<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-13215
GARDNER DENVER, INC.
(formerly known as Gardner Denver Machinery Inc.)
(Exact name of Registrant as Specified in its Charter)
Delaware 76-0419383
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1800 Gardner Expressway
Quincy, Illinois 62301
(Address of Principal Executive Offices and Zip Code)
(217) 222-5400
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirement for the past 90 days.
Yes X No
---------- ----------
Number of shares outstanding of the issuer's Common Stock, par value $.01 per
share, as of August 10, 1998: 16,192,157 shares.
===============================================================================
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
GARDNER DENVER, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
-----------------------
1998 1997
-------- -------
<S> <C> <C>
Revenues $103,509 $69,447
Costs and Expenses:
Cost of sales (excluding depreciation
and amortization) 70,131 45,743
Depreciation and amortization 3,221 2,190
Selling and administrative expenses 13,738 9,292
Interest expense 1,386 936
Other expense 123 --
-------- -------
Income before income taxes 14,910 11,286
Provision for income taxes 5,710 4,473
-------- -------
Net income $ 9,200 $ 6,813
======== =======
Basic earnings per share $ 0.57 $ 0.45
======== =======
Diluted earnings per share $ 0.55 $ 0.43
======== =======
The accompanying notes are an integral part of this statement.
</TABLE>
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<PAGE> 3
<TABLE>
GARDNER DENVER, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Revenues $193,301 $135,522
Costs and Expenses:
Cost of sales (excluding depreciation
and amortization) 129,529 90,196
Depreciation and amortization 6,116 4,450
Selling and administrative expenses 26,692 18,653
Interest expense 2,565 1,913
Other expense 278 --
-------- --------
Income before income taxes 28,121 20,310
Provision for income taxes 10,840 8,173
-------- --------
Net income $ 17,281 $ 12,137
======== ========
Basic earnings per share $ 1.08 $ 0.81
======== ========
Diluted earnings per share $ 1.04 $ 0.77
======== ========
The accompanying notes are an integral part of this statement.
</TABLE>
-3-
<PAGE> 4
<TABLE>
GARDNER DENVER, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 11,546 $ 8,831
Receivables, net 86,507 62,307
Inventories, net 62,617 48,324
Deferred income taxes 5,281 2,784
Other 1,935 2,637
-------- --------
Total current assets 167,886 124,883
-------- --------
Property, plant and equipment, net 49,897 37,530
Intangibles, net 113,254 85,524
Deferred income taxes 13,290 15,845
Other assets 4,452 5,356
-------- --------
Total assets $348,779 $269,138
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 804 $ 459
Accounts payable and accrued liabilities 69,918 58,471
-------- --------
Total current liabilities 70,722 58,930
-------- --------
Long-term debt, less current maturities 89,536 51,227
Postretirement benefits other than pensions 50,958 52,977
Other long-term liabilities 4,983 2,393
-------- --------
Total liabilities 216,199 165,527
-------- --------
Stockholders' equity:
Common stock, $.01 par value; 50,000,000 shares
authorized; 16,131,480 shares issued and
outstanding at June 30, 1998 161 154
Capital in excess of par value 151,884 139,524
Treasury stock at cost, 40,724 shares at
June 30, 1998 (921) (333)
Retained deficit (16,314) (33,432)
Cumulative translation adjustments (2,230) (2,302)
-------- --------
Total stockholders' equity 132,580 103,611
-------- --------
Total liabilities and stockholders' equity $348,779 $269,138
======== ========
The accompanying notes are an integral part of this statement.
</TABLE>
-4-
<PAGE> 5
<TABLE>
GARDNER DENVER, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,281 $ 12,137
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,116 4,450
Stock issued for employee benefit plans 963 725
Deferred income taxes (189) (1,021)
Changes in assets and liabilities:
Receivables (13,953) (6,508)
Inventories (1,373) 1,859
Accounts payable and accrued liabilities 1,766 1,760
Other assets and liabilities, net (470) (2,023)
-------- --------
Net cash provided by operating activities 10,141 11,379
-------- --------
Cash flows from investing activities:
Business acquisitions, net of cash acquired (39,295) (26,153)
Foreign currency hedging transactions 851 --
Capital expenditures (6,269) (2,475)
-------- --------
Net cash used for investing activities (44,713) (28,628)
-------- --------
Cash flows from financing activities:
Principal payments on long-term debt (28,890) (9,435)
Proceeds from long-term borrowings 67,450 23,000
Debt issuance costs (67) --
Proceeds from stock options, net of
treasury stock transactions 316 762
Other (163) --
-------- --------
Net cash provided by financing activities 38,646 14,327
-------- --------
Effect of exchange rate changes (1,359) --
-------- --------
Increase (decrease) in cash and equivalents 2,715 (2,922)
-------- --------
Cash and equivalents, beginning of period 8,831 8,610
-------- --------
Cash and equivalents, end of period $ 11,546 $ 5,688
======== ========
The accompanying notes are an integral part of this statement.
</TABLE>
-5-
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies.
Basis of Presentation. The accompanying financial statements include the
accounts of Gardner Denver, Inc. ("Gardner Denver" or the "Company") and its
subsidiaries. All significant intercompany transactions and accounts have
been eliminated. Investments in entities in which the Company has twenty to
fifty percent ownership are accounted for by the equity method.
All shares of common stock and per share amounts have been adjusted to give
retroactive effect to a three-for-two stock split distributed on December 29,
1997 to stockholders of record at the close of business on December 8, 1997,
effected in the form of a stock dividend.
The financial information presented as of any date other than December 31 has
been prepared from the books and records without audit. The accompanying
consolidated financial statements have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and the
footnotes required by generally accepted accounting principles for complete
statements. In the opinion of management, all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of such
financial statements, have been included.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
These consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto for the year ended
December 31, 1997 contained in the Company's 1997 Annual Report to
Stockholders.
Financial Instruments. Off balance sheet derivative financial instruments as
of June 30, 1998 consist of an interest rate swap agreement used to fix
interest rates on floating rate debt. Included on the balance sheet is a
foreign currency forward contract in Finnish Marka to hedge foreign exchange
risk on the Company's investment in its Finnish subsidiary, Oy Tamrotor Ab
("Tamrotor"). The contract is marked to market and both unrealized and
realized gains and losses are included in the cumulative translation
adjustments component of stockholders' equity.
