<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
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: 0-18237
VIKING OFFICE PRODUCTS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-2082946
------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
879 West 190th Street
P. O. Box 61144
Los Angeles, California 90061
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(310) 225-4500
---------------------------------------------------
(Registrant's Telephone Number, including area code)
- -------------------------------------------------------------------------------
(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:
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT FEBRUARY 7, 1997
----- -------------------------------
<S> <C>
Common Stock 83,793,055
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 28,
1996 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $16,428 $11,693
Short-term investments 37,858 33,068
Accounts receivable, net 134,730 121,061
Merchandise inventories 101,693 81,753
Prepaid catalog costs 16,947 17,831
Prepaid expenses and other current assets 3,029 3,430
-------- --------
Total current assets 310,685 268,836
-------- --------
Property and equipment, net 113,410 95,231
Other assets:
Deposits and other assets 7,267 6,590
Intangible assets, net 28,534 28,984
-------- --------
Total other assets 35,801 35,574
-------- --------
Total assets $459,896 $399,641
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $110,053 $91,975
Sales and value added taxes payable 3,428 3,956
Income taxes payable 30,719 26,149
-------- --------
Total current liabilities 144,200 122,080
-------- --------
Deferred income taxes 2,532 2,532
Stockholders' equity:
Common stock 103,742 98,567
Unamortized value of long-term incentive stock grant (5,244) (4,346)
Retained earnings 214,539 181,722
Cumulative foreign currency translation adjustment 127 (914)
-------- --------
Total stockholders' equity 313,164 275,029
-------- --------
Total liabilities and stockholders' equity $459,896 $399,641
======== ========
</TABLE>
2
<PAGE>
VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- -----------------------
1996 1995 1996 1995
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues $316,494 $250,437 $607,026 $480,447
Cost of goods sold, including delivery 205,874 164,991 393,876 314,990
-------- -------- -------- --------
Gross profit 110,620 85,446 213,150 165,457
Selling, general & administrative expenses 87,983 68,221 168,018 129,536
-------- -------- -------- --------
Operating income 22,637 17,225 45,132 35,921
Other income 2,528 2,171 4,654 4,195
Interest expense 26 37 52 108
-------- -------- -------- --------
Income before income taxes 25,139 19,359 49,734 40,008
Income taxes 8,554 6,549 16,917 13,896
-------- -------- -------- --------
Net income $ 16,585 $ 12,810 $ 32,817 $ 26,112
======== ======== ======== ========
Net income per common and common
equivalent share $ 0.19 $ 0.15 $ 0.38 $ 0.30
======== ======== ======== ========
Weighted average number of common
and common equivalent shares 87,500 86,800 87,500 86,200
======== ======== ======== ========
</TABLE>
3
<PAGE>
VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
-------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $589,429 $457,152
Cash paid to suppliers and employees (545,399) (437,679)
Interest received 1,737 1,116
Interest paid (52) (108)
Income taxes paid (14,068) (1,155)
-------- --------
Net cash provided by operating activities 31,647 19,326
Cash flows from investing activities:
Capital expenditures (25,636) (30,292)
Short-term investments (4,790) 8,216
Proceeds from sale of property and equipment 183 196
Issuance of notes receivable and other (637) (4,140)
-------- --------
Net cash used in investing activities (30,880) (26,020)
Cash flows from financing activities:
Proceeds from issuance of common stock 4,429 2,456
-------- --------
Net cash provided by financing activities 4,429 2,456
Effect of exchange rate changes on cash (461) (885)
-------- --------
Net increase (decrease) in cash and cash equivalents 4,735 (5,123)
Cash and cash equivalents, beginning of period 11,693 11,080
-------- --------
Cash and cash equivalents, end of period $ 16,428 $ 5,957
======== ========
Reconciliation of net income to net cash provided by
operating activities:
Net income $32,817 $26,112
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,137 6,240
(Gain) loss on sale of property and equipment (46) 111
Provision for doubtful accounts and customer returns 6,124 4,886
Increase in accounts receivable (16,889) (23,458)
Increase in merchandise inventories (18,683) (29,438)
Decrease in prepaid expenses and other current assets 1,551 4,292
Increase in accounts payable and accrued expenses 14,321 21,433
Increase in other liabilities 3,315 9,148
-------- --------
Total adjustments (1,170) (6,786)
-------- --------
Net cash provided by operating activities $ 31,647 $ 19,326
======== ========
</TABLE>
4
<PAGE>
VIKING OFFICE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(UNAUDITED)
1. FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission and reflect all adjustments, consisting only of normal
recurring adjustments, which, in the opinion of management, are necessary for a
fair presentation of the results of the interim periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's Annual Report to Shareholders for the year
ended June 28, 1996.
