<PAGE>
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 DECEMBER 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___TO___
COMMISSION FILE NUMBER 0-20774
ACE CASH EXPRESS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2142963
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1231 GREENWAY DRIVE, SUITE 800
IRVING, TEXAS 75038
(Address of principal executive offices)
(972) 550-5000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since last
report)
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.
Class Outstanding as of January 30, 1998
----- ----------------------------------
Common Stock 9,772,208 shares
<PAGE>
ACE CASH EXPRESS, INC.
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
<S> <C>
Item 1. Interim Consolidated Financial Statements:
Consolidated Balance Sheets as of
December 31, 1997, and June 30, 1997 3
Interim Unaudited Consolidated Statements of Earnings for the
Three and Six Months Ended December 31, 1997 and 1996 4
Interim Unaudited Consolidated Statements of Cash Flows
for the Six Months Ended December 31, 1997 and 1996 5
Notes to Interim Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
-----------------------------
1997 1997
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 65,555 $ 55,494
Accounts and notes receivable, net 7,772 7,459
Prepaid expenses 529 573
Inventories 1,889 2,052
Property and equipment, net 24,861 23,920
Covenants not to compete, net 2,486 2,775
Excess of purchase price over fair value of assets acquired,
net 28,807 28,469
Other assets 3,617 3,608
------------ ------------
$ 135,516 $ 124,350
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Money order principal payable $ 25,700 $ 41,281
Revolving advances from money order supplier 36,545 7,166
Accounts payable and accrued liabilities 7,898 11,031
Notes payable 218 637
Senior secured notes payable 20,251 20,231
Term advances from money order supplier 7,330 8,209
Other liabilities 4,582 4,739
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1 par value, 1,000,000 shares authorized,
none issued and outstanding - -
Common stock, $.01 par value, 20,000,000 shares authorized,
9,770,733 and 9,668,612 shares issued and outstanding,
respectively 98 96
Additional paid-in capital 19,630 19,130
Retained earnings 13,264 11,830
------------ ------------
Total shareholders' equity 32,992 31,056
------------ ------------
$ 135,516 $ 124,350
============ ============
</TABLE>
See notes to the interim consolidated financial statements.
3
<PAGE>
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues $ 23,125 $ 20,097 $ 44,819 $ 39,118
Store expenses:
Salaries and benefits 6,710 6,054 12,877 11,809
Occupancy 3,766 3,407 7,487 6,695
Depreciation 986 811 1,947 1,583
Other 5,083 4,159 9,781 8,351
-------- -------- -------- --------
Total store expenses 16,545 14,431 32,092 28,438
-------- -------- -------- --------
Store gross margin 6,580 5,666 12,727 10,680
Region expenses 1,907 1,795 3,947 3,559
Headquarters expenses 1,545 1,408 3,040 2,635
Franchise expenses 231 288 443 526
Other depreciation and amortization 830 730 1,692 1,386
Interest expense, net 668 564 1,165 1,113
Other expenses 18 27 50 42
-------- -------- -------- --------
Income before income taxes 1,381 854 2,390 1,419
Income taxes 557 335 956 556
-------- -------- -------- --------
Net income $ 824 $ 519 $ 1,434 $ 863
======== ======== ======== ========
Basic earnings per share $ 0.08 $ 0.05 $ 0.15 $ 0.09
======== ======== ======== ========
Weighted average number of common shares
outstanding - basic EPS 9,742 9,527 9,714 9,511
======== ======== ======== ========
Diluted earnings per share $ 0.08 $ 0.05 $ 0.14 $ 0.09
======== ======== ======== ========
Weighted average number of common and common
equivalent shares outstanding - diluted EPS 10,146 9,750 10,080 9,708
======== ======== ======== ========
</TABLE>
See notes to the interim consolidated financial statements.
4
<PAGE>
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
------------------------
1997 1996
---------- ----------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,434 $ 863
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 3,639 2,255
Recognition of deferred revenue (640) (702)
Changes in assets and liabilities:
Accounts and notes receivable, net (313) (764)
Prepaid expenses 44 (162)
Inventories 163 740
Other assets (9) (793)
Accounts payable and other liabilities (2,630) (576)
---------- ----------
Net cash provided by operating activities 1,688 861
Cash flows from investing activities:
Purchases of property and equipment, net (2,650) (2,186)
Cost of net assets acquired (1,979) (5,624)
---------- ----------
Net cash used by investing activities (4,629) (7,810)
Cash flows from financing activities:
Net borrowings from (payments to) money order supplier 13,798 (9,777)
Net borrowings of senior secured notes payable - 20,135
Term advances from money order supplier - 8,335
Payments of term advances from money order supplier (879) (19,447)
Net decrease in notes payable (419) (939)
Proceeds from stock options exercised 502 350
---------- ----------
Net cash provided (used) by financing activities 13,002 (1,343)
---------- ----------
Net increase (decrease) in cash and cash equivalents 10,061 (8,292)
Cash and cash equivalents, beginning of period 55,494 56,603
---------- ----------
Cash and cash equivalents, end of period $ 65,555 $ 48,311
========== ==========
Supplemental disclosures of cash flows information:
Interest paid $ 1,308 $ 1,004
Income taxes paid 915 1,811
</TABLE>
See notes to the interim consolidated financial statements.
5
<PAGE>
ACE CASH EXPRESS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying condensed unaudited interim consolidated financial
statements of Ace Cash Express, Inc. (the "Company" or "ACE") and its
subsidiaries have been prepared in accordance with generally accepted accounting
principles for interim financial information and the rules and regulations of
the Securities and Exchange Commission. They do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. Although management believes that the disclosure is
adequate to prevent the information from being misleading, the interim
consolidated financial statements should be read in conjunction with the
Company's audited financial statements in its Annual Report on Form 10-K filed
with the Securities and Exchange Commission. In the opinion of Company
management, all adjustments, consisting of normal recurring accruals,
considered necessary for a fair presentation have been included.
Certain prior period accounts have been reclassified to conform to the
current year's presentation.
EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS No.
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 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 requirements of SFAS No. 128.
STOCK SPLIT
On November 14, 1997, the Board of Directors of the Company authorized a
stock dividend in the form of a three-for-two stock split. The split was
effected by distributing one additional share of common stock of the Company for
every two shares of common stock outstanding. The record date for determining
holders entitled to receive the stock dividend was November 30, 1997, with a
delivery date on or about December 15, 1997. Cash was paid in lieu of
fractional shares. For financial presentation purposes, all share and per share
amounts have been restated herein as if the split were effective July 1, 1996.
6
<PAGE>
SUPPLEMENTAL STATISTICAL DATA - COMPANY OWNED STORES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31, YEAR ENDED JUNE 30,
--------------- --------------- ---------------------------
1997 1996 1997 1996 1997 1996 1995
------ ------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STORE OPERATING DATA:
Beginning of period 623 576 617 544 544 452 343
Acquired - 11 7 34 46 69 77
Opened 22 14 27 25 45 33 40
Closed (1) (9) (7) (11) (18) (10) (8)
------ ------ ------ ------ ------- ------- -------
End of period 644 592 644 592 617 544 452
====== ====== ====== ====== ======= ======= =======
Percentage increase in
comparable store revenues from
prior period (1) 7.8% 7.7% 7.0% 6.8% 6.3% 4.7% 1.6%
Capital expenditures
(in thousands) $ 830 $1,123 $2,650 $2,186 $ 4,868 $ 3,435 $ 4,187
Cost of net assets acquired
(in thousands) $ 663 $1,869 $1,979 $5,624 $10,766 $14,432 $14,000
- ---------------------------------------------------------------------------------------------------------
OPERATING DATA:
Face amount of checks cashed (in
millions) $ 686 $ 611 $1,337 $1,185 $ 2,621 $ 2,144 $ 1,567
Face amount of money orders
sold (in millions) $ 456 $ 447 $ 895 $ 882 $ 1,812 $ 1,531 $ 1,213
Face amount of money orders
sold as a percentage of the face
amount of checks cashed 66.5% 73.2% 66.9% 74.4% 69.1% 71.4% 77.4%
Face amount of average check $ 285 $ 270 $ 286 $ 270 $ 291 $ 285 $ 284
Average fee per check $ 6.58 $ 6.27 $ 6.59 $ 6.30 $ 6.97 $ 6.81 $ 6.79
Number of checks cashed
(in thousands) 2,408 2,256 4,682 4,370 9,020 7,535 5,516
Number of money orders sold
(in thousands) 3,493 3,369 6,881 6,622 13,608 11,835 9,334
- ---------------------------------------------------------------------------------------------------------
COLLECTIONS DATA:
Face amount of returned checks
(in thousands) $2,863 $2,342 $5,481 $5,047 $10,399 $ 8,661 $ 6,206
Collections (in thousands) 1,667 1,556 3,186 3,098 6,554 5,004 3,786
------ ------ ------ ------ ------- ------- -------
Net write-offs (in thousands) $1,196 $ 786 $2,295 $1,949 $ 3,845 $ 3,657 $ 2,420
====== ====== ====== ====== ======= ======= =======
Collections as a percentage of
returned checks 58.2% 66.4% 58.1% 61.4% 63.0% 57.8% 61.0%
Net write-offs as a percentage of
revenues 5.2% 3.9% 5.1% 5.0% 4.4% 5.3% 5.1%
Net write-offs as a percentage of
the face amount of checks cashed .17% .13% .17% .16% .15% .17% .15%
</TABLE>
(1) Calculated based on the change in revenues of all stores open for both of
the full year and the interim periods compared.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
REVENUE ANALYSIS
- ----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
-------------------------------------- --------------------------------------
(IN THOUSANDS) (PERCENTAGE OF REVENUE) (IN THOUSANDS) (PERCENTAGE OF REVENUE)
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Check fees $ 15,771 $ 14,062 68.2% 70.0% $ 30,580 $ 27,197 68.2% 69.5%
Tax check fees 79 87 0.3 0.4 289 314 0.7 0.8
Money transfer services 1,438 1,470 6.2 7.3 2,873 2,891 6.4 7.4
Loan fees and interest 2,376 1,382 10.3 6.9 4,346 2,570 9.7 6.6
Money order sales 707 675 3.1 3.4 1,399 1,334 3.1 3.4
New customer fees 545 494 2.4 2.4 1,086 929 2.4 2.4
Bill payment services 862 469 3.7 2.3 1,555 934 3.5 2.4
Franchise revenues 415 254 1.8 1.3 903 616 2.0 1.6
Other fees 932 1,204 4.0 6.0 1,788 2,333 4.0 5.9
-------- -------- -------- -------- -------- -------- -------- --------
Total revenues $ 23,125 $ 20,097 100.0% 100.0% $ 44,819 $ 39,118 100.0% 100.0%
======== ======== ======== ======== ======== ======== ======== ========
Average revenue per
store $ 36.5 $ 34.4 $ 71.1 $ 68.9
</TABLE>
QUARTER COMPARISON
Total revenues increased $3.0 million, or 15%, to $23.1 million in the second
quarter of fiscal 1998 from the $20.1 million in the second quarter of the last
fiscal year. This revenue growth resulted, in part, from a $1.4 million, or
7.8%, increase in comparable store revenues (519 stores). The balance of the
increase came from stores which were opened or acquired after June 30, 1996,
and were therefore not open for both of the full periods compared. The number
of Company-owned stores increased by 52, or 9%, from 592 stores opened at
December 31, 1996, to 644 stores opened at December 31, 1997. The increase in
total check cashing fees accounted for 56% of the total revenue increase.