Note 2. Acquisitions.
On June 30, 1997, the Company purchased 100% of the issued and outstanding
stock of Tamrotor, a subsidiary of Tamrock Corporation located in Tampere,
Finland, for approximately $26.2 million. The purchase price was allocated
to assets and liabilities based on their respective fair values at the date
of acquisition, and resulted in cost in excess of net assets acquired of
$15.4 million.
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<PAGE> 7
On January 5, 1998, the Company purchased substantially all of the assets and
assumed certain agreed upon liabilities of Geological Equipment Corporation
("Geoquip"), located in Fort Worth, Texas for approximately $12.0 million.
The purchase price was paid in cash ($1.5 million) and 430,695 shares of
Gardner Denver common stock. The Company also paid approximately $2 million
to acquire patents, previously owned by Geoquip shareholders, for products
manufactured by Geoquip. The purchase price was allocated to assets and
liabilities based on their respective fair values at the date of acquisition
and resulted in cost in excess of net assets acquired of $7.4 million.
On January 29, 1998, the Company purchased substantially all of the assets
and assumed certain agreed upon liabilities of Champion Pneumatic Machinery
Company, Inc. ("Champion"), a subsidiary of CRL Industries, Inc., for
approximately $23.7 million. Champion is located in Princeton, Illinois.
The purchase price was allocated to assets and liabilities based on their
respective fair values at the date of acquisition and resulted in cost in
excess of net assets acquired of $17.8 million.
On March 9, 1998, the Company purchased substantially all of the assets and
assumed certain agreed upon liabilities of the Wittig Division of Mannesmann
Demag A.G. for approximately $12.0 million. Wittig is located in Schophfeim,
Germany. The purchase price was allocated to assets and liabilities based on
their respective fair values at the date of acquisition and resulted in cost
in excess of net assets acquired of $2.4 million.
As a result of the stability of the product technology, markets and customers
associated with these four acquisitions, the cost in excess of net assets
acquired for each acquisition is being amortized over 40 years using the
straight-line method.
All acquisitions have been accounted for by the purchase method, and
accordingly, the results of operations of Tamrotor, Geoquip, Champion and
Wittig are included in the Company's Consolidated Statement of Operations
from the dates of acquisition. Certain estimates of fair market value of
assets received and liabilities assumed were made with adjustments to each
separate company's historical financial statements. The estimates and
adjustments for the acquisitions of Geoquip, Champion and Wittig have not
been finalized.
Note 3. Income Taxes.
In the first six months of 1998 and 1997, the Company paid $11.3 million and
$8.6 million, respectively, to the various taxing authorities and recognized
$10.8 million and $8.2 million, respectively, in income tax expense.
-7-
<PAGE> 8
Note 4. Inventories.
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
Raw materials, including parts and
subassemblies $ 57,365 $ 47,992
Work-in-process 12,137 9,667
Finished goods 15,445 11,003
Perishable tooling and supplies 2,571 2,571
-------- --------
87,518 71,233
Excess of current standard costs
over LIFO costs (12,036) (10,964)
Allowance for obsolete and slow-
moving inventory (12,865) (11,945)
-------- --------
Inventories, net $ 62,617 $ 48,324
======== ========
</TABLE>
Note 5. Long-term Debt and Other Borrowing Arrangements.
Long-term debt at June 30, 1998 consisted of certain notes and credit
facilities due between 2000 and 2018. In September 1996, the Company entered
into an unsecured senior note agreement for $35 million. This debt has a
ten-year final, seven-year average maturity with principal payments beginning
in 2000. In January 1998, the Company refinanced its existing bank debt with
an unsecured five-year revolving loan. The total credit line available on
the revolving loan is $125 million, of which $81 million remained available
for additional borrowings or to issue as letters of credit at June 30, 1998.
The revolving loan will mature on January 20, 2003. On April 23, 1998, the
Fayette County Development Authority issued $9.5 million in Industrial
Revenue Bonds, on behalf of the Company, to finance the cost of constructing
and equipping the Company's new manufacturing facility in Peachtree City,
Georgia. These variable rate bonds mature on March 1, 2018. Maturities of
long-term debt for the five years subsequent to June 30, 1998 are $0.8
million for 1999; $0.6 million for 2000; $5.3 million for 2001; $5.1 million
for 2002; and $49.1 million for 2003.
Total interest expense during the first six months of 1998 and 1997 totaled
$2.6 and $1.9 million, respectively. Interest paid for the first six months
of 1998 totaled $2.5 million, while the interest paid for the first six
months of 1997 was $2.0 million.
Note 6. Earnings per share.
The 1998 and 1997 basic earnings per share for the three month period ended
June 30 were calculated based on 16,114,626 and 15,025,385 weighted average
shares outstanding, respectively. The 1998 and 1997 basic earnings per share
for the six month period ended June 30 were calculated based on 16,034,526
and 14,934,717 weighted average shares outstanding, respectively. The 1998
and 1997 diluted earnings per share for the three month period ended June 30
were calculated based on 16,708,154 and 15,799,083 weighted average shares
outstanding. The 1998 and 1997 diluted earnings per share for the six month
period ended June 30 were calculated based on 16,680,102 and 15,738,666
weighted average shares outstanding.
-8-
<PAGE> 9
Basic and diluted weighted average shares outstanding were adjusted for the
stock split effected on December 29, 1997. The basic and diluted earnings
per share were calculated in accordance with Statement of Financial
Accounting Standards 128 ("SFAS 128").
Note 7. Interest Rate Swap Agreements.
At June 30, 1998, the Company had an interest rate swap agreement with a
commercial bank (the "Counter Party") outstanding, having a notional
principal amount of $15 million. The swap provides a fixed interest rate of
6%. The interest rate swap terminated in November 1997, but was extended for
one additional year at the option of the Counter Party. The Company is
exposed to credit loss in the event of nonperformance by the Counter Party to
the interest rate swap agreement. However, the Company does not anticipate
such nonperformance.
Note 8. Comprehensive Income.