The June 28, 1996 Condensed Consolidated Balance Sheet was derived from the
audited Consolidated Balance Sheet at June 28, 1996, which was incorporated by
reference in the Company's annual report on Form 10-K.
In October 1995, The Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation", which is effective for the Company beginning July 1, 1996. SFAS
No. 123 requires expanded disclosure of stock-based compensation arrangements
with employees and encourages (but does not require) compensation cost to be
measured based on the fair value of the equity instrument awarded. Companies are
permitted, however, to continue to apply APB Opinion No. 25, which recognizes
compensation cost based on the intrinsic value of the equity instrument awarded.
The Company will continue to apply APB Opinion No. 25 to its stock based
compensation awards to employees and will disclose the required pro forma effect
on net income and earnings per share.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
Viking Office Products, Inc. ("Viking" or the "Company") operated nine
distribution centers throughout the United States, two in Australia and seven in
Europe. Operations in the foreign countries account for an increasing percentage
of the Company's consolidated revenues and expenses, and an increasing amount of
Viking's consolidated assets. The asset and liability accounts of Viking's
foreign subsidiaries are translated for consolidated financial reporting
purposes into United States Dollar amounts at period end exchange rates. Revenue
and expense accounts are translated at weighted average exchange rates for the
period. Foreign currency fluctuations did not materially impact the results of
operations for the three months and six months ended December 31, 1996.
The following table shows, for the periods indicated, the percentage
relationships to revenues of items included in the Condensed Consolidated
Statements of Income and the percentage changes in the dollar amounts of such
items from period to period.
<TABLE>
<CAPTION>
Percentage
Increase (Decrease)
Three Months Ended Six Months Ended -------------------------------
December 31, December 31, 3 Months 6 Months
-------------------- -------------------- --------------- ---------------
1996 1995 1996 1995 1996 vs. 1995 1996 vs. 1995
------ ------ ------ ------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0% 26.4% 26.3%
Cost of goods sold, including delivery 65.0% 65.9% 64.9% 65.6% 24.8% 25.0%
------ ------ ------ ------
Gross profit 35.0% 34.1% 35.1% 34.4% 29.5% 28.8%
Selling, general & administrative
expenses 27.8% 27.2% 27.7% 26.9% 29.0% 29.7%
------ ------ ------ ------
Operating income 7.2% 6.9% 7.4% 7.5% 31.4% 25.6%
Other income 0.8% 0.8% 0.8% 0.8% 16.4% 10.9%
Interest expense 0.0% 0.0% 0.0% 0.0% NA NA
------ ------ ------ ------
Income before income taxes 8.0% 7.7% 8.2% 8.3% 29.9% 24.3%
Income taxes 2.7% 2.6% 2.8% 2.9% 30.6% 21.7%
------ ------ ------ ------
Net income 5.3% 5.1% 5.4% 5.4% 29.5% 25.7%
------ ------ ------ ------
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE THREE MONTHS ENDED DECEMBER
- --------------------------------------------------------------------------------
31, 1995.