Check cashing fees increased $1.7 million, or 12%, from the $14.1 million in
the second quarter of the last fiscal year to $15.8 million in the second
quarter of fiscal 1998. This increase resulted from a 7% increase in the total
number of checks cashed, plus a 6% increase in the face amount of the average
check.
Loan fees and interest increased $1.0 million, or 72%, primarily as a result of
an increase in the number of loans per store. The number of stores offering
the Company's loan products increased to 252 stores at December 31, 1997, as
compared to 168 stores at December 31, 1996. Bill payment services increased
$0.4 million, or 84%, as a result of offering additional new products,
including prepaid local telephone services in certain markets. Franchise
revenues consist of royalties, initial franchise fees, and buy back fees.
Franchise fees increased $0.2 million, or 63%, primarily as a result of
additional initial franchise fees due to an increase in the number of
franchised stores opened during the second quarter of the current fiscal year
compared to the same period of the last fiscal year. Other fees decreased $0.3
million, or 23%, as a result of decreases in food stamp distribution revenue
and other miscellaneous product revenue.
SIX MONTH COMPARISON
Total revenues increased $5.7 million, or 15%, from the $39.1 million in the
first six months of the last fiscal year to $44.8 million in the first six
months of fiscal 1998. This revenue growth resulted, in part, from a $2.5
million, or 7.0%, increase in comparable store revenues (519 stores). The
balance of the increase came from stores which were opened or acquired after
June 30, 1996, and were therefore not open for both of the full periods
compared. The increase in total check cashing fees accounted for 59% of the
total revenue increase. Check cashing fees increased $3.4 million, or 12%,
from the $27.5 million in the first six months of the last fiscal year to $30.9
million in the first six months of fiscal 1998. This increase resulted from a
7% increase in the total number of checks cashed, plus a 6% increase in the face
amount of the average check.
8
<PAGE>
Loan fees and interest increased $1.8 million, or 69%, primarily as a result of
an increase in the number of loans per store. The number of stores offering
the Company's loan products increased to 252 stores at December 31, 1997, as
compared to 168 stores at December 31, 1996. Bill payment services increased
$0.6 million, or 66%, as a result of offering additional new products,
including prepaid local telephone services in certain markets. Franchise
revenues increased $0.3 million, or 47%, primarily as a result of additional
initial franchise fees due to an increase in the number of franchised stores
opened during the first six months of fiscal 1998 compared to the first six
months of the last fiscal year. During the six months ended December 31, 1997,
there were 23 franchised stores opened, compared to the 13 franchised stores
opened during the six months ended December 31, 1997. Other fees decreased
$0.5 million, or 23%, as a result of decreases in food stamp distribution
revenue and other miscellaneous product revenue.
<TABLE>
<CAPTION>
STORE EXPENSE ANALYSIS
- ----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
-------------------------------------- --------------------------------------
(IN THOUSANDS) (PERCENTAGE OF REVENUE) (IN THOUSANDS) (PERCENTAGE OF REVENUE)
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Salaries and benefits $ 6,710 $ 6,054 29.0% 30.1% $ 12,877 $ 11,809 28.7% 30.2%
Occupancy 3,766 3,407 16.3 17.0 7,487 6,695 16.7 17.1
Armored and security 1,013 844 4.4 4.2 1,970 1,618 4.4 4.1
Returns and cash shorts 1,763 1,325 7.6 6.6 3,359 2,966 7.5 7.6
Loan losses 421 353 1.8 1.8 848 651 1.9 1.7
Depreciation 986 811 4.3 4.0 1,947 1,583 4.4 4.0
Other 1,886 1,637 8.1 8.1 3,604 3,116 8.0 8.0
-------- -------- -------- -------- -------- -------- -------- --------
Total store expenses $ 16,545 $ 14,431 71.5% 71.8% $ 32,092 $ 28,438 71.6% 72.7%
======== ======== ======== ======== ======== ======== ======== ========
Average per store
expense $ 26.1 $ 24.7 $ 50.9 $ 50.1
</TABLE>
QUARTER COMPARISON
Total store expenses increased $2.1 million, or 15%, to $16.5 million in the
second quarter of fiscal 1998 from $14.4 million in the second quarter of the
last fiscal year. Store expenses decreased as a percentage of revenues,
decreasing to 71.5% in the second quarter of fiscal 1998 from 71.8% in the
second quarter of the last fiscal year. Salaries and benefits expenses,
occupancy costs, and armored and security expenses increased primarily as a
result of the increased number of stores in operation. Returned checks, net of
collections, and cash shortages increased $0.4 million as a result of the
increased number of stores and increased forgeries in the second quarter of
fiscal 1998, compared to the second quarter of the last fiscal year. Other
store expenses increased $0.2 million, or 15%, primarily as a result of the
increased number of stores in operation.
SIX MONTH COMPARISON
Total store expenses increased $3.7 million, or 13%, from the $28.4 million in
the first six months of the last fiscal year to $32.1 million in the first six
months of fiscal 1998. Store expenses decreased as a percentage of revenues,
decreasing from 72.7% in the first six months of the last fiscal year to 71.6%
in the first six months of fiscal 1998. Salaries and benefits expenses,
occupancy costs, and armored and security expenses increased primarily as a
result of the increased number of stores in operation. Returned checks, net of
collections, and cash shortages increased $0.4 million, or 13%, in the first
six months of fiscal 1998 as a result of the increased number of stores.
Returned checks, net of collections, and cash shortages decreased as a
percentage of revenues to 7.5% in the first six months of fiscal 1998 from 7.6%
in the first six months of fiscal 1997. Loan losses increased $0.2 million in
the first six months of fiscal 1998, as compared to the first six months of
fiscal 1997, as a result of the increased volume of loans made. Other store
expenses increased $0.5 million, or 16%, primarily as a result of the increased
number of stores in operation.
9
<PAGE>
<TABLE>
<CAPTION>
OTHER EXPENSE ANALYSIS
- ----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
-------------------------------------- --------------------------------------
(IN THOUSANDS) (PERCENTAGE OF REVENUE) (IN THOUSANDS) (PERCENTAGE OF REVENUE)
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Region expenses $ 1,907 $ 1,795 8.2 % 8.9% $ 3,947 $ 3,559 8.8% 9.1%
Headquarters expenses 1,545 1,408 6.7 7.0 3,040 2,635 6.8 6.7
Franchise expenses 231 288 1.0 1.4 443 526 1.0 1.3
Other depreciation and
amortization 830 730 3.6 3.6 1,692 1,386 3.8 3.5
Interest expense, net 668 564 2.9 2.8 1,165 1,113 2.6 2.8
Other expenses 18 27 0.1 0.1 50 42 0.1 0.1
</TABLE>
QUARTER COMPARISON
Region Expenses
Region expenses increased $0.1 million, or 6%, in the second quarter of fiscal
1998 over the second quarter of the last fiscal year, primarily due to the
addition of regional personnel and a centralized loan operations group. Region
expenses decreased as a percentage of revenues, from 8.9% in the second quarter
of the last fiscal year to 8.2% in the second quarter of fiscal 1998.
Headquarters Expenses
Headquarters expenses increased $0.1 million, or 10%, in the second quarter of
fiscal 1998 over the second quarter of the last fiscal year, principally as a
result of increased salaries and benefits expenses. Headquarters expenses
decreased as a percentage of revenues from 7.0% in the second quarter of the
last fiscal year to 6.7% in the second quarter of fiscal 1998.
Franchise Expenses
Franchise expenses remained relatively unchanged for the second quarter of
fiscal 1998 as compared to the second quarter of the last fiscal year.
Other Depreciation and Amortization
Other depreciation and amortization increased $0.1 million, or 14%, in the
second quarter of fiscal 1998 from the second quarter of the last fiscal year,
principally due to increased depreciation for new capital expenditures.
Interest Expense
Interest expense, net of interest income, increased $0.1 million, or 18%, in
the second quarter of fiscal 1998 as compared to the second quarter of the last
fiscal year.
Income Taxes
A total of $0.6 million was provided for income taxes in the second quarter of
fiscal 1998, up from $0.3 million in the second quarter of the last fiscal
year. The provision for income taxes was calculated based on a statutory
federal income tax rate of 34%, plus a provision for state income taxes and
non-deductible goodwill.
SIX MONTH COMPARISON
Region Expenses
Region expenses increased $0.4 million, or 11%, in the first six months of
fiscal 1998 over the first six months of the last fiscal year, primarily due to
the addition of regional personnel and a centralized loan operations group.
Region expenses
10
<PAGE>
decreased as a percentage of revenues, from 9.1% in the first six months of the
last fiscal year to 8.8% in the first six months of fiscal 1997.
Headquarters Expenses
Headquarters expenses increased $0.4 million, or 15%, in the first six months
of fiscal 1998 over the first six months of the last fiscal year, principally
as a result of increased salaries and benefits, professional fees, and
insurance expenses. Headquarters expenses increased slightly as a percentage
of revenues from 6.7% in the first six months of the last fiscal year to 6.8%
in the first six months of fiscal 1998.
Franchise Expenses
Franchise expenses remained relatively unchanged for the first six months of
fiscal 1998, compared to the first six months of the last fiscal year.
Other Depreciation and Amortization
Other depreciation and amortization increased $0.3 million, or 22%, in the
first six months of fiscal 1998 from the first six months of the last fiscal
year, principally due to increased depreciation for new capital expenditures.
Interest Expense
Interest expense, net of interest income, increased $0.1 million, or 5%, in the
first six months of fiscal 1998 as compared to the first six months of the last
fiscal year.
Income Taxes
A total of $1.0 million was provided for income taxes in the first six months
of fiscal 1998, up from $0.6 million in the first six months of the last fiscal
year. The provision for income taxes was calculated based on a statutory
federal income tax rate of 34%, plus a provision for state income taxes and
non-deductible goodwill.
BALANCE SHEET VARIATIONS
Cash and cash equivalents, the money order principal payable, and the revolving
advances from the Money Order Supplier vary as a result of seasonal and
day-to-day requirements resulting from maintaining cash for the cashing of
checks, receipts of cash from the sale of money orders, loan volume, and
remittances on money orders sold. For the six months ended December 31, 1997,
cash and cash equivalents increased $10.1 million, compared to a decrease of
$8.3 million for the six months ended December 31, 1996.