In June 1997, the Financial Accounting Standards Board (FASB) adopted
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and
disclosure of comprehensive income and its components. Effective January 1,
1998, the Company adopted SFAS No. 130. For the six months ended June 30,
1998 and 1997, comprehensive income was $17.3 million and $12.2 million,
respectively. For the three months ended June 30, 1998 and 1997,
comprehensive income was $9.2 million and $6.9 million, respectively. Items
impacting the Company's comprehensive income, but not included in net income,
consist of changes in cumulative translation adjustments and a foreign
currency hedge in 1998. In 1997, the adjustment from net income to
comprehensive income consists solely of changes in cumulative translation
adjustments. The net impact of these items was minimal in each year.
Note 9. New Accounting Standards.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement establishes accounting
and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability, measured at
its fair value. The Statement requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the income statement, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999 and
will be adopted at that time. The Company has reviewed its current
derivative instruments and hedging activities and has determined that the
adoption of SFAS No. 133 would not have a material impact on its financial
statements as of June 30, 1998.
-9-
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations.
Revenues
Revenues increased $57.8 million (43%) to $193.3 million for the six months
ended June 30, 1998, compared to the same period of 1997. Incremental
revenues from acquisitions completed since June 1997 contributed $42.5
million of this increase. Excluding acquisitions, revenues increased $15.3
million (11%) over the same period of 1997. See Note 2 to the Financial
Statements contained in this document for further information on the
Company's recent acquisitions.
For the six months ended June 30, 1998, revenues for the Compressed Air
Products segment increased $41.5 million (39%) to $148.1 million compared to
the same period of 1997. Excluding acquisitions, which contributed $37.7
million, compressor products revenues increased $3.8 million (4%), primarily
related to growth in the U.S. economy, increased shipments of engineered
packages and penetration of niche markets such as field gas gathering.
Petroleum Products segment revenues increased $16.3 million (56%) in the six
months ended June 30, 1998, compared to the same period of 1997. An
acquisition contributed $4.8 million of this increase. Excluding this
acquisition, petroleum products revenues increased $11.5 million (40%),
primarily as a result of growth in oil and gas well drilling and stimulation
over the last eighteen months. The Company has been able to leverage its
manufacturing operations and administrative expenses, and obtain significant
price increases in the Petroleum Products segment as a result of the
increased demand for petroleum products.
For the three months ended June 30, 1998, revenues were $103.5 million,
compared to $69.4 million in the same period of 1997. Approximately $26.5
million of this increase is attributable to incremental revenues from
acquisitions which the Company has completed since June 1997. Excluding
incremental revenues from acquisitions, revenues increased approximately $7.6
million (11%) for the quarter, compared to the same period of 1997.
Revenues for the Compressed Air Products segment increased $23.9 million
(44%) to $78.1 million for the quarter ended June 30, 1998, compared to $54.2
million for the same period of 1997 as a result of incremental revenues from
acquisitions. Petroleum Products segment revenues increased 66% to $25.4
million for the quarter ended June 30, 1998, compared to the same period of
1997. Incremental revenues from acquisitions generated $2.5 million of the
$10.1 million increase in petroleum products revenues. The remaining
increase was primarily a result of increased drilling and stimulation
activity over the last eighteen months.
Compared to the first quarter of 1998, the Company's revenues increased $13.7
million in the three-month period ending June 30, 1998. Petroleum Products
segment revenues increased $5.7 million (29%) in the second quarter of 1998,
compared to the first quarter of 1998, primarily due to shipments of drilling
pumps ordered in the fourth quarter of 1997. Revenues for the
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<PAGE> 11
Compressed Air Products segment increased $8.0 million (12%), due primarily
to incremental revenues from acquisitions.
In general, demand for compressor products follows economic growth patterns
as indicated by the rate of change in GDP and industrial production. In the
U.S., orders for compressor products declined somewhat in the second quarter
of 1998, compared to the same period of 1997 and to the first quarter of
1998, as a result of uncertainty concerning the economy's rate of growth. In
Europe, demand for compressor products increased during the second quarter of
1998, as a result of improving economic conditions in this region. Demand
for petroleum products correlates with the prices of oil and natural gas.
Future increases in demand for these products is dependent upon further
appreciation in oil and gas prices.
Costs and Expenses
Gross margins (defined as sales less cost of sales excluding depreciation and
amortization) for the six month period of 1998 increased $18.5 million (41%)
to $63.8 million from $45.3 million in the same period of 1997. Gross margin
as a percentage of revenues decreased to 33.0% in the six month period of
1998 from 33.4% in the same period of 1997. Excluding the effect of the
acquisitions, gross margin as a percentage of revenues increased to 33.7%.
Increases in gross margin are primarily attributable to increased volume,
with some improvement resulting from cost reduction efforts, such as
manufacturing process improvements, and price increases for petroleum
products which were implemented in 1997. For the second quarter of 1998, the
gross margin increased $9.7 million (41%) to $33.4 million from $23.7 million
in the same period of 1997. Gross margin as a percentage of revenues
declined to 32.2% in the three month period of 1998 from 34.1% in the same
period of 1997. Excluding the effect of the acquisitions, gross margin as a
percentage of revenues decreased to 33.5% for the three month period of 1998.
For the three month period, the decrease in gross margin as a percentage of
revenues is primarily attributable to the Company incurring expenses related
to a plant relocation, which is planned to occur in the fourth quarter of
1998 and an unfavorable mix of shipments compared to the same period of the
previous year.
Depreciation and amortization increased 37% to $6.1 million in the first six
months of 1998, compared with $4.5 million for the same period of 1997. For
the second quarter, depreciation and amortization increased 47% to $3.2
million, compared with $2.2 million for the same period of 1997. The
increases in depreciation and amortization expense in both the six and three
month periods, compared to the previous year, were due to the acquisitions
and capital expenditures. Depreciation and amortization as a percentage of
revenues was 3.2% and 3.1% for the respective three and six-month periods of
1998, which was relatively unchanged from the comparable periods of 1997.
Selling and administrative expenses increased in the first six months of 1998
by 43% to $26.7 million from $18.7 million for the same period of 1997.
Approximately $6.9 million of the $8.0 million increase is attributable to
newly acquired operations. For the second quarter of 1998, selling and
administrative expenses increased 48% to $13.7 million from $9.3 million in
the same period of 1997, primarily due to newly acquired operations. As a
percentage of revenues, selling
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<PAGE> 12
and administrative expenses were 13.3% and 13.8% for the respective three and
six-month periods of 1998, which was relatively unchanged from the comparable
periods of 1997.