- ---------
Revenues for the three months ended December 31, 1996 were $316.5 million,
an increase of $66.1 million, or 26.4%, over the three months ended December 31,
1995. European revenues were $186.4 million, an increase of 41.6% over the
comparable period of the prior year. European operations included the United
Kingdom, The Republic of Ireland, France, Belgium, Luxembourg, The Netherlands
and Germany. In Australia, revenues were $15.3 million, increasing 25.1% over
last year. International operations accounted for more than 63% of the second
quarter revenues. United States revenues were $114.8 million, an increase of
7.7% versus the same period last year. This slower growth rate was due primarily
to lower selling prices of paper products. On a company-wide basis, during the
three months ended December 31, 1996, the number of catalogs mailed increased
14.2%, the number of customers who purchased products increased 25.1% and the
average revenue per customer increased by 1.0% since last year.
Gross profit for the three months ended December 31, 1996 increased by
$25.2 million, or 29.5% over last year. As a percentage of revenues, gross
profit increased from 34.1% in the three months ended December 31, 1995 to 35.0%
in the current quarter. The increase in gross profit is primarily attributable
to decreases in the costs of paper products and higher volume rebates earned on
inventory purchases.
6
<PAGE>
Selling, general and administrative expenses for the three months ended
December 31, 1996 increased by $19.8 million, or 29.0% over the prior year. As a
percentage of revenues, these expenses increased from 27.2% in the three months
ended December 31, 1995 to 27.8% in the three months ended December 31, 1996.
This increase was primarily due to higher expenses in Germany, lower than
expected revenues in the United States and France, as well as start up and early
operating expenses for new distribution centers in Europe and in the United
States.
Other income for the three months ended December 31, 1996 increased by
$357,000, or 16.4% over the comparable period of the prior year. The three
months ended December 31, 1996 included more cash discounts received on higher
inventory purchases.
Income taxes for the three months ended December 31, 1996 increased by $2.0
million due to higher pretax earnings. The effective tax rate increased from
33.8% for the three months ended December 31, 1995 to 34.0% for the current
period.
Consolidated net income for the quarter ended December 31, 1996 was $16.6
million, an increase of 29.5% over the comparable period of the prior year.
Consolidated earnings per share were $.19 compared to $.15 last year.
SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE SIX MONTHS ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
1995.
- -----
Revenues for the six months ended December 31, 1996 were $607.0 million, an
increase of $126.6 million, or 26.3%, over the six months ended December 31,
1995. European revenues were $352.2 million, an increase of 41.9% over the prior
year. European operations included the United Kingdom, The Republic of Ireland,
France, Belgium, Luxembourg, The Netherlands and Germany. In Australia, revenues
were $30.7 million, increasing 26.0% over last year. International operations
accounted for more than 63% of the revenues for the six months ended December
31, 1996. United States revenues were $224.1 million, an increase of 7.9% over
last year. This slower growth rate was due primarily to lower selling prices of
paper products versus last year. On a company-wide basis, during the six months
ended December 31, 1996, the number of catalogs mailed increased 16.6%, the
number of customers who purchased products increased 22.0% and the average
revenue per customer increased by 3.6% since last year.
Gross profit for the six months ended December 31, 1996 increased by $47.7
million, or 28.8% over last year. As a percentage of revenues, gross profit
increased from 34.4% in the six months ended December 31, 1995 to 35.1% in the
current period. The increase in gross profit is primarily attributable to
decreases in the costs of paper products and higher gross profit in the newer
markets in Europe, as well as higher volume rebates earned on inventory
purchases.
Selling, general and administrative expenses for the six months ended
December 31, 1996 increased by $38.5 million, or 29.7% over the prior year. As a
percentage of revenues, these expenses increased from 26.9% in the six months
ended December 31, 1995 to 27.7% in the six months ended December 31, 1996. This
percentage increase was primarily due to higher expenses in Germany, lower than
expected revenues in the United States and France, as well as start up and early
operating expenses for new distribution centers in Europe and in the United
States.