Property and equipment and the excess purchase price over the fair value of net
assets acquired increased $1.0 million and $0.3 million, respectively, as a
result of the 7 stores acquired and the 27 stores opened during the six months
ended December 31, 1997, offset by related depreciation and amortization.
Accounts payable and accrued liabilities decreased $3.1 million, primarily due
to the timing of certain payments, including fiscal year-end bonus payments and
other salary-related accruals.
On November 14, 1997, the Board of Directors of the Company authorized a stock
dividend in the form of a three-for-two stock split. The split was effected by
distributing one additional share of common stock of the Company for every two
shares of common stock outstanding. The record date for determining holders
entitled to receive the stock dividend was November 30, 1997, with a delivery
date on or about December 15, 1997. Cash was paid in lieu of fractional
shares. For financial presentation purposes, all share and per share amounts
have been restated herein as if the split were effective July 1, 1996.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows from Operating Activities
During the six months ended December 31, 1997 and 1996, the Company had net
cash provided by operating activities of $1.7 million and $0.9 million,
respectively.
Cash Flows from Investing Activities
During the six months ended December 31, 1997 and 1996, the Company used $2.7
million and $2.2 million, respectively, for purchases of property and equipment
related principally to new store openings and remodeling existing stores.
Capital expenditures related to acquisitions amounted to $2.0 million and $5.6
million, respectively, for the six months ended December 31, 1997 and 1996.
Cash Flows from Financing Activities
Net cash provided by financing activities for the six months ended December 31,
1997 was $13.0 million. Net cash used by financing activities for the six
months ended December 31, 1996, was $1.3 million. For the six months ended
December 31, 1997, the Company incurred $13.8 million revolving advances from
the Money Order Supplier. Additionally, the Company reduced its Term Advances
by $0.9 million, paid $0.4 million for certain notes payables, and received
$0.5 million for the exercise of stock options during the six months ended
December 31, 1997.
Under the provisions of the Company's agreement with the Money Order Supplier
regarding advances for the acquisition and construction of additional locations
("Term Advances"), the repayment terms of each Term Advance call for the
principal amount to be paid in equal monthly installments on a 60-month
amortization through December 1998, at which time the remaining principal is
due. As of December 31, 1997, approximately $11.2 million of the Term Advances
commitment was available for acquisition and construction of additional
locations. Interest on the Term Advances accrues at the prime rate plus one
percent, which currently totals 9.5%.
The interest on revolving advances from the Money Order Supplier is based on a
per annum rate of 1.5% over the prime rate, which currently totals 10%. The
total amount of deferred money order remittances payable to the Money Order
Supplier may not exceed the Company's cash balances and cash equivalents
(including checks cashed by the Company that are being processed for payment).
The principal amount of the Company's outstanding 9.03% Senior Secured Notes is
due in five equal annual installments of $4 million each, beginning November 15,
1999. Interest payments are due semiannually, on each May 15 and November 15,
until maturity on November 15, 2003.
OPERATING TRENDS
Seasonality
The Company's business is seasonal during the third quarter of each year,
because of the impact of cashing tax refund checks and two other tax-related
services--electronic tax filing and processing applications for refund
anticipation loans.
IMPACT OF INFLATION
The Company believes that the results of its operations are not dependent upon
the levels of inflation.
FORWARD-LOOKING STATEMENTS
This Report may contain, and from time to time the Company or certain of its
representatives may make, "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities
12
<PAGE>
Exchange Act of 1934, as amended. These statements are generally identified by
the use of words such as "anticipate," "expect," "estimate," "believe,"
"intend," and terms with similar meanings. Although the Company believes that
the current views and expectations reflected in these forward-looking
statements are reasonable, those views and expectations, and the related
statements, are inherently subject to risks, uncertainties, and other factors,
many of which are not under the Company's control and may not even be
predictable. Those risks, uncertainties, and other factors could cause the
actual results to differ materially from these in the forward-looking
statements. Those risks, uncertainties, and factors include, but are not
limited to, the following matters described in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission: the
Company's relationships with the Money Order Supplier and the supplier of
MoneyGram services; governmental regulation of the check-cashing industry;
theft and employee errors; the availability of suitable locations, acquisition
opportunities, adequate financing, and experienced management employees to
implement the Company's growth strategy; the fragmentation of the check-cashing
industry and the competition from various other sources, such as banks, savings
and loans, and other financial services entities, as well as retail businesses
that offer products and services offered by the Company; and customer demand
and response to products and services offered by the Company. The Company
expressly disclaims any obligations to release publicly any updates or
revisions to these forward-looking statements to reflect any change in its
views or expectations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on November 14, 1997. At
the Annual Meeting the Company's shareholders elected six individuals to serve
as directors of the Company until the next annual meeting or until their
successors are elected and qualified. The table below shows the votes cast in
favor of the election of the six persons as directors and the votes withheld
against their election. There were no abstentions or broker non-votes.
<TABLE>
<CAPTION>
Director Votes for Votes Withheld
<S> <C> <C>
Raymond C. Hemmig 5,324,928 2,737
Donald H. Neustadt 5,324,875 2,790
Howard W. Davis 5,324,928 2,737
Marshall B. Payne 5,324,928 2,737
Edward W. Rose III 5,324,928 2,737
C. Daniel Yost 5,324,913 2,752
</TABLE>
At the Annual Meeting, the Company's shareholders also voted to approve a
proposal (previously approved by the Company's Board of Directors) to increase
the number of shares of Common Stock authorized for issuance from 10,000,000
shares to 20,000,000 shares. An aggregate 5,182,247 shares were voted for the
proposal, 123,365 shares were voted against the proposal, and 22,053 shares
abstained. Additionally, the Company's shareholders voted to approve a
proposal to adopt the Company's 1997 Stock Option Plan for employees. An
aggregate 3,334,010 shares were voted for the proposal, 281,731 shares were
voted against the proposal, and 22,803 shares abstained.
13
<PAGE>
All of the numbers of shares stated in the two preceding paragraphs do not
reflect the three-for-two stock split as of the close of business on November
30, 1997 (after the Annual Meeting). See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Balance Sheet Variations."
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Exhibits
-------------- --------
* 3.3 Articles of Amendment to the Restated Articles
of Incorporation of Ace Cash Express, Inc. filed
November 17, 1997
* 3.4 Certificate of Amendment to Bylaws dated October
15, 1997
* 3.5 Certificate of Amendment to Bylaws dated December
3, 1997
* 3.6 Composite Restated Articles of Incorporation of
Ace Cash Express, Inc. (through January 31, 1998)
* 3.7 Composite of Bylaws of Ace Cash Express, Inc.
(through January 31, 1998)
10.32 Ace Cash Express, Inc. 1997 Stock Option Plan
(filed as Exhibit A to the Company's proxy
statement No. 0-20774 and incorporated herein by
reference)
* 27 Financial Data Schedule (EDGAR version only)
------------------------------
* filed herewith
(b) Reports on Form 8-K
None
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.
ACE CASH EXPRESS, INC.
----------------------
February 4, 1998 By: /s/ Jay B. Shipowitz
Senior Vice President and CFO
(Duly authorized officer and
principal financial and chief
accounting officer)
By: /s/ Susan S. Pressler
Vice President and Controller
14
<PAGE>
EXHIBIT 3.3
ARTICLES OF AMENDMENT
TO THE RESTATED ARTICLES OF INCORPORATION
OF
ACE CASH EXPRESS, INC.
FILED NOVEMBER 17, 1997
Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, Ace Cash Express, Inc. (the "Corporation") hereby adopts the following
Articles of Amendment to its Restated Articles of Incorporation:
ARTICLE ONE. The name of the Corporation is Ace Cash Express, Inc.
ARTICLE TWO. The following amendment to the Restated Articles of
Incorporation, as heretofore amended, of the Corporation (the "Amendment") was
adopted by the shareholders of the Corporation on November 14, 1997:
Section A of Article V of the Restated Articles of Incorporation, as
amended, of the Corporation be amended to read in its entirety as follows:
A. Capitalization. The aggregate number of shares which the
--------------
Corporation is authorized to issue is 21,000,000 shares, consisting of:
(1) 20,000,000 shares of Common Stock having a par value of
$.01 per share; and
(2) 1,000,000 shares of Preferred Stock having a par value of
$1.00 per share.
The following is a statement of the relative rights, preferences and
limitations with respect to the shares of each class of capital stock of the
Corporation, insofar as the same are fixed in these Articles of Incorporation,
and of the authority expressly vested in the Board of Directors of the
Corporation to divide the Preferred Stock into series and to fix and determine
the variations in the relative rights and preferences as between series:
ARTICLE THREE. The number of shares of Common Stock of the Corporation
outstanding and entitled to vote was 6,473,327 at the time of the adoption of
the Amendment. No shares of Preferred Stock of the Corporation were outstanding
at the time of the adoption of the Amendment.
ARTICLE FOUR. The holders of 5,182,247 shares of Common Stock outstanding
and entitled to vote voted in favor of the Amendment, and the holders of 123,365
shares of Common Stock outstanding and entitled to vote voted against the
Amendment.
DATED as of the 17th day of November, 1997.
ACE CASH EXPRESS, INC.
By: /s/ Jay B. Shipowitz
------------------------------
Jay B. Shipowitz,
Senior Vice President
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
------------------------
TO BYLAWS
---------
DATED OCTOBER 15, 1997
----------------------
The undersigned hereby certifies that the following is an amendment to the
Bylaws of Ace Cash Express, Inc. (the "Corporation"), adopted by the Board of
Directors of the Corporation by unanimous written consent effective as of
October 15, 1997:
NOW, THEREFORE, BE IT RESOLVED, that the first paragraph of Section 8
of Article II of the Bylaws be, and it hereby is, amended to read in its
entirety as follows:
"Section 8. Voting. When a quorum is present at any shareholders'
---------- -------
meeting, the affirmative vote of the holders of a majority of the
shares entitled to vote on, and that voted for or against or expressly
abstained with respect to, any question or matter brought before such
meeting shall decide such question or matter and shall be the act of
the shareholders' meeting, unless the affirmative vote of a greater
number or portion of the shares entitled to vote is required by the
Act, the Articles of Incorporation, or these Bylaws."