As a result of the significant volume increases in petroleum product
revenues, this business segment has leveraged its fixed and semi-fixed costs
to generate improvements in operating margins (defined as revenues, less cost
of sales, depreciation and amortization, and selling and administrative
expenses excluding corporate administrative expenses). Significant price
increases for this segment have also contributed to this improvement. For
the second quarter of 1998, the Petroleum Products segment generated
operating margins of 24.6%, compared to 21.6% for the same period of 1997.
The Compressed Air Products segment generated operating margins of 13.7% for
the second quarter of 1998, a decline from the 17.1% for the comparable
three month period of 1997. This decline is primarily due to newly acquired
operations which currently generate a lower operating margin (after
amortization of goodwill associated with the acquisitions) than does the
balance of the Company's existing operations. Excluding the incremental
effect of acquisitions completed since June 1997 on the results of 1998, the
operating margin for compressor products would have remained flat at 17.1%.
Interest expense increased $0.7 million (34%) for the six month period of
1998 compared to the same period of 1997, due to incremental debt incurred
for the acquisitions. The average interest rate for the six-month period of
1998 was 6.2% compared to 7.5% for the same period of 1997, primarily due to
lower interest rates on incremental borrowings. During the second quarter of
1998, interest expense increased $0.5 million (48%) to $1.4 million compared
to the same period in 1997 due to incremental debt incurred for acquisitions.
See Note 5 to the Financial Statements contained in this document for further
information on the Company's borrowing arrangements.
Income before income taxes improved $7.8 million (38%) for the six months
ended June 30, 1998, compared to the same period of 1997. Approximately $1.7
million of this increase is attributable to the acquisitions, net of interest
expense on debt incurred to complete the acquisitions and the related
amortization of goodwill. The remaining $6.1 million increase is primarily a
result of incremental revenues, improved gross margin and lower interest
expense (excluding debt related to acquisitions) in 1998 compared to the
previous year. Income before income taxes improved $3.6 million (32%) for
the second quarter of 1998, compared to the same period in 1997.
Approximately $0.6 million of this increase is attributable to the
acquisitions, net of interest expense on debt incurred to complete the
acquisitions and the related amortization of goodwill. The remaining $3.0
million increase is attributable to incremental revenues and lower interest
expense (excluding debt related to acquisitions).
Compared to 1997, the provision for income taxes increased by $2.7 million to
$10.8 million for the first six months of 1998 and by $1.2 million to $5.7
million for the second quarter of 1998, as a result of the increase in income
before taxes. The Company's effective tax rate was 38.5% for the first six
months of 1998, compared to 40.2% for the first six months of 1997; and 38.3%
for the second quarter of 1998, compared to 39.6% for the second quarter of
1997. The lower effective rate in 1998 is due to the tax savings from the
Foreign Sales Corporation (the "FSC"), the lower statutory tax rate in
Finland compared to the U.S., and the implementation of other tax strategies,
partly offset by an increase in nondeductible goodwill resulting from some of
the acquisitions.
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<PAGE> 13
Net income for the six months ended June 30, 1998 increased $5.1 million
(42%) to $17.3 million ($1.04 diluted earnings per share), compared to $12.1
million ($0.77 diluted earnings per share) for the same period of 1997.
Acquisitions provided $1.1 million ($0.07 diluted earnings per share) of the
net income increase in the six month period of 1998. The remaining $4.0
million ($0.20 diluted earnings per share) increase is a result of revenue
growth, price increases for petroleum products and leverage of manufacturing
costs and administrative expenses as volume increased. Net income for the
second quarter of 1998 increased $2.4 million (35%) to $9.2 million ($0.55
diluted earnings per share) from $6.8 million ($0.43 diluted earnings per
share) for the same period in 1997. Net income for the second quarter of 1998
included approximately $0.5 million ($0.03 diluted earnings per share) in
incremental income from acquisitions. Excluding the incremental income from
acquisitions, net income increased $1.9 million (28%) for the quarter, a $0.09
diluted earnings per share improvement, for the reasons discussed previously.
Liquidity and Capital Resources
Operating Working Capital
During the six months ended June 30, 1998, operating working capital (defined
as receivables plus inventories, less accounts payable and accrued
liabilities) increased $27.0 million to $79.2 million, with the acquisitions
causing $12.9 million of this increase. The remaining increase in operating
working capital was due to an increase in inventory and receivables.
Receivables increased $24.2 million since the end of 1997, of which $12.1
million was due to acquisitions. The remaining increase in receivables was
due to higher revenues in 1998 compared to 1997, the timing of the sales
within the second quarter of 1998, and a delay in payments by a key customer
which should be resolved prior to December 31, 1998.
Inventories increased $14.3 million to $62.6 million at June 30, 1998,
compared to December 31, 1997. The acquisitions generated $13.0 million of
this increase. The remaining increase in inventories was due to longer lead
times on purchased material requiring higher levels of safety stock. The
$11.4 million increase in accounts payable and accrued liabilities is
primarily attributable to the acquisitions.
Cash Flows
During the six months of 1998, the Company generated cash flows from
operations totaling $10.1 million, a decrease of $1.2 million (11%) compared
to the same period in 1997. This decrease was primarily the result of the
increase in receivables, as discussed previously. The increase in
receivables and inventories was partially offset by higher net income. During
this six month period, the Company borrowed $18.0 million under a new
revolving credit facility and utilized the funds to repay all outstanding
commitments under its previous credit facility. The Company also borrowed
$40.0 million to finance the purchase of acquisitions, and issued $10.5
million of stock to fund the balance of the purchase price for Geoquip. In
April of 1998, the Fayette County Development Authority issued $9.5 million
in Industrial Revenue Bonds on the Company's behalf to finance the
construction of the Peachtree City, Georgia facility, as discussed below.
The remaining cash flows enabled the Company to expend $6.3 million on
capital expenditures and
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<PAGE> 14
repay $28.9 million of long-term debt, resulting in an increase in the cash
balance of $2.7 million as of June 30, 1998.
