corporation shall be entitled to hold liable for calls and assessments a
person registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or legal claim to or interest in such share or shares on
the part of any other person, whether or not it has actual or other notice
thereof.
Section 5. Record Date
For the purpose of determining the shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or to give a
written consent to or dissent from any proposals without a meeting, or for the
purpose of determining shareholders entitled to receive payment of any dividend
or the allotment of any rights, or for the purpose of any other action affecting
the interest of shareholders, the Board of Directors may fix, in advance, a
record date. Such date shall not be more than 60 days prior to the shareholders'
meeting or other corporate action or event to which it relates. The record date
for a shareholders' meeting may not be less than 10 days before the date of the
meeting. The record date to determine shareholders entitled to give a written
consent may not be more than 60 days before the date fixed for the tabulation of
the consents or, if
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no date has been fixed for tabulation, more than 60 days before the last
day on which consents received may be counted.
If no record date is fixed: (a) the record date for a shareholders' meeting
shall be the close of business on the day next preceding the day on which notice
is given or, if no notice is given, the day next preceding the day on which the
meeting is held; and (b) the record date for determining shareholders for any
other purpose shall be at the close of business on the day on which the
resolution of the Board of Directors relating thereto is adopted.
Except as otherwise provided by law, only such persons as shall be
shareholders of record on the date so fixed shall be entitled to notice of, and
to vote at, such meeting and any adjournment thereof, or to give such written
consent, or to receive payment of such dividend or such allotment of rights, or
otherwise to be recognized as shareholders for the related purpose,
notwithstanding any registration of transfer of shares on the books of the
Corporation after any such record date so fixed.
When a determination of shareholders of record for a shareholders' meeting
has been made, such determination shall apply to any adjournment thereof, unless
the Board of Directors fixes a new record date for the adjourned meeting in
accordance with these By-Laws.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Fiscal Year
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
Section 2. Dividends
Subject to the provisions of the Certificate of Incorporation and the laws
of the State of New Jersey, dividends on the outstanding shares of the
Corporation may be declared by the Board of Directors at any regular or special
meeting and may be paid in cash, in its bonds or other property or in shares of
the capital stock of the Corporation.
Section 3. Reserves
Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Board of
Directors may from time to time, in their absolute discretion, deem proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation.
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Section 3 of ARTICLE VI
of the By-Laws of the Corporation is hereby amended to read as follows:
The chairman of the board of directors, the chief executive officer and all
other officers of the Corporation who report directly to the chief executive
officer of the Corporation shall be elected by the board of directors and shall
hold office for such time as may be prescribed by the board of directors. All
other officers shall be appointed by the chief executive officer of the
Corporation and shall hold office for such time as may be prescribed by the
chief executive officer. Any officer, however elected or appointed, may be
removed with or without cause at any time by the board of directors. Any officer
appointed by the chief executive officer may be removed with or without cause at
any time by the chief executive officer. The removal of an officer without cause
shall be without prejudice to his contractual rights, if any. The election or
appointment of an officer shall not in and of itself create any contractual
rights.
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