/s/ Jay B. Shipowitz
------------------------------
Jay B. Shipowitz, Secretary
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT
------------------------
TO BYLAWS
---------
DATED DECEMBER 3, 1997
----------------------
The undersigned hereby certifies that the following is an amendment to the
Bylaws of Ace Cash Express, Inc. (the "Corporation"), adopted by the Board of
Directors of the Corporation by unanimous written consent effective as of
December 3, 1997:
NOW, THEREFORE, BE IT RESOLVED, that the last paragraph of Section 8 of
Article II of the Bylaws be, and it hereby is, amended to read in its
entirety as follows:
Shares of the Corporation's stock owned by it or by another
domestic or foreign corporation or entity, if a majority of the voting
stock or voting interest of the other corporation or the other entity
is owned or controlled by the Corporation, shall not be voted, directly
or indirectly, at any meeting and shall not be counted in determining
the total number of outstanding shares at any given time. Nothing in
this Section 8 limits the right of the Corporation or any other
domestic or foreign corporation or other entity to vote stock,
including (without limitation) its own stock, held or controlled by it
in a fiduciary capacity or with respect to which it otherwise exercises
voting power in a fiduciary capacity.
/s/ Jay B. Shipowitz
------------------------------
Jay B. Shipowitz, Secretary
<PAGE>
EXHIBIT 3.6
COMPOSITE
RESTATED ARTICLES OF INCORPORATION
OF
ACE CASH EXPRESS, INC.
(THROUGH JANUARY 31, 1998)
ARTICLE I
---------
The name of the corporation is Ace Cash Express, Inc.
ARTICLE II
----------
The period of its duration is perpetual.
ARTICLE III
-----------
The purpose for which the corporation is organized is to transact any
and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE IV
----------
The street address of the initial registered office of the corporation
is 1231 Greenway Tower, Suite 800, Irving, Texas 75038, and the name of the
initial registered agent of the corporation at such address is Donald H.
Neustadt.
ARTICLE V
---------
A. Capitalization. The aggregate number of shares which the
---------------
Corporation is authorized to issue is 21,000,000 shares, consisting of:
(1) 20,000,000 shares of Common Stock have a par value of $.01 per
share; and
(2) 1,000,000 shares of Preferred Stock having a par value of $1.00
per share.
The following is a statement of the relative rights, preferences and
limitations with respect to the shares of each class of capital stock of the
Corporation, insofar as the same are fixed in these Articles of Incorporation,
and of the authority expressly vested in the Board of Directors of the
Corporation to divide the Preferred Stock into series and to fix and determine
the variations in the relative rights and preferences as between series:
B. Preferred Stock.
----------------
1. The Preferred Stock may, from time to time, be divided into and
issued in one or more series with each series to be so designated as to
distinguish the shares thereof form the shares of all other series and
classes. The shares of each series may have such designations, and relative
rights, preferences and limitations as are stated and expressed herein and
in a resolution or resolutions providing for the issue of such series,
adopted by the Board of Directors as hereinafter provided.
<PAGE>
2. To the extent that these Articles of Incorporation shall not have
fixed and determined the variations in the relative rights and preferences
of the Preferred Stock, both in relation to the Common Stock and as between
series of Preferred Stock, the Board of directors of the Corporation is
expressly vested with the authority to divide the Preferred Stock into one
or more series and, within the limitations set forth in these Articles of
Incorporation, to fix and determine the relative rights and preferences of
the shares of any series so established, and, with respect to each such
series, to fix by resolution or resolutions providing for the issue of such
series, the following:
(a) The maximum number of shares to constitute such series and the
distinctive designation thereof;
(b) The annual dividend rate, if any, on the shares of such series
and the date or dates from which dividends shall commence to accrue or
accumulate as herein provided, and whether dividends shall be
cumulative;
(c) The price at and the terms and conditions on which the shares
of such series may be redeemed, including, without limitation, the time
during which shares of the series may be redeemed, the premium, if any,
over and above the par value thereof an any accumulated dividends
thereon which the holders of shares of such series shall be entitled to
receive upon the redemption thereof, which premium may vary at different
dates and may also be different with respect to shares redeemed through
the operation of any retirement or sinking fund;
(d) The liquidation preference, if any, over and above the par
value thereof, and any accumulated dividends thereon, which the holders
of shares of such series shall be entitled to receive upon the voluntary
or involuntary liquidation, dissolution or winding up on the affairs of
the Corporation;
(e) Whether or not the shares of such series shall be subject to
the operation of a retirement or sinking fund, and, if so, the extent
and manner in which any such retirement or sinking fund shall be applied
to the purchase or redemption of the shares of such series for
retirement or for other corporate purposes, and the terms and provisions
relative to the operations of such retirement or sinking fund;
(f) The terms and conditions, if any, on which the shares of such
series shall be convertible into, or exchangeable for, shares of capital
stock of any other class or classes of the Corporation or any series of
any other class or classes, or of any other series of the same class,
including the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same, provided that
shares of such series may not be convertible into shares of a series or
class which has prior or superior rights and preferences as to dividends
or distribution of assets of the Corporation upon voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation;
(g) The voting rights, if any, on the shares of such series; and
(h) Any other preferences and relative, participating, optional or
other special rights, or qualifications, limitations or restrictions
thereof, as shall not be inconsistent with the law or with this Article
V.
3. All shares of any one series of Preferred Stock shall be identical
with each other in all respects, except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon, if any,
shall be cumulative; and all series shall rank equally and be identical in all
respects, except as provided in Paragraph 1 of this Section A and except as
permitted by the foregoing provisions of Paragraph 2.
<PAGE>
4. Except to the extent restricted or otherwise provided in the
resolution or resolutions adopted by the Board of Directors providing for the
issue of any series of Preferred Stock, no dividends (other than dividends
payable in Common Stock) on any class or classes of capital stock of the
Corporation ranking, with respect to dividends, junior to the Preferred Stock,
or any series thereof, shall be declared, paid or set apart for payment, until
and unless the holders of share of Preferred Stock of each senior series shall
have been paid, or there shall have been set apart for payment, cash dividends,
when and as declared by the Board of Directors out of funds of the Corporation
legally available therefor, at the annual rate, and no more, fixed in the
resolution or resolutions adopted by the Board of Directors providing for the
issue of such series.
5. To the extent provided in the resolution or resolutions adopted by
the Board of directors providing for the issue of any series of Preferred Stock,
upon the voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation before any payment or distribution of the assets of
the Corporation (whether capital or surplus) shall be made to or set apart for
the holders of any class or classes of capital stock of the Corporation ranking
junior, as to liquidation rights, to the Preferred Stock, or any series thereof,
the holders of the shares of the Preferred Stock shall be entitled to receive
payment at the rate fixed in the resolution or resolutions adopted by the Board
of Directors providing for the issue of the respective series. For the purposes
of this Paragraph 5 and Paragraph 2(d) of the Section A, neither the
consolidation nor merger of the Corporation with one or more other corporations
shall be deemed to be a liquidations, dissolution or winding up.
6. The Corporation, at the option of the Board of Directors, may
redeem, unless otherwise provided in the resolution establishing a series of
Preferred Stock, at such time as is fixed (and if not so fixed at any time) in
the resolution or resolutions adopted by the Board of directors providing for
the issue of a series, the whole or, from time to time, any part of the
Preferred Stock of any series then outstanding, at the par value thereof, plus
in every case an amount equal to all accumulated dividends, if any (whether or
not earned or declared), with respect to each share so redeemed and, in addition
thereto, the amount of the premium, if any, payable upon such redemption fixed
in the resolution or resolutions adopted by the Board of Directors providing for
the issue of such series (the total sum so payable on any such redemption being
referred to as the "redemption price"). Notice of every such redemption shall
be mailed not less than twenty (20) nor more than (50) days in advance of the
date designated for such redemption (the "redemption date") to the holders of
record of the shares of Preferred Stock to be redeemed at their respective
addresses as the same shall appear on the books of the Corporation. In order to
facilitate the redemption of any shares of Preferred Stock which may be chosen
for redemption as provided in this Paragraph 6, the Board of Directors shall be
authorized to cause the transfer books of the Corporation to be closed as to
such shares at any time (not exceeding fifty (50) days) prior to the redemption
date. In case of the redemption of only a portion of any series of Preferred
Stock then outstanding, the shares of such series to be so redeemed shall be
selected by lot or in such manner as the Board of directors may determine. The
Board of Directors shall have full power and authority, subject to the
limitations and provisions contained herein and in the Texas Business
Corporation Act, to prescribe the terms and conditions upon which the Preferred
Stock shall be redeemed from time to time.
7. Shares of Preferred Stock which have been redeemed, purchased or
otherwise acquired by the Corporation or which, if convertible or exchangeable,
have been converted into or exchanged for shares of capital stock of any other
class or classes or any series of any other class, shall be canceled and such
shares may not under any circumstances thereafter be reissued as Preferred
Stock, and the Corporation shall from time to time and at least once a year
cause all such acquired preferred shares to be canceled in the manner provided
by law.
8. Nothing herein contained shall limit any legal right to the
Corporation to purchase any shares of the Preferred Stock.
<PAGE>
C. Common Stock.
-------------
1. Shares of Common Stock may be issued by the Corporation from time to
time for such consideration as may lawfully be fixed by the Board of
Directors.
2. The Common Stock shall be entitled to one vote per share on all
matters. Cumulative voting for voting for directors shall not be permitted
and is hereby expressly denied.
3. Subject to the prior rights and preferences of the Preferred Stock
and subject to and subject to the provisions and conditions set forth in the
foregoing Section A of this Article Five, or in any resolution or
resolutions providing for the issue of a series of Preferred Stock, and to
the extent permitted by the laws of the State of Texas, the holders of
Common Stock shall be entitled to receive such cash dividends as may be
declared and made payable by the Board of Directors.
4. After payment shall have been made in full to the holders of any
series of Preferred Stock having preferred liquidation rights, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the remaining assets and funds of the
Corporation shall be distributed among the holders of the Common Stock
according to their respective shares.
D. Cumulative Voting. Cumulative voting in the election of directors is
------------------
expressly prohibited.
E. Series A Preferred. The Corporation hereby establishes a series of
-------------------
Preferred Stock, which shall be given the distinctive designation of "Series
A Preferred Stock, $1.00 par value" (the "Series A Preferred"). This Series
is to consist of 78,600 shares, of which the rights and preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions of such rights and preferences
shall be as follows:
1. Dividends. The holders of Series A Preferred shall be entitled to
----------
receive, when and as declared by the Board of Directors out of the funds
of the Corporation legally available therefore, and the Corporation
shall be bound to pay thereon, in preference to the holders of any other
class of capital stock, or series thereof, of the Corporation,
including, without limitation, the Common Stock, cash dividends at the
annual rate of $0.60 per share. Such dividends shall commence to accrue
on the date any shares of the Series A Preferred are first issued and
become outstanding. Dividends on the Series A Preferred shall be
payable annually in arrears on the 15th day of January, commencing on
January 31, 1988, to holders of record on the first day of such month.