Capital Expenditures and Commitments
Capital projects to increase operating efficiency and flexibility, expand
production capacity and product quality resulted in expenditures of $6.3
million in the first six months of 1998. This was $3.8 million higher than
the level of capital expenditures in the comparable period in 1997. Most of
the increase was due to expenditures made for production equipment and
construction of the new manufacturing facility in Peachtree City, Georgia.
Commitments for capital expenditures at June 30, 1998 totaled $11.3 million.
Management expects additional capital authorizations to be committed during the
remainder of the year and that capital expenditures for 1998 will approximate
$18 to $21 million, primarily due to the construction of the new facility in
Georgia, expenditures made at newly acquired facilities and expenditures for
capacity expansion and cost reductions at other operations.
In 1997 the Company announced that it will close its blower manufacturing
plant in Syracuse, New York, and consolidate operations at its new site in
Georgia. The new plant should be operating by the fourth quarter of 1998, at
which time the Syracuse plant will be shut down. The Company expects to
spend approximately $7.0 million in capital for the facility.
Impact of the Year 2000 Issue
The "Year 2000 Issue" is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or statements, perform material requirements
planning or engage in similar normal business activities.
The Company believes the 1997 implementation of its integrated management
information system addresses the Year 2000 Issue for the programs replaced
with the new system. The Company has completed its assessment of the impact
of the Year 2000 Issue on other parts of its business, including embedded
systems not involving information technology. The Company expects to
implement the remaining upgrades necessary to address the Year 2000 Issue by
the first quarter of 1999 without a material impact on the results of
operations. These upgrades include significant enhancements other than
addressing the Year 2000 Issue.
The Company is communicating with its significant suppliers and large
customers to determine the extent to which the Company would be vulnerable to
those third parties' failure to remediate their own Year 2000 Issue. The
Company also plans to perform on-site review of critical suppliers and is
considering contingency plans, if needed. The success of the Company's
suppliers and customers in remediating their respective Year 2000 Issue is
not within the Company's control,
-14-
<PAGE> 15
but the Company does not currently expect that its operations will be
materially impacted by the Year 2000 Issue due to its suppliers or customers.
Cautionary Statements Regarding Forward-Looking Statements
This Management's Discussion and Analysis contains forward-looking statements
within the meaning of the federal securities laws. As a general matter,
forward-looking statements are those focused upon anticipated events or
trends and expectations and beliefs relating to matters that are not
historical in nature. Such forward-looking statements are subject to
uncertainties and factors relating to the Company's operations and business
environment, all of which are difficult to predict and many of which are
beyond the control of the Company, that could cause actual results of the
Company to differ materially from those matters expressed in or implied by
such forward-looking statements. Such factors could include among others;
the speed with which the Company is able to integrate its recent
acquisitions; the level of oil and gas drilling and production, which affects
demand for the Company's petroleum products; pricing of Gardner Denver's
products; changes in the general level of industrial production and
industrial capacity utilization rates in the United States and the rate of
economic growth in Europe, which affect demand for the Company's compressor
products; the degree to which the Company is able to penetrate niche markets;
and the extent to which the Company is able to operate without disruption due
to the Year 2000 Issue.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
- ---------------
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders (the "Annual Meeting") was held
pursuant to notice on May 5, 1998. At the Annual Meeting, Frank J. Hansen
and Thomas M. McKenna were elected to serve as directors for a three-year
term expiring in 2001. There were 14,288,068 affirmative votes cast and
72,379 votes withheld concerning Mr. Hansen's election as a director, and
14,268,251 affirmative votes cast and 92,196 votes withheld concerning Mr.
McKenna's election as a director.
At the Annual Meeting, the Company's stockholders approved an amendment to
the Company's Articles of Incorporation, changing the corporate name to
"Gardner Denver, Inc." There were 14,288,904 affirmative votes cast, 15,241
votes cast against and 116,302 abstaining votes concerning this amendment.
-15-
<PAGE> 16
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits:
3.1 Certificate of Incorporation of Gardner Denver, Inc. as amended
on May 5, 1998.
3.2 ByLaws of Gardner Denver, Inc. as amended on May 5, 1998.
11.1 Computation of earnings per share for the three months ended
June 30, 1998 and June 30, 1997.
11.2 Computation of earnings per share for the six months ended
June 30, 1998 and June 30, 1997.
27.0 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended June
30, 1998.
-16-
<PAGE> 17
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.
GARDNER DENVER, INC.
Date: August 13, 1998 By: /s/Ross J. Centanni
-----------------------------------------
Ross J. Centanni
President and Chief Executive Officer
Date: August 13, 1998 By: /s/Philip R. Roth
-----------------------------------------
Philip R. Roth
Vice President, Finance and
Chief Financial Officer
-17-
<PAGE> 18
GARDNER DENVER, INC.
<TABLE>
Exhibit Index
<CAPTION>
Exhibit
No. Description
<C> <S>
3.1 Certificate of Incorporation of Gardner Denver, Inc. as amended
on May 5, 1998.
3.2 ByLaws of Gardner Denver, Inc. as amended on May 5, 1998.
11.1 Computation of earnings per share for the three months ended June
30, 1998 and June 30, 1997.
11.2 Computation of earnings per share for the six months ended June
30, 1998 and June 30, 1997.
27.0 Financial Data Schedule.
</TABLE>
<PAGE> 1
CERTIFICATE OF INCORPORATION
OF
GARDNER DENVER, INC.
ARTICLE I
Name
----
Section 1.01 Name. The name of the corporation is Gardner Denver, Inc.
----
(the "Corporation").
ARTICLE II
Registered Office and Registered Agent
--------------------------------------
Section 2.01 Registered Office and Agent. The address of the
---------------------------
Corporation's registered office in the State of Delaware is Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
Purpose
-------
Section 3.01 Purpose. The nature of the business or purposes to be
-------
conducted or promoted is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
Terms of Shares
---------------
Section 4.01 Amount Authorized. The total number of shares of stock which
-----------------
the Corporation shall have authority to issue is sixty million (60,000,000),
of which ten million (10,000,000) shares shall be preferred stock, par value
$.01 per share ("Preferred Stock"), and fifty million (50,000,000) shares
shall be common stock, par value $.01 per share ("Common Stock"). Shares of
any class of stock of the Corporation may be issued for such consideration
and for such corporate purposes as the Board of Directors of the Corporation
may from time to time determine.