Other income for the six months ended December 31, 1996 increased by
$459,000, or 10.9% over the comparable period of the prior year. This year
included more cash discounts received on higher inventory purchases.
Income taxes for the six months ended December 31, 1996 increased by $3.0
million due to higher pretax earnings. The effective tax rate decreased from
34.7% for the six months ended December 31, 1995 to 34.0% for the current
period. This decrease was primarily attributable to the use of foreign losses
available to offset domestic taxable income.
7
<PAGE>
Consolidated net income for the six months ended December 31, 1996 was $32.8
million, an increase of 25.7% over the six months ended December 31, 1995.
Consolidated earnings per share were $.38 compared to $.30 last year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Viking's primary source of liquidity has been cash flow from operations.
Viking believes that its existing cash and short-term investments, funds
generated from operations and available credit under its revolving credit
facility will be sufficient to finance its working capital requirements for the
foreseeable future. At December 31, 1996, the Company had working capital of
$166.5 million compared to $146.8 million at June 28, 1996. The improved working
capital position primarily reflects increased net income, net of investing
activities, which consisted primarily of capital expenditures. Cash provided by
operating and financing activities that exceeded current working capital and
capital expenditures requirements was invested in short-term marketable
securities.
Capital expenditures amounted to $25.6 million for first six months of
fiscal 1997 as Viking continued to invest in domestic and international
operations, particularly in Europe. Viking believes there are substantial
opportunities throughout Europe to expand its business. In January 1997, Viking
began cross border operations into Austria, and plans to enter Italy in calendar
1997. Capital expenditures related to expansion have been funded by cash from
operations. In fiscal 1997, capital expenditures are expected to be between $50
million and $60 million.
Viking has a revolving credit agreement which provides for an unsecured
revolving credit facility up to $60 million through June 2001. Advances under
this credit facility bear interest at the bank's base rate or, at the option of
Viking, the LIBOR rate plus a percentage spread based upon certain defined
ratios. In addition, Viking is required to pay a commitment fee of 1/8% on the
total amount of the revolving credit facility. The availability of the line of
credit is subject to Viking's maintenance of certain financial ratios. At
December 31, 1996, no amounts were outstanding under this credit facility and
the entire $60 million was available for borrowing.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(a) On January 20, 1997, the Board of Directors amended the Bylaws of the
corporation to add provisions requiring shareholders to provide advance notice
of business proposed to be brought before, and of nominations of directors to be
made at, annual shareholder meetings, in order to help management of the
corporation regulate the conduct of the annual meetings.
Under the amended Bylaws, a shareholder must advise the corporation in writing
at least 60 days but not more than 90 days prior to the proposed annual meeting
date of the shareholder's intent to propose business to be acted upon at the
meeting or to nominate one or more persons for election as directors. However,
if the corporation fails to give notice or to make a public announcement of the
date set for the annual meeting at least 70 days prior thereto, the
shareholder's proposal or nomination must be received by the corporation no
later than the tenth day following the date notice or public announcement of the
date of the annual meeting is given. A shareholder is required to provide
certain information with the notice, including the shareholder's stock holdings.
Failure to give proper notice will result in denial of the shareholder's right
to propose such business or make a nomination at the meeting.
9
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders for Viking Office Products, Inc. was
held on November 14, 1996. At the meeting, the shareholders elected a Board of
Directors pursuant to management's nomination in the proxy statement dated
October 3, 1996.
At the meeting, the shareholders also voted to approve the President's
Performance Based Bonus Plan and to ratify the selection of Deloitte and Touche
as independent auditors.