Such dividends shall be cumulative, so that if, at any time, dividends
upon the outstanding Series A Preferred shall not have been paid or
declared and a sum sufficient for the payment thereof set apart for such
payment, the amount of the deficiency shall accrue and the aggregate
deficiency shall be fully paid, or dividends in such amount declared a
sum or sums shall be paid or set aside as dividends for any other class,
or series thereof, of capital stock of the Corporation. If the dividend
on the Series A Preferred for any dividend period shall not have been
paid or set apart in full, no asset which is by law available for the
payment of dividends shall be paid or set aside for the purchase or
redemption of any class of capital stock, or any series thereof (except
the Series A Preferred), of the Corporation. Notwithstanding the
foregoing, nothing contained herein shall restrict the ability of the
Corporation pursuant to that certain Shareholders' Agreement, dated as
of January 29, 1987, among the Corporation and its shareholders, as such
agreement may now exist or hereafter be amended or restated.
2. Voting Rights. The Series A Preferred shall not have any voting
--------------
power, except as otherwise specifically required by law.
3. Redemptions.
------------
<PAGE>
(a) Subject to the provisions of this paragraph 3 and applicable
law, the Corporation shall have the right, but not the obligation, to
redeem the Series A Preferred, in whole or in part, at a redemption
price of $10.00 per share, plus all accumulated but unpaid dividends
thereon (the "Redemption Price").
(b) (i) Notice of every redemption of Series A Preferred shall be
given by mailing such notice not less than twenty (20) nor more than
fifty (50) days prior to the date fixed for such redemption to each
holder of record of shares of Series A Preferred to be so redeemed, and
shall be sufficiently given if the Corporation shall cause a copy
thereof to be mailed to such holders of record at their respective
addresses as the same shall appear on the books of the Corporation, by
first class mail, postage prepaid; provided, however, that the failure
to mail such notice to one or more of such holders shall not affect the
validity of such redemption as to the holders to whom the notice was
mailed. Such notice shall include among its other provisions a
statement indicating the subparagraph of this paragraph 3 pursuant to
which the redemption is being made. If less than all of the outstanding
Series A Preferred is to be redeemed, the redemption may be made pro
rata, by lot or in such other equitable manner as may be prescribed by
resolution of the Board of Directors.
(ii) Subject to the foregoing and to the provisions contained
in this paragraph 3, the Board of Directors shall have full power and
authority to prescribe the terms and conditions upon which Series A
Preferred shall be redeemed from time to time.
(iii) If any such notice of redemption shall have been duly
given of if the Corporation shall have granted to a bank or trust
company an irrevocable written authorization promptly to give or
complete such notice and pay all amounts due to holders of shares (as
evidenced by a list of holders of such shares certified by the president
or a vice president and by the secretary or an assistant secretary of
the Corporation) called for redemption and if, on or before the
redemption date specified therein, all funds necessary for such
redemption (including an amount equal to the accumulated and unpaid
dividends thereon to the date fixed for redemption) shall have been
deposited by the Corporation with such bank or trust company designated
in such notice, in trust for the pro rata benefit of the holders of the
shares so called for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancellation, form and after the time of such deposit
(or form and after the redemption date if such notice shall fail to
state that the holders of the shares called for redemption may receive
their redemption price at any time after such deposit), all shares with
respect to which such deposit shall have been made shall no longer be
deemed to be outstanding and all rights with respect to such shares
shall cease and terminate, except for the right of the holders of the
certificates, upon surrender thereof, to receive the redemption price,
plus any accumulated but unpaid dividends, out of the funds so
deposited, without interest. Any interest accrued on such funds shall
be paid to the Corporation from time to time.
(iv) If such notice of redemption shall have been duly given,
and if on or before the redemption date specified therein all funds
necessary for such redemption shall be set aside and continue to be
available for payment on and after the redemption date upon surrender
of the certificates for the shares so called for redemption, then,
notwithstanding that any certificate for shares so called for redemption
shall not have been surrendered for cancellation, the shares so called
for redemption shall, on and after such redemption date, no longer
deemed to be outstanding, and all rights with respect to such shares
shall terminate on such redemption date, except for the right of the
holders of the certificates, upon surrender thereof, to receive the
amount payable on redemption thereof, without interest.
(v) Any funds so set aside or deposited, as the case may be,
and unclaimed at the end of six years from such redemption date shall be
released or repaid to the Corporation to be held for the benefit of such
holder, after which the holders of the shares so called for redemption
shall look only to the Corporation for the payment thereof.
(c) Any shares of Series A Preferred redeemed, purchased or
otherwise acquired by the Corporation shall be deemed canceled and may
not under any circumstances thereafter be reissued as Series A
Preferred or any other series of Preferred Stock, $1.00 par value, or
otherwise disposed of by the Corporation, and the Corporation shall
from time to time and at least once each year cause all such shares to
be canceled in the manner provided by law.
<PAGE>
4. Priority in Event of Dissolution and Liquidation or Sale of Assets.
-------------------------------------------------------------------
(a) Subject to the remaining provisions of this paragraph 4, in the
event of any sale of all or substantially all of the assets of the
Corporation or any liquidation, dissolution or winding up of the affairs
of the Corporation, whether voluntary or otherwise (a "Liquidating
Event"), after payment or provision for payment of the debts and other
liabilities of the Corporation, the holders of Series A Preferred shall
be entitled to receive, out of the remaining net assets of the
Corporation, an amount equal to $10.00, plus all accumulated but unpaid
dividends (the "Liquidation Value"), in cash for each outstanding share
of Series A preferred, before any distribution or payment shall be made
to the holders of Common Stock of the Corporation. Upon the occurrence
of any Liquidating Event, and after payment or provision for payment of
the debts and other liabilities of the Corporation, if the assets of the
Corporation available for distribution to shareholders shall be
insufficient to permit the payment to the holders of Series A Preferred
of an amount equal to the Liquidation value per share, then all the
remaining assets of the Corporation shall be distributed ratably among
the holders of Series A Preferred then outstanding according to the
number of shares held by each. After payment in full to the holders of
Series A Preferred of the amounts distributable to them as herein
provided, the holders of any other junior capital stock shall be
entitled, to the exclusion of the holders of Series A Preferred, to
share ratably in the remaining assets of the Corporation in accordance
with their respective rights.
(b) Neither the consolidation nor merger of the Corporation with or
into any other corporation shall be deemed to be a sale of all or
substantially all of the assets of the Corporation or a liquidation,
dissolution or winding up of the affairs of the Corporation, whether
voluntary or otherwise, within the meaning of this paragraph 4.
(c) No provision of this paragraph 4 shall in any manner, prior to
any sale of all or substantially all of the assets of the Corporation or
any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or otherwise, create or be considered or
deemed to create any restriction upon the surplus of the Corporation or
prohibit the payment of dividends on the capital stock of the
Corporation out of the funds of the Corporation legally available
therefor, nor shall any such restriction or prohibition be in any manner
implied from the provisions of this paragraph 4.
ARTICLE VI
----------
No shareholder of the corporation will by reason of his holding shares
of capital stock of the corporation have any preemptive or preferential rights
to purchase or subscribe to any shares of any class of capital stock of the
corporation, or any notes, debentures, bonds, warrants, options or other
securities of the corporation, now or hereafter to be authorized.
ARTICLE VII
-----------
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of alt least One Thousand and
No/100 Dollars ($1,000), consisting of money paid, labor done or property
actually received, which property actually received shall have a value of not
less than One Thousand and No/100 Dollars ($1,000).
<PAGE>
ARTICLE VIII
------------
The number of directors shall be fixed in the manner provided in the
Bylaws of the corporation. The current Board of Directors consists of four
directors, and the names and addresses of the persons who are serving as
directors until their successors are elected and qualified are:
Name Address
---- -------
Donald H. Neustadt 1231 Greenway Tower
Suite 800, Irving, Texas 75038
Wallace M. Swanson 1231 Greenway Tower
Suite 800
Irving, Texas 75038
Edward W. Rose, III 2660 One Dallas Centre
350 North St. Paul Street
Dallas, Texas 75201
Marshall B. Payne 2600 One Dallas Centre
350 North St. Paul Street
Dallas, Texas 75201
ARTICLE IX
----------
The corporation may purchase, directly or indirectly, its own shares of
capital stock to the extent of the aggregate of unrestricted capital surplus and
unrestricted reduction surplus without submitting such purchase to vote of the
shareholders of the corporation.
ARTICLE X
---------
Notwithstanding any provisions of the Texas Business Corporation Act now
or hereafter in force requiring for action to be authorized or taken on any
matter the affirmative vote of two-thirds, or any other percentage, of the
outstanding shares of capital stock, or of any class or series of capital stock,
of the corporation entitled by law to vote on such matter, any action of the
shareholders of the corporation may be authorized and taken by the affirmative
vote of the shareholders of the majority of such outstanding shares of capital
stock, or of any such class or series of capital stock of the corporation.
ARTICLE XI
----------
Special meetings of shareholders of the Corporation may be called only
by the Chairman of the Board, Chief Executive Officer, President or the Board of
Directors of the Corporation or by holders of at least twenty-five (25) percent
of all shares entitled to vote at the proposed special meeting.
ARTICLE XII
-----------
To the fullest extent permitted by Texas statutory or decisional law, as
the same exists or may hereafter be amended or interpreted, a director of the
Corporation shall not be liable to the Corporation or its shareholders for any
act or omission in such director's capacity as a director. Any repeal or
amendment of this Article, or adoption of any other provision of these Articles
of Incorporation inconsistent with this Article, by the shareholders of the
Corporation shall be prospective only and shall not adversely affect any
limitation on the liability to the Corporation or its shareholders of a director
of the Corporation existing at the time of such repeal, amendment or adoption of
an inconsistent provision.
<PAGE>
EXHIBIT 3.7
COMPOSITE OF
BYLAWS
OF
ACE CASH EXPRESS, INC.
(THROUGH JANUARY 31, 1998)
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE I
OFFICES
Section 1. Principal Office -1-
Section 2. Other Offices -1-
ARTICLE II
SHAREHOLDERS
Section l. Time and Place of Meetings -1-
Section 2. Annual Meetings -1-
Section 3. Special Meetings -1-
Section 4. Notice -1-
Section 5. Closing of Transfer Books and Fixing Record Date -1-
Section 6. List of Shareholders -2-
Section 7. Quorum -2-
Section 8. Voting -2-
Section 9. Action by Consent -3-
ARTICLE III
DIRECTORS
Section 1. Number of Directors -4-
Section 2. Vacancies -4-
Section 3. General Powers -4-
Section 4. Place of Meetings -4-
Section 5. Annual Meetings -4-
<PAGE>
Section 6. Regular Meetings -4-
Section 7. Special Meetings -4-
Section 8. Quorum and Voting -5-
Section 9. Approval of Certain Matters -5-
Section 10. Committees -5-
Section 11. Compensation of Directors -6-
Section 12. Action by Unanimous Consent -6-
Section 13. Presence at Meetings by Means of Communications Equipment -6-
ARTICLE IV
NOTICES
Section 1. Form of Notice -6-
Section 2. Waiver -6-
Section 3. When Notice Unnecessary -6-
ARTICLE V
OFFICERS
Section 1. General -7-
Section 2. Election -7-
Section 3. Chairman of the Board -7-
Section 4. President -7-
Section 5. Vice Presidents -7-
Section 6. Assistant Vice Presidents -8-
Section 7. Secretary -8-
Section 8. Assistant Secretaries -8-
Section 9. Treasurer -8-
<PAGE>
Section 10. Assistant Treasurers -8-
Section 11. Bonding -9-
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Section 1. Form of Certificates -9-
Section 2. Lost Certificates -9-
Section 3. Transfer of Shares -9-
Section 4. Registered Shareholders -9-
ARTICLE VII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. General. -10-
Section 2. Insurance -10-
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends -11-
Section 2. Reserves -11-
Section 3. Fiscal Year -11-
Section 4. Seal -11-
Section 5. Annual Statement -11-
Section 6. Resignation -11-
ARTICLE IX
AMENDMENTS TO BYLAWS
<PAGE>
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the Corporation shall
---------- -----------------
be in Dallas County, Texas.