Section 4.02 Preferred Stock. The Preferred Stock may be issued from time
---------------
to time in one or more series, each such series to have distinctive
designations. The powers, preferences and rights of each such series, and
the qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding. The Board of
Directors hereby is
-1-
<PAGE> 2
expressly granted authority to cause the Preferred Stock to be issued in one or
more series and with respect to each such series prior to the issuance thereof
to fix by resolution the following:
(a) the designation of the series, which may be by distinguishing
number, letter or title;
(b) the number of shares of the series, which number the Board of
Directors may (except where otherwise provided in the creation of
the series) increase or decrease (but not below the number of
shares thereof then outstanding);
(c) the voting powers of the shares, which may be full or limited, or
may be without voting power;
(d) the dividend rights of the series, if any, including without
limitation, the dividend rates, the dividend payment dates,
whether dividends will be cumulative, any conditions for payment
and any payment preferences in relation to the dividends payable
on any other class or classes or series of stock;
(e) the redemption rights, if any, and the price or prices for the
shares of the series;
(f) sinking fund requirements, if any, for the purchase or redemption
of shares of the series;
(g) rights upon the liquidation, dissolution or winding up of the
Corporation or upon the distribution of the assets of the
Corporation;
(h) whether the shares shall be convertible into shares of any other
class or classes or any other series of the same or any other
class or classes of stock, and if so, the conversion price, any
adjustments thereof, and all other terms and conditions upon
which such conversion may be made;
(i) the benefit of any conditions and restrictions upon the creation
of indebtedness of the Corporation or any subsidiary, upon the
issue of any additional stock (including additional shares of
such series or of any other series) and upon the payment of
dividends or the making of other distributions on and the
purchase, redemption or other acquisition by the Corporation or
any subsidiary of any outstanding stock of the Corporation; and
(j) such other powers, preferences, and rights, and such other
qualifications, limitations or restrictions as the Board of
Directors shall determine;
all as shall be stated in the resolution or resolutions of the Board of
Directors providing for the issue of such Preferred Stock.
-2-
<PAGE> 3
The relative powers, preferences and rights of each series of Preferred Stock
in relation to the powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time to time by the
Board of Directors in the resolution or resolutions adopted pursuant to
authority granted in this Section 4.02, and the consent, by class or series
vote or otherwise, of the holders of Preferred Stock of such of the series of
the Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other series of
Preferred Stock whether the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a parity
with, the powers, preferences, and rights of such outstanding series, or any
of them, unless and to the extent that the Board of Directors may provide in
such resolution or resolutions adopted with respect to any series of
Preferred Stock that the consent of the holders of a majority (or such other
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance Of any or all other
series of Preferred Stock.
Shares of any series of Preferred Stock that (i) have been redeemed by the
Corporation in accordance with the express terms thereof, (ii) are purchased
in satisfaction of any sinking fund requirements provided for shares of such
series or (iii) are converted in accordance with the express terms thereof
shall be cancelled and not reissued. Any shares of Preferred Stock otherwise
acquired by the Corporation shall resume the status of authorized and
unissued shares of Preferred Stock without series designation.
Section 4.03 Dividends. Subject to the preferential rights, if any, of the
---------
holders of Preferred Stock, the holders of Common Stock shall be entitled to
receive such dividends, if any, as may be declared from time to time by the
Board of Directors from funds legally available therefor.
Section 4.04 Liquidation, Dissolution, Winding Up. After distribution in
------------------------------------
full of the preferential amount, if any, to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding up of the Corporation,
the holders of the Common Stock shall be entitled to receive all the
remaining assets of the Corporation, tangible and intangible, of whatever
kind available for distribution to stockholders, ratably in proportion to the
number of shares of the Common Stock held by each.
Section 4.05 Voting. Except as may otherwise be required by law, this
------
Certificate of Incorporation or, in the case of Preferred Stock, the
provisions of such resolution or resolutions as may be adopted by the Board
of Directors pursuant to Section 4.02 of this Article IV, each holder of
Preferred Stock and each holder of Common Stock shall have one vote in
respect of each share of Preferred Stock and each share of Common Stock held
by such holder on each matter voted upon by the stockholders.
Section 4.06 No Cumulative Voting. Cumulative voting of shares is
--------------------
prohibited.
Section 4.07 No Preemptive Rights. No holder of shares of any class of
--------------------
stock of the Corporation shall, as such holder, have any preemptive right to
purchase shares of any class of stock of the Corporation or shares or other
securities convertible into or exchangeable for or carrying rights or options
to purchase shares of any class of stock of the Corporation, whether such
class of stock,
-3-
<PAGE> 4
shares or other securities are now or hereafter authorized, which at any time
may be proposed to be issued by the Corporation or subjected to rights or
options to purchase granted by the Corporation.
ARTICLE V
Meetings
--------
Section 5.01 No Written Consents. No action required to be taken or that
-------------------
may be taken at an annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power of stockholders to
consent in writing, without a meeting, to the taking of any action is
specifically denied.
ARTICLE VI
Board of Directors
------------------
Section 6.01 Removal. Notwithstanding any other provisions of this
-------
Certificate of Incorporation or the bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
this Certificate of Incorporation or the bylaws of the Corporation), any
director or the entire Board of Directors of the Corporation may be removed
at any time, but only for cause.
ARTICLE VII
Amendment of Bylaw
------------------
Section 7.01 Amendment of By-laws. In furtherance and not in limitation
--------------------
of the powers conferred by statute, the Board of Directors is expressly
authorized to make, alter or repeal the Bylaws of the Corporation.
ARTICLE VIII
Indemnification and Limitation of Liability
-------------------------------------------
Section 8.01 Limitation of Liability. No director of the Corporation
-----------------------
shall be personally liable to the Corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a director, except that the
foregoing provision shall not eliminate or limit the liability of a director
(i) for any breach of such director's duty of loyalty to the Corporation or
its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Title 8, Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which such director derived an improper personal benefit. If
the Delaware General Corporation Law hereafter is amended to authorize the
further elimination or limitation on personal liability of directors, then
the liability of a director of the Corporation, in
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<PAGE> 5
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended Delaware General
Corporation Law.