The vote on the proposal to adopt the President's Performance based Bonus
plan was as follows:
<TABLE>
<CAPTION>
VOTES FOR AGAINST ABSTENTIONS
--------- ------- -----------
<S> <C> <C>
64,757,320 545,541 112,757
</TABLE>
The vote on the proposal to ratify the selection of auditors was as
follows:
<TABLE>
<CAPTION>
VOTES FOR AGAINST ABSTENTIONS
--------- ------- -----------
<S> <C> <C>
68,182,090 32,343 26,103
</TABLE>
10
<PAGE>
ITEM 5. OTHER INFORMATION.
On January 20, 1997, the Board of Directors adopted a Shareholder Rights
Plan designed to assure that all Viking shareholders receive fair and equal
treatment in the event of any proposed takeover of the Company, and to guard
against partial tender offers, open market accumulations and other abusive
tactics to gain control of Viking without paying all stockholders a control
premium. The Board of Directors declared a dividend of one Preferred Share
Purchase Right (a "Right") for each outstanding share of common stock. The
Rights have an exercise price of $150, trade automatically with shares of Viking
common stock and are exercisable if a person or a group acquires 15% or more of
Viking's common stock or announces a tender offer for 15% or more of the common
stock. Each Right entitles the holder to purchase, at the Rights then current
exercise price, a number of common shares of Viking (or, under certain
circumstances, of the acquiring person or entity) having a market value of twice
the Rights exercise price. Viking's board is entitled to redeem the Rights at
$0.01 per Right at any time before the 10th day after a person has acquired 15%
or more of the outstanding common stock. The dividend was distributed to
shareholders of record on February 3, 1997. The Rights expire in ten years.
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS REPORT:
3.6 Amendment to the Bylaws of the corporation
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
On January 31, 1997, the Company filed a report on Form 8-K containing a
report on Item 5 with respect to the adoption of a Shareholder Rights Plan,
which was adopted by the Board of Directors on January 20, 1997.
12
<PAGE>
SIGNATURE
- ---------
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.
VIKING OFFICE PRODUCTS, INC.
DATE: February 7, 1997 BY: /s/ Frank R. Jarc
-------------------------
Executive Vice President,
Chief Financial Officer
BY: /s/ Keith Bjelajac
-------------------------
Corporate Controller
13
<PAGE>
EXHIBIT 3.6
EXHIBIT 3.6 TO FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1996 AMENDMENT TO
- -----------------------------------------------------------------------------
THE BYLAWS OF THE CORPORATION
- -----------------------------
CERTIFICATE OF SECRETARY
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of Viking Office
Products, Inc., a California corporation (the "corporation");
That the following resolutions, which are not inconsistent with Articles of
Incorporation of the corporation, as amended, and have not been modified or
rescinded, were unanimously adopted by the Board of Directors of the corporation
on January 20, 1997:
"RESOLVED that Article II, Section 2.2, of the Bylaws of the
corporation be and it hereby is amended to read in its entirety as follows:
'Section 2.2 ANNUAL MEETINGS
The annual meeting of shareholders shall be held on July 1 (but if
such day is a legal holiday, then on the next succeeding business day) at
the hour of 10:00 o'clock in the a.m., Pacific Time, or such other day and
time as the Board of Directors may select, at which meeting the
shareholders shall elect by plurality vote a Board of Directors, consider
reports of the affairs of the corporation, and transact such other business
as may properly be brought before the meeting.