Section 2. Other Offices. The Corporation may also have offices at such
---------- --------------
other places both within and without the State of Texas as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
SHAREHOLDERS
Section l. Time and Place of Meetings. Meetings of the shareholders shall
---------- ---------------------------
be held at such time and at such place, within or without the State of Texas, as
shall be determined by the Board of Directors.
Section 2. Annual Meetings. Annual meetings of shareholders shall be held
---------- ----------------
each calendar year on such date and at such time as is designated by the Board
of Directors and stated in the notice of the meeting. At the annual meeting,
the shareholders shall elect a Board of Directors and transact such other
business as may properly be brought before the meeting.
Section 3. Special Meetings. Special meetings of the shareholders may be
---------- -----------------
called at any time by the Chairman of the Board, Chief Executive Officer,
President or the Board of Directors, and shall be called by the Chief Executive
Officer or the Secretary at the request in writing of the holders of not less
than twenty-five percent (25%) of the voting power represented by all of the
shares issued, outstanding and entitled to be voted at the meeting, unless the
Articles of Incorporation provide for a different percentage, in which event
such provision of the Articles of Incorporation shall govern. Such request
shall state the purpose or purposes of the proposed meeting. Business
transacted at special meetings shall be confined to the purposes stated in the
notice of the meeting.
Section 4. Notice. Written or printed notice stating the place, day and
---------- -------
hour of any shareholders' meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) nor more than fifty (50) days before the date of the meeting,
either personally or by mail, by or at the direction of the Chief Executive
Officer, the Secretary or the officer or person calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the shareholder at his address as it appears on
the stock transfer books of the Corporation.
Section 5. Closing of Transfer Books and Fixing Record Date. For the
---------- -------------------------------------------------
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the Corporation may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, fifty (50) days. If the stock transfer books shall be
closed for the purpose of determining shareholders, such books shall be closed
for at least ten days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may f ix in advance a date as
the record date for any such determination of shareholders, such date in any
case to be not more than fifty (50) days and, in the case of a meeting of
shareholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of
<PAGE>
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof except where the determination has been made through the closing of
stock transfer books and the stated period of closing has expired.
Section 6. List of Shareholders. The officer or agent of the Corporation
---------- ---------------------
having charge of the stock transfer books for shares of the Corporation shall
make, at least ten days before each meeting of the shareholders, a complete list
of the shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of voting
shares held by each, which list, for a period of ten days prior to such meeting,
shall be kept on file at the registered office of the Corporation and shall be
subject to inspection by any shareholder at any time during the usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original stock transfer books shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders. Failure to comply
with the requirements of this Section shall not affect the validity of any
action taken at such meeting.
Section 7. Quorum. The holders of shares having a majority of the voting
---------- -------
power represented by all issued and outstanding shares entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the shareholders for the transaction of business except as otherwise
provided by the Articles of Incorporation or by the Texas Business Corporation
Act (herein called the "Act"). In no event shall a quorum consist of the
holders of less than one-third (1/3) of the shares entitled to vote and thus
represented at such meeting. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders entitled to
vote, present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. once a quorum is constituted, the shareholders present or represented
by proxy at a meeting may continue to transact business until adjournment,
notwithstanding the subsequent withdrawal therefrom or refusal to vote of such
number of shareholders as to leave less than a quorum.
Section 8. Voting. When a quorum is present at any shareholders' meeting,
---------- -------
the affirmative vote of the holders of a majority of the shares entitled to vote
on, and that voted for or against or expressly abstained with respect to, any
question or matter brought before such meeting shall decide such question or
matter and shall be the act of the shareholders' meeting, unless the affirmative
vote of a greater number or portion of the shares entitled to vote is required
by the Act, the Articles of Incorporation, or these Bylaws.
Unless otherwise provided in the Articles of Incorporation or these Bylaws
in accordance with the Act, directors of the Corporation shall be elected by a
plurality of the votes cast by the holders of shares entitled to vote in the
election of directors at a meeting of shareholders at which a quorum is present.
At every meeting of the shareholders, each shareholder shall be entitled to
such number of votes, in person or by proxy, for each share having voting power
held by such shareholder, as is specified in the Articles of Incorporation or
resolution of the Board of Directors creating such shares, except to the extent
that the voting rights of the shares of any class or classes are limited or
denied by the Articles of Incorporation. At each election for directors, every
shareholder shall be entitled to cast, in person or by proxy, the number of
votes to which the shares owned by him are entitled for as many persons as there
are directors to be elected and for whose election he has a right to vote.
Cumulative voting is prohibited by the Articles of Incorporation. Every proxy
must be executed in writing by the shareholder or by his duly authorized
attorney-in-fact. A telegram, telex, cablegram, or similar transmission by the
shareholder, or a photographic, photostatic, facsimile, or similar reproduction
of a writing executed by the shareholder, shall be treated as an execution in
writing for the purposes of this Section S. No proxy shall be valid after
eleven (11) months from the date of its execution unless otherwise provided
therein. Each proxy shall be revocable unless (i) the proxy form conspicuously
states that the proxy is irrevocable, and (ii) the proxy is coupled with an
interest, as defined in the Act and other Texas laws.
<PAGE>
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe or, in
the absence of such provision, as the Board of Directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name as trustee.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without being transferred into his name, if such authority is contained in an
appropriate order of the court that appointed the receiver.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of the Corporation's stock owned by it or by another domestic or
foreign corporation or entity, if a majority of the voting stock or voting
interest of the other corporation or the other entity is owned or controlled by
the Corporation, shall not be voted, directly or indirectly, at any meeting and
shall not be counted in determining the total number of outstanding shares at
any given time. Nothing in this Section 8 limits the right of the Corporation
or any other domestic or foreign corporation or other entity to vote stock,
including (without limitation) its own stock, held or controlled by it in a
fiduciary capacity or with respect to which it otherwise exercises voting power
in a fiduciary capacity.
Section 9. Action by Consent. Any action required to be taken at a meeting
---------- ------------------
of the shareholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the shareholders
entitled to vote with respect to the subject matter thereof.
In addition, if the Articles of Incorporation so provide, any action
required or permitted to be taken at a meeting of the shareholders may be taken
without a meeting, without prior notice, and without a vote if a consent or
consents in writing setting forth the action so taken, shall be signed by the
holder or holders of shares having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which the holders of
all shares entitled to vote on the action were present and voted. Prompt notice
of the taking of any action by shareholders without a meeting by less than
unanimous written consent shall be given to those who did not consent in writing
to the action.
Every written consent shall bear the date of signature of each shareholder
who signs the consent. No written consent shall be effective to take the action
that is the subject of the consent unless, within 60 days after the date of the
earliest dated consent delivered to the Corporation as set forth below in this
Section 9, the consent or consents signed by the holder or holders of shares
having not less than the minimum number of votes that would be necessary to take
the action that is the subject of the consent are delivered to the Company by
delivery to its registered office, its principal place of business, or an
officer or agent of the Company having custody of the records in which
proceedings of meetings of shareholders are recorded. Delivery shall be by hand
or certified or registered mail, return receipt requested. Delivery to the
Corporation's principal place of business shall be addressed to the President or
the Chief Executive officer of the Company. A telegram, telex, cablegram, or
similar facsimile, or similar reproduction of a writing signed by a shareholder,
shall be regarded as signed by the shareholder for the purposes of this
Section 9.
Section 10. Presence at Meetings by Means of Communications Equipment.
----------- ----------------------------------------------------------
Shareholders may participate in and hold a meeting of the shareholders by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a
<PAGE>
meeting pursuant to this Section 10 shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
Section 1. Number of Directors. The number of directors of the Corporation
---------- --------------------
shall be fixed from time to time by resolution of the Board of Directors, but in
no case shall the number of directors be less than one. No decrease in the
number of directors shall have the effect of reducing the term of any incumbent
director. Directors shall be elected at each annual meeting of the
shareholders, except as provided in Section 2 of this Article, and each director
shall hold office until the annual meeting of shareholders following his
election or until his successor is elected and qualified. Directors need not be
residents of the State of Texas or shareholders of the Corporation.
Section 2. Vacancies. Subject to other provisions of this Section 2, any
---------- ----------
vacancy occurring in the Board of Directors may be filled by election at an
annual or special meeting of the shareholders called for that purpose or by the
affirmative vote of a majority of the remaining directors, though the remaining
directors may constitute less than a quorum of the Board of Directors as fixed
by Section 8 of this Article III. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in of f ice. Any directorship
to be filled by reason of an increase in the number of directors shall be filled
by election at an annual meeting or at a special meeting of shareholders called
for that purpose or may be filled by the affirmative vote of a majority of the
Board of Directors for a term of office continuing only until the next election
of one or more directors by the shareholders; provided that the Board of
Directors may not fill more than two such directorships during the period
between any two successive annual meetings of shareholders.
Shareholders holding shares having a majority of the voting power
represented by all issued and outstanding shares may, at any time and with or
without cause, terminate the term of office of all or any of the directors by a
vote at any annual or special meeting called for that purpose; provided that
such removal shall be without prejudice to the contractual rights, if any, of
such directors under any agreements with the Company. Such removal shall be
effective immediately upon such shareholder action even if successors are not
elected simultaneously, and the vacancies on the Board of Directors caused by
such action shall be filled only by election by the shareholders.
Section 3. General Powers. The business and affairs of the Corporation
---------- ---------------
shall be managed by its Board of Directors, which may exercise all of the powers
of the Corporation and do all such lawful acts and things, as are not by the
Act, the Articles of Incorporation or these Bylaws directed or required to be
exercised or done by the shareholders.
Section 4. Place of Meetings. The Board of Directors of the Corporation
---------- ------------------
may hold meetings, both regular and special, either within or without the State
of Texas.