Section 8.02 Indemnification. Any person who was or is made a party or is
---------------
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the Corporation) (hereinafter a
"proceeding"), by reason of the fact that he is or was a Director or officer
of the Corporation or is or was serving at the request of the Corporation as
a director or officer of another corporation or of a partnership, joint
venture, trust or other enterprise shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him or her in connection
therewith; provided, however, that the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) that was initiated by such person only if such proceeding (or part
thereof) was authorized or ratified by the Board of Directors of the
Corporation. The right to indemnification conferred in this Section 8.02
shall be a contract right.
For purposes of this Section 8.02, reference to "the Corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued would
have had power and authority to indemnify its directors and officers so that
any person who is or was a director or officer of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under the provisions of this Section 8.02, with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Section 8.03 Payment of Expenses in Advance. Expenses (including
------------------------------
attorneys' fees) incurred by an officer or director in defending an action, suit
or proceeding referred to in Section 8.02 above may be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of an
undertaking by or an behalf of the director or officer to repay such amount
unless it shall ultimately be determined that he or she is entitled to be
indemnified by the Corporation as authorized in Section 8.02.
Section 8.04 Indemnification Not Exclusive. The indemnification provided
-----------------------------
under Section 8.02 shall not be deemed exclusive of (i) any other rights to
which those seeking indemnification may be entitled under any bylaw, any
agreement, any insurance purchased by the Corporation, vote of stockholders
or disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office or (ii) the power of the Corporation to indemnify any person who is or
was an employee or agent of the Corporation or of another corporation, joint
venture, trust or other enterprise that he or she is serving or has
-5-
<PAGE> 6
served at the request of the Corporation, to the same extent and in the same
situations and subject to the same determinations with respect to directors and
officers. The indemnification provided by Section 8.02 shall continue as to
any person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such person.
Section 8.05 Other. Any repeal or modification of this Article VIII by the
-----
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of
the Corporation or the Indemnification of any officer or director of the
Corporation existing at the time of such repeal or modification.
ARTICLE IX
Amendment of Certificate of Incorporation
-----------------------------------------
Section 9.01 Amendment of Certificate of Incorporation. Notwithstanding
-----------------------------------------
anything contained in this Certificate of Incorporation or the bylaws of the
Corporation to the contrary (and notwithstanding that a lesser percentage may
be specified by law), the affirmative vote of the holders of at least 80% of
the voting power of all of the securities of the Corporation entitled to vote
generally in the election of directors, voting together as a single class,
shall be required to alter, amend or repeal Articles V and VI hereof.
ARTICLE X
Incorporator
------------
Section 10.01 Name and Mailing Address. The name and the mailing address
------------------------
of the incorporator is:
Lisa Rush
811 Dallas Avenue
Houston, Texas 77002
ARTICLE XI
Initial Board of Directors
--------------------------
Section 11.01 Initial Board. The name and mailing address of the persons
-------------
who shall serve as directors of the Corporation until the first annual meeting
of stockholders or until their successors are elected and qualify are:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Alan E. Riedel 1001 Fannin Street
Suite 4000
Houston, Texas 77002
Michael J. Sebastian 1001 Fannin Street
Suite 4000
Houston, Texas 77002
Ross J. Centanni 1800 Gardner Expressway
Quincy, Illinois 62305
-6-
</TABLE>
<PAGE> 1
GARDNER DENVER, INC.
BYLAWS
ARTICLE I
OFFICES
-------
Section 1.1. Registered Office. The registered office of the Corporation
-----------------
shall be at such place in the City of Wilmington, County of New Castle, State
of Delaware as the Board of Directors shall from time to time designate.
Section 1.2. Other Offices. The Corporation also may have offices at such
-------------
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 2.1. Annual Meeting. The annual meeting of the stockholders of
--------------
the Corporation shall be held on a date determined by the Board of Directors.
The business to be transacted at the meeting shall be the election of directors
and any other proper business as may be brought before the meeting.
Section 2.2. Special Meetings. Special meetings of the stockholders, for
----------------
any purpose or purposes, unless otherwise prescribed by statute, shall be called
by the President or Secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the Corporation issued and
outstanding and entitled to vote at such meeting. Such request shall state
the purpose or purposes of the proposed meeting.
Section 2.3. Time and Place of Meetings. All meetings of the stockholders
--------------------------
shall be held at the principal office of the Corporation, or at such other
place within or without the State of Delaware, and at such time as may be
fixed by the Board of Directors and as specified in the notice of meeting.
Section 2.4. Notice of Meetings. Written notice of each annual or special
------------------
meeting of the stockholders, stating the time, date, hour, place and, with
respect to any special meeting, the purpose or purposes thereof, shall be
given to each stockholder of record as of the applicable record date who is
entitled to vote thereat, by mailing the same, postage prepaid, not less than
ten (10) nor more than sixty (60) days before the date of the meeting, to his
or her address as it appears on the records of the Corporation.
-1-
<PAGE> 2
Section 2.5. Waiver of Notice. Notice of any stockholders' meeting may be
----------------
waived in writing by any stockholder either before or after such meeting, and
the attendance of any stockholder at any meeting without protesting, prior to
or at the commencement of the meeting, shall be deemed to be a waiver by such
stockholder of notice of such meeting.
Section 2.6. Quorum. Except as otherwise provided by statute, the
------
certificate of incorporation or these bylaws, the holders of a majority of
the capital stock of the Corporation issued and outstanding and entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business.
At any meeting, whether a quorum is present or not, the holders of a majority
of the voting shares represented in person or by proxy may adjourn from time
to time, without notice other than by announcement at the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at such meeting.
Section 2.7. Voting. When a quorum is present at any meeting, the vote of
------
the holders of a majority of the capital stock of the Corporation having
voting power present in person or by proxy shall decide any question brought
before such meeting, except that if the question is one upon which a
different vote is required by statute, the certificate of incorporation or
these bylaws, then in such case the terms of the statute, the certificate of
incorporation or these bylaws shall govern and control the decision of such
question. Every stockholder having the right to vote shall be entitled to
vote in person, or by proxy appointed by instrument in writing subscribed by
such stockholder, bearing a date not more than three years prior to voting,
unless such instrument provides for a longer period, and filed with the
Secretary of the Corporation before, or at the time of, the meeting.