To be properly brought before the annual meeting, business must be
either (i) specified in the notice of annual meeting (or any supplement or
amendment thereto) given by or at the direction of the Board of Directors,
(ii) otherwise brought before the annual meeting by or at the direction of
the Board of Directors, or (iii) otherwise properly brought before the
annual meeting by a shareholder. In addition to any other applicable
requirements, for business to be properly brought before an annual meeting
by a shareholder, the shareholder must have given timely notice thereof in
writing to the Secretary of the corporation. To be timely, a shareholder's
notice must be delivered to or mailed and received at the principal
executive offices of the corporation not less than sixty (60) days nor more
than ninety (90) days prior to the meeting, provided, however, that in the
event that less than seventy (70) days notice or prior public disclosure of
the date of the annual meeting is given or made to shareholders, notice by
a shareholder, to be timely, must be received no later than the close of
business on the tenth (10th) day following the day on which such notice of
the date of the annual meeting was mailed or such public disclosure was
made, whichever first occurs. A shareholder's notice to the Secretary shall
set forth (a) as to each matter the shareholder proposes to bring before
the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such
business at the annual meeting, and (ii) any material interest of the
shareholder in such business, and (b) as to the shareholder giving the
notice (i) the name and record address of the shareholder and (ii) the
class, series and number of shares of capital stock of the corporation
which are beneficially owned by the shareholder. Notwithstanding anything
in these Bylaws to the contrary, no business shall be conducted at the
annual meeting except in accordance with the procedures set forth in this
Article II, Section 2.2. The officer of the corporation presiding at an
annual meeting shall, if the facts warrant, determine and declare to the
annual meeting that business was not properly brought before the annual
meeting in accordance with the provisions of this Article II, Section 2.2,
and if such
<PAGE>
officer should so determine, such officer shall so declare to the annual
meeting and any such business not properly brought before the meeting shall
not be transacted.'
RESOLVED that Article III, Section 3.3, of the Bylaws of the
corporation be and it hereby is amended to read in its entirety as follows:
'Section 3.3. ELECTION AND TENURE OF OFFICE
The directors shall be elected at the annual meeting of the
shareholders. Each director, including a director elected to fill a
vacancy, shall hold office until the next annual meeting and until a
successor has been elected and qualified.
Nominations of persons for election to the Board of Directors of the
corporation at the annual meeting may be made at such meeting by or at the
direction of the Board of Directors, by any committee or persons appointed
by the Board of Directors or by any shareholder of the corporation entitled
to vote for the election of directors at the meeting who complies with the
notice procedures set forth in this Article III, Section 3.3. Such
nominations by any shareholder shall be made pursuant to timely notice in
writing to the Secretary of the corporation. To be timely, a shareholder's
notice shall be delivered to or mailed and received at the principal
executive offices of the corporation not less than sixty (60) days nor more
than ninety (90) days prior to the meeting; provided, however, that in the
event that less than seventy (70) days notice or prior public disclosure of
the date of the meeting is given or made to shareholders, notice by the
shareholder, to be timely, must be received no later than the close of
business on the tenth (10th) day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made,
whichever first occurs. Such shareholder's notice to the Secretary shall
set forth (i) as to each person whom the shareholder proposes to nominate
for election or reelection as a director, (a) the name, age, business
address and residence address of the person, (b) the principal occupation
or employment of the person, (c) the class and number of shares of capital
stock of the corporation which are beneficially owned by the person, and
(d) any other information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors pursuant
to the Rules and Regulations of the Securities and Exchange Commission
under Section 14 of the Securities Exchange Act of 1934, as amended; and
(ii) as to the shareholder giving the notice (a) the name and record
address of the shareholder and (b) the class and number of shares of
capital stock of the corporation which are beneficially owned by the
shareholder. The corporation may require any proposed nominee to furnish
such other information as may reasonably be required by the corporation to
determine the eligibility of such proposed nominee to serve as a director
of the corporation. No person shall be eligible for election as a director
of the corporation unless nominated in accordance with the procedures set
forth herein. The officer of the corporation presiding at an annual meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing procedure, and if
he should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.'
RESOLVED FURTHER that the Secretary be and he is hereby authorized and
directed to prepare and executive a certificate as to the adoption of the
foregoing amendment to the Bylaws and to place a copy of said certificate
in the minute book of the corporation."
<PAGE>
IN WITNESS WHEREOF I have executed this Certificate of Secretary this
31st day of January 1997.
/s/ Stephen R. Kroll, Secretary
--------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-27-1997
<PERIOD-END> DEC-31-1996
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0
0
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</TABLE>