Section 5. Annual Meetings. The first meeting of each newly elected Board
---------- ----------------
of Directors shall be held, without further notice, immediately following the
annual meeting of shareholders at the same place, unless by the majority vote or
unanimous consent of the directors then elected and serving, such time or place
shall be changed.
Section 6. Regular Meetings. Regular meetings of the Board of Directors
---------- -----------------
may be held with or without notice at such time and place as the Board of
Directors may determine by resolution.
Section 7. Special Meetings. Special meetings of the Board of Directors
---------- -----------------
may be called by or at the request of the Chief Executive Officer and shall be
called by the Secretary on the written request of a majority of the incumbent
directors. The person or persons authorized to call special meetings of the
Board of Directors may
<PAGE>
fix the place for holding any special meeting of the Board of Directors called
by them. Notice of any special meeting shall be given at least forty-eight (48)
hours before such meeting if given either personally (including written notice
delivered personally or telephone notice) or by telex, telecopy, telegram or
other means of immediate communication, and at least seven (7) days previous
before such meeting if given by written notice mailed to each director at the
address of his business or residence. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting. If mailed,
the notice shall be deemed to be delivered when deposited in the United States
mail addressed, in the manner specified above, with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered
when the telegram is delivered to the telegraph company. Any director may waive
notice of any meeting, as provided in Article IV, Section 2 of these Bylaws.
The attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business because the meeting is not
lawfully called or convened.
Section 8. Quorum and Voting. Subject to Section 9 of this Article III, at
---------- ------------------
all meetings of the Board of Directors, the presence of a majority of the number
of directors fixed in Article III, Section 1, of these Bylaws shall be necessary
and sufficient to constitute a quorum for the transaction of business, and the
affirmative vote of at least a majority of the number of directors fixed in
Article III, Section 1 of these Bylaws and present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by the Act, the Articles of Incorporation or
these Bylaws. If a quorum shall not be present at any meeting of directors, a
majority of the directors present thereat may adjourn the meeting from time to
time without notice other than announcement at the meeting, until a quorum shall
be present.
Section 9. Approval of Certain Matters. The affirmative vote of at least a
---------- ----------------------------
majority of the number of Directors specified in Article III, Section 1 of these
Bylaws and present at any meeting shall be necessary to authorize the
Corporation to:
(i) enter into or engage in any material business other than the business
activities then being conducted by the Corporation;
(ii) acquire or agree to acquire, whether by merger, consolidation,
acquisition of capital stock or assets or other means, an equity
interest in, or operating assets of, any corporation, partnership,
sole proprietorship or other entity; merge or consolidate with or
agree to merge or consolidate with any corporation;
(iv) sell or dispose of, or agree to sell or dispose of, all or a
substantial part of the assets of the Corporation;
(v) issue or agree to issue any securities (within the meaning of the
Securities Act of 1933) of the Corporation;
(vi) amend the Articles of Incorporation of the Corporation or these
Bylaws; or
(vii) take or approve any action the indirect effect of which would be to
engage in any of the foregoing activities.
Section 10. Committees. The Board of Directors may, by resolution adopted
----------- -----------
by a majority of the whole Board of Directors, designate one or more committees,
each to consist of one or more directors, one of whom may be designated as
Chairman and as such shall preside at all meetings of such committees. To the
extent provided in the resolution of the Board of Directors, the committees so
appointed shall have and may exercise all of the authority of the Board of
Directors in the management of the business and affairs of the Corporation,
except where
<PAGE>
action of the Board of Directors is required by the Act (particularly Article
2.36 thereof), by the Articles of Incorporation or by Section 9 of Article III
of the Bylaws, but the designation of such committees and the delegation thereto
of authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed upon it or him by law. The committees
shall keep regular minutes of their proceedings and report the same to the Board
of Directors when required. Any member of a committee may be removed, with or
without cause, by the affirmative vote of a majority of the whole Board of
Directors. If any vacancy or vacancies occur in the committees, such vacancy or
vacancies shall be filled by the affirmative vote of a majority of the whole
Board of Directors.
Section 11. Compensation of Directors. Unless otherwise provided by
----------- --------------------------
resolution of the Board of Directors, directors, as such, shall not receive any
stated salary for their services, but, by resolution of the Board of Directors,
a fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the Board of Directors. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of any committee may, by resolution of the Board of Directors, be allowed like
compensation for attending committee meetings.
Section 12. Action by Unanimous Consent. 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 a written consent, setting forth the action so
taken, is signed by all the members of the Board of Directors or the committee,
as the case may be, and such written consent shall have the same force and
effect as a unanimous vote at a meeting of the Board of Directors.
Section 13. Presence at Meetings by Means of Communications Equipment.
----------- ----------------------------------------------------------
Members of the Board of Directors of the Corporation or any committee designated
by the Board of Directors, may participate in and hold a meeting of such board
or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 13 shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE IV
NOTICES
Section 1. Form of Notice. Whenever under the provisions of the Act, the
---------- ---------------
Articles of Incorporation or these Bylaws, notice is required to be given to any
director or shareholder, and no provision is made as to how such notice shall be
given, it shall not be construed to mean personal notice exclusively, but any
such notice may be given in writing, by mail, postage prepaid, addressed to such
director or shareholder at such address as appears on the books of the
Corporation. Any notice required or permitted to be given by mail shall be
deemed to be given at the time when the same be thus deposited, postage prepaid,
in the United States mail as aforesaid.
Section 2. Waiver. Whenever any notice is required to be given to any
---------- -------
director or shareholder of the Corporation under the provisions of the Act, the
Articles of Incorporation or these Bylaws, a waiver thereof in writing signed by
the person or persons entitled to such notice, whether before or after the time
stated in such notice, shall be equivalent to the giving of such notice.
Section 3. When Notice Unnecessary. Whenever under the provisions of the
---------- ------------------------
Act, the Articles of Incorporation or these Bylaws, any notice is required to be
given to any shareholder, such notice need not be given to the shareholder if
(i) notice of two consecutive annual meetings and all notices of meetings held
during the period between those annual meetings, if any, or (ii) all (but in no
event less than two) payments (if sent by first class mail) of distributions or
interest on securities during a 12-month period have been mailed to that person,
addressed at his address as shown on the records of the Corporation, and have
been returned undeliverable. Any
<PAGE>
action or meeting taken or held without notice to such person shall have the
same force and effect as if the notice had been duly given. If such a person
delivers to the Corporation a written notice setting forth his then current
address, the requirement that notice be given to that person shall be
reinstated.
ARTICLE V
OFFICERS
Section 1. General. The elected officers of the Corporation shall be a
---------- --------
Chairman of the Board, a President, a Secretary and a Treasurer. The Board of
Directors may also elect or appoint a Chief Executive officer, one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers, all of whom shall also be
officers. Two or more offices may be held by the same person.
Section 2. Election. The Board of Directors shall elect the officers of
---------- ---------
the Corporation at each annual meeting of the Board of Directors. The Board of
Directors may appoint such other officers and agents as it shall deem necessary
and shall determine the salaries of all officers and agents from time to time.
The officers shall hold office until their successors are chosen and qualified.
No officer need be a member of the Board of Directors except the Chairman of the
Board, if one be elected. Any officer elected or appointed by the Board of
Directors may be removed, with or without cause, at any time by a majority vote
of the whole Board; provided that such removal shall be without prejudice to the
contractual rights, if any, of such officers under any employment contracts with
the corporation. Election or appointment of an officer or agent shall not of
itself create contract rights.
Section 3. Chairman of the Board. Except as otherwise provided by the
---------- ----------------------
Board of Directors, the Chairman of the Board shall be the Chief Executive
Officer of the Corporation and, subject to the provisions of these Bylaws, shall
have general supervision of the affairs of the Corporation and shall have
general and active control of all its business. He shall preside, when present,
at all meetings of shareholders and at all meetings of the Board of Directors.
He shall see that all orders and resolutions of the Board of Directors and the
shareholders are carried into effect. He shall have general authority to
execute bonds, deeds and contracts in the name of the Corporation and affix the
corporate seal thereto; to sign stock certificates; to cause the employment or
appointment of such employees and agents of the Corporation as the proper
conduct of operations may require, and to fix their compensation, subject to the
provisions of these Bylaws; to remove or suspend any employee or agent who shall
have been employed or appointed under his authority or under authority of an
officer subordinate to him; to suspend for cause, pending final action by the
authority which shall have elected or appointed him, any officer subordinate to
the Chairman of the Board; and, in general, to exercise all the powers and
authority usually appertaining to the chief executive officer of a corporation,
except as otherwise provided in these Bylaws.
Section 4. President. In the absence of a Chairman of the Board or an
---------- ----------
elected or appointed Chief Executive Officer, the President shall be the ranking
and Chief Executive Officer of the Corporation, and shall have the duties and
responsibilities, and the authority and power, of the Chairman of the Board.
The President shall be the Chief Operating Officer of the Corporation and as
such shall have, subject to review and approval of the Chairman of the Board,
the responsibility for the operation of the Corporation and the authority of the
Chairman of the Board.
Section 5. Vice Presidents. In the absence of the President or in the
---------- ----------------
event of his inability or refusal to act, the Vice President (or in the event
there be more than one, the Vice Presidents in the order designated or, in the
absence of any designation, then in the order of their election) shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. The Vice Presidents
shall perform such other duties and have such other powers as the Board of
Directors, the Chief Executive Officer or the Chief Operating Officer may from
time to time prescribe. The Vice President in charge
<PAGE>
of finance, if one is so elected, shall also perform the duties and assume the
responsibilities described in Section 9 of this Article for the Treasurer, and
shall report directly to the Chief Executive Officer of the Corporation.
Section 6. Assistant Vice Presidents. In the absence of a Vice President
---------- --------------------------
or in the event of his inability or refusal to act, the Assistant Vice President
(or, if there be more than one, the Assistant Vice Presidents in the order
designated or, in the absence of any designation, then in the order of their
election) shall perform the duties and exercise the powers of that Vice
President, and shall perform such other duties and have such other powers as the
Board of Directors, the Chief Executive Officer, the Chief Operating Officer or
the Vice President under whose supervision he is appointed may from time to time
prescribe.
Section 7. Secretary. The Secretary shall attend all meetings of the Board
---------- ----------
of Directors and all meetings of the shareholders and record all the proceedings
of the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the Executive Committee
or other standing committees when required. He shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or the Chief Executive Officer, under whose supervision
he shall be. He shall have custody of the corporate seal of the Corporation and
he, or an Assistant Secretary, shall have authority to affix the same to any
instrument requiring it, and when so affixed, it may be attested by his
signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his signature. The Secretary
shall keep and account for all books, documents, papers and records of the
Corporation except those for which some other officer or agent is properly
accountable. He shall have authority to sign stock certificates and shall
generally perform all the duties usually appertaining to the office of the
secretary of a corporation.
Section 8. Assistant Secretaries. In the absence of the Secretary or in
---------- ----------------------
the event of his inability or refusal to act, the Assistant Secretary (or, if
there be more than one, the Assistant Secretaries in the order designated or, in
the absence of any designation, then in the order of their appointment) shall
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors, the
Chief Executive Officer or the secretary may from time to time prescribe.
Section 9. Treasurer. The Treasurer (or the Vice President in charge of
---------- ----------
finance, if one is so elected) shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Chief Executive Officer and the Board of Directors, at its regular meetings,
or when the Board of Directors so requires, an account of all his transactions
as Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, he shall give the Corporation a bond (which shall be
renewed every six years) in such sum and with such surety or sureties as shall
be satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration of 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. The Treasurer shall be under the
supervision of the Vice President in charge of finance, if one is so designated,
and he shall perform such other duties as may be prescribed by the Board of
Directors, the Chief Executive Officer or any such vice President in charge of
finance.
Section 10. Assistant Treasurers. The Assistant Treasurer or Assistant
----------- ---------------------
Treasurers shall assist the Treasurer, and in the absence of the Treasurer or in
the event of his inability or refusal to act, the Assistant Treasurer (or, if
there shall be more than one, the Assistant Treasurer in the order designated
or, in the absence of any designation, then in the order of their appointment),
shall perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Board of Directors,
the Chief Executive Officer or the Treasurer may from time to time prescribe.
<PAGE>
Section 11. Bonding. If required by the Board of Directors, all or certain
----------- --------
of the officers shall give the corporation a bond, in such form, in such sum and
with such surety or sureties as shall be satisfactory to the Board, for the
faithful performance of the duties of their office and for the restoration to
the Corporation, in case of their death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in their possession or under their control belonging to the Corporation.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Section 1. Form of Certificates. The Corporation shall deliver
---------- ---------------------
certificates representing all shares to which shareholders are entitled.
certificates representing shares of the Corporation shall be in such form as
shall be approved and adopted 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 on the face thereof that the Corporation is
organized under the laws of the State of Texas, the name of the registered
holder, the number and class of shares, and the designation of the series, if
any, which said certificate represents, and either the par value of the shares
or a statement that the shares are without par value. Each certificate shall
also set forth on the back thereof, a full or summary statement of matters
required by the Act or the Articles of Incorporation to be described on
certificates representing shares, and shall contain a statement on the face
thereof referring to the matters set forth on the back thereof. Certificates
shall be signed by the Chairman of the Board, President or any Vice President
and the Secretary or any Assistant Secretary, and may be sealed with the seal of
the Corporation or a facsimile thereof. If any certificate is countersigned by
a transfer agent or registered by a registrar, either of which is other than the
Corporation or an employee of the Corporation, the signatures of the
Corporation's officers may be facsimiles. In case any officer or officers who
have signed, or whose facsimile signature or signatures have been used on such
certificate or certificates, shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates have been delivered by the Corporation or its
agents, such certificate or certificates may nevertheless be issued and
delivered as though the person or persons who signed the certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation.
Section 2. Lost Certificates. The Corporation may direct that a new
---------- ------------------
certificate be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing the issue of a new certificate, the Board of
Directors, in its discretion and as a condition precedent to the issuance
thereof, may require the owner of the lost or destroyed certificate, or his
legal representative, to advertise the same in such manner as it shall require
and/or give the Corporation a bond in such form, in such sum, and with such
surety or sureties as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost or destroyed.
<PAGE>
Section 3. Transfer of Shares. Shares of stock shall be transferable only
---------- -------------------
on the books of the Corporation by the holder thereof in person or by his duly
authorized attorney. Subject to any restrictions on transfer set forth in the
Articles of Incorporation of the Corporation, these Bylaws or any agreement
among shareholders to which this Corporation is a party or has notice, upon
surrender to the Corporation or to the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, it shall be the duty of the
Corporation or the transfer agent of the Corporation 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. The Corporation shall be entitled to
---------- ------------------------
recognize the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
ARTICLE VII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. General. The Corporation shall indemnify persons who are or
---------- --------
were a director or officer of the Corporation both in their capacities as
directors and officers of the Corporation and, if serving at the request of the
Corporation as a director, officer, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, trust, partnership,
joint venture, sole proprietorship, employee benefit plan or other enterprise,
in each of those capacities, against any and all liability and reasonable
expense that may be incurred by them in connection with or resulting from (a)
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, arbitrative or investigative, (b) an appeal in such an
action, suit or proceeding, or (c) any inquiry or investigation that could lead
to such an action, suit or proceeding, all to the full extent permitted by
Article 2.02-1 of the Act. The corporation shall pay or reimburse, in advance
of the final disposition of the action, suit or proceeding, to all persons who
are or were a director or officer of the Corporation all reasonable expenses
incurred by such person who was, is, or is threatened to be made a named
defendant or respondent in a proceeding to the full extent permitted by the Act.
The Corporation shall indemnify persons who are or were an employee or agent of
the Corporation, or persons who are not or were not employees or agents of the
Corporation but who are or were serving at the request of the Corporation as a
director, officer, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, trust, partnership, joint venture, sole
proprietorship, employee benefit plan or other enterprise (collectively, along
with the directors and officers of the Corporation, such persons are referred to
herein as "Corporate Functionaries") against any and all liability and
reasonable expense that may be incurred by them in connection with or resulting
from (a) any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, (b) an
appeal in such an action, suit or proceeding, or (c) any inquiry or
investigation that could lead to such an action, suit or proceeding, to the
extent required by Article 2.02-1 of the Act, and the Corporation may indemnify
such persons to the extent permitted by the Act. The rights of indemnification
provided for in this Article VII shall be in addition to all rights to which any
Corporate Functionary may be entitled under any agreement or vote of
shareholders or as a matter of law or otherwise.
Section 2. Insurance. The Corporation may purchase or maintain insurance
---------- ----------
on behalf of any Corporate Functionary against any liability asserted against
him and incurred by him in such a capacity or arising out of his status as a
Corporate Functionary, whether or not the corporation would have the power to
indemnify him or her against the liability under the Act or these Bylaws;
provided, however, that if the insurance or other arrangement is with a person
or entity that is not regularly engaged in the business of providing insurance
coverage, the insurance or arrangement may provide for payment of a liability
with respect to which the Corporation would not have the power to indemnify the
person only if including coverage for the additional liability has been approved
by the shareholders of the Corporation. Without limiting the power of the
Corporation to procure or maintain any kind of insurance or arrangement, the
Corporation may, for the benefit of persons indemnified by the Corporation, (i)
create a trust fund, (ii) establish any form of self-insurance, (iii) secure
its indemnification obligation by grant of any security interest or other lien
on the assets of the Corporation, or (iv) establish a letter of credit, guaranty
or surety arrangement. Any such insurance or other arrangement may be procured,
maintained or established within the Corporation or its affiliates or with any
insurer or other person deemed appropriate by the Board of Directors of the
Corporation regardless of whether all or part of the stock or other securities
thereof are owned in whole or in part by the Corporation. In the absence of
fraud, the judgment of the Board of Directors of the Corporation as to the terms
and conditions of such insurance or other arrangement and the identity of the
insurer or other person participating in an arrangement shall be conclusive, and
the insurance or arrangement shall not be voidable and shall not subject the
directors
<PAGE>
approving the insurance or arrangement to liability, on any ground, regardless
of whether directors participating in approving such insurance or other
arrangement shall be beneficiaries thereof.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the outstanding shares of the
---------- ----------
Corporation, subject to the provisions of the Act and the Articles of
Incorporation and any agreements or obligations of the Corporation, if any, may
be declared by the Board of Directors at any regular or special meeting.
Dividends may be declared and paid in cash, in property, or in shares of the
Corporation, provided that all such declarations and payments of dividends shall
be in strict compliance with all applicable laws and the Articles of
Incorporation. The Board of Directors may fix in advance a record date for the
purpose of determining shareholders entitled to receive payment of any dividend,
such record date to be not more than fifty (50) days prior to the payment date
of such dividend. In the absence of any action by the Board of Directors, the
date upon which the Board of Directors adopts the resolution declaring such
dividend shall be the record date.
Section 2. Reserves. There may be created by resolution of the Board of
---------- ---------
Directors out of the earned surplus of the corporation such reserve or reserves
as the Board of Directors from time to time, in its discretion, deems proper to
provide for contingencies, or to equalize dividends, or to repair or maintain
any property of the Corporation, or for such other proper purpose as the Board
shall deem beneficial to the Corporation, and the Board may modify or abolish
any reserve in the same manner in which it was created.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be
---------- ------------
determined by the Board of Directors.
Section 4. Seal. The Corporation shall have a seal which may be used by
---------- -----
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced. Any officer of the Corporation shall have authority to affix the
seal to any document requiring it.
Section 5. Annual Statement. Upon thirty (30) days, prior written request
---------- -----------------
of any shareholder, the Board of Directors of the Corporation shall mail or
cause to be mailed to each shareholder of record, at least ten (10) days before
each annual meeting of shareholders, a full and clear statement of the business
and financial condition of the Corporation, including a reasonably detailed
balance sheet, income statement and surplus statement, all prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and certified by the President of the Corporation.
Section 6. Resignation. Any director, officer or agent of the Corporation
---------- ------------
may resign by giving written notice to the President or the Secretary. The
resignation shall take effect at the time specified therein, or immediately if
no time is specified therein. Unless specified in such notice, the acceptance
of such resignation shall not be necessary to make it effective.
ARTICLE IX
AMENDMENTS TO BYLAWS
These Bylaws may be altered, amended, modified or repealed, or new Bylaws
may be adopted at any meeting of the Board of Directors in accordance with
Article III, Section 9 of these Bylaws.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND INTERIM UNAUDITED CONSOLIDATED STATEMENTS OF
EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 65,555
<SECURITIES> 0
<RECEIVABLES> 8,683
<ALLOWANCES> 911
<INVENTORY> 1,889
<CURRENT-ASSETS> 75,745
<PP&E> 43,278
<DEPRECIATION> 18,417
<TOTAL-ASSETS> 135,516
<CURRENT-LIABILITIES> 70,612
<BONDS> 0
0
0
<COMMON> 98
<OTHER-SE> 32,894
<TOTAL-LIABILITY-AND-EQUITY> 135,516
<SALES> 44,819
<TOTAL-REVENUES> 44,819
<CGS> 0
<TOTAL-COSTS> 41,214
<OTHER-EXPENSES> 50
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,165
<INCOME-PRETAX> 2,390
<INCOME-TAX> 956
<INCOME-CONTINUING> 1,434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,434
<EPS-PRIMARY> .15
<EPS-DILUTED> .14
</TABLE>