Section 2.8. Director Nominations and Other Business. Subject to any rights
---------------------------------------
of holders of shares of the Preferred Stock of the Corporation, nominations
for the election of directors shall be made by the Board of Directors or by
any stockholder entitled to vote in elections of directors. However, any
stockholder entitled to vote in election of directors may nominate one or
more persons for election as director only if written notice of such
stockholder's intent to make such nomination or nominations has been given,
either by personal delivery or by United States registered or certified mail,
postage prepaid, to the Secretary of the Corporation not less than sixty (60)
nor more than ninety (90) days prior to meeting of the stockholders called
for the election of directors; provided however, that in the event that less
than seventy (70) days' notice of the date of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as
prescribed, not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the meeting was mailed to
stockholders or public disclosure of the date of the meeting was made,
whichever occurs first. Each notice shall set forth (i) the name and address
of the stockholder who intends to make the nomination and of the person or
persons to be nominated, (ii) a representation that the stockholder is a
holder of record of shares of capital stock of the Corporation entitled to
vote at such meeting and intends to appear in person or by
-2-
<PAGE> 3
proxy at the meeting to nominate the person or persons specified in the notice,
(iii) a description of all arrangements, understandings or relationships
between the stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination or nominations
are to be made by the stockholder and (iv) such other information regarding
each nominee proposed by such stockholder as would be required to be included
in a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission, had the nominee been nominated, or intended to be
nominated, by the Board of Directors, and shall include a consent signed by
each such nominee to serve as a director of the Corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedure.
In addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given notice thereof in writing to the Secretary of the Corporation either by
personal delivery or by United States registered or certified mail, postage
prepaid, not less than sixty (60) nor more than ninety (90) days prior to the
date of such meeting. Such stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before
the meeting, including the complete text of any resolutions to be presented
at the meeting, with respect to such business, and the reasons for conducting
such business at the meeting, (ii) the name and address of record of the
stockholder proposing such business, (iii) the class and number of shares of
capital stock of the Corporation that are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such
business. In the event that a stockholder attempts to bring business before
an annual meeting without complying with the foregoing procedure, the
chairman of the meeting may declare to the meeting that the business was not
properly brought before the meeting and, if he shall so declare, such
business shall not be transacted.
Notwithstanding the foregoing provisions of this Section 2.8, a stockholder
shall also comply with all applicable requirements of the Securities Exchange
Act of 1934 (the "Exchange Act") and the rules and regulations thereunder
with respect to the matters set forth in this Section 2.8. Nothing in this
Section 2.8 shall be deemed to affect any rights of stockholders to request
inclusion of a proposal in the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act (or any similar provision).
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 3.1. Number; Election; Term. The number of directors which shall
----------------------
constitute the whole board shall be not less than three (3) nor more than
nine (9), and the number of directors shall be determined from time to time
by a majority vote of the directors in office. No reduction in the number of
directors shall have the effect of shortening the term of any incumbent
director and when so fixed such number shall continue to be the authorized
number of directors until changed by the Board of Directors by vote as
aforesaid. The directors shall be divided into three (3) classes, Class I,
Class II and Class III, each class to be as nearly equal in number as
possible. The
-3-
<PAGE> 4
term of office of each director shall be until the third annual meeting
following his election and until the election and qualification of his
successor; provided, however, that the directors first serving as Class I
directors shall serve for a term expiring at the annual meeting next
following December 31, 1994, the directors first serving as Class II
directors shall serve for a term expiring at the second annual meeting next
following December 31, 1994, and the directors first serving as Class III
directors shall serve for a term expiring at the third annual meeting next
following December 31, 1994. Subject to any rights of holders of Preferred
Stock, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, removal from office or any other cause,
shall be filled solely by the Board of Directors, acting by not less than a
majority of the directors then in office, even though less than a quorum, or
by a sole remaining director, and not by the stockholders.
Section 3.2. Powers of the Board. The business of the Corporation shall be
-------------------
managed by or under the direction of its Board of Directors, which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the certificate of incorporation or by
these bylaws directed or required to be exercised or done exclusively by the
stockholders.
Section 3.3. Quorum. A majority of the Board of Directors shall constitute
------
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as otherwise specifically provided by
statute, by the certificate of incorporation or by these bylaws. If a quorum
shall not be present at any meeting of the Board of Directors, 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 3.4. Regular Meetings. A regular meeting of the Board of Directors
----------------
shall be held each year, without other notice than this bylaw, at the place
of, and immediately following, the annual meeting of stockholders; other
regular meetings of the Board of Directors shall be held at such times and
places within or without the State of Delaware as may be determined by the
Board by resolution, without other notice than such resolution.
Section 3.5. Special Meetings. Special meetings of the Board of Directors
----------------
may be held at any time within or without the State of Delaware upon call by the
Chairman of the Board or the President. Notice of such meeting shall be given
to each director either by letter, telefax, telegram or in person not less
than two (2) days prior to such meeting. Special meetings of the Board of
Directors shall be called by the President or Secretary in like manner and on
like notice on the written request of at least two (2) directors. Neither the
business to be transacted at, nor the purpose of, any special meeting of the
Board of Directors need be specified in the notice of the meeting, except
that notice shall be given of any proposed amendment to the bylaws if it is
to be adopted at the special Meeting or with respect to any other matter
where notice is required by statute.
Section 3.6. Waiver of Notice. Notice of any meeting of the Board of
----------------
Directors may be waived in writing by any director either before or after
such meeting, and the attendance of any director at
-4-
<PAGE> 5
any meeting without protesting, prior to or at the commencement of the meeting,
shall be deemed to be a waiver by him or her of notice of such meeting.
Section 3.7. Directors' Consent. Unless otherwise restricted by the
------------------
certificate of incorporation or by these bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
or such committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the
Board or such committee.
Section 3.8. Telephonic Participation at Meetings. Unless otherwise
------------------------------------
restricted by the certificate of incorporation or by these bylaws, members of
the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar communications by
means of which all persons participating in the meeting can hear each other,
and such participation in a meeting shall constitute presence in person at
the meeting.
Section 3.9. Committees. The Board of Directors may, by resolution passed
----------
by a majority of the whole board, designate one or more committees, including if
they shall so determine, an Executive Committee, each committee to consist of
one or more of the directors of the Corporation. The Board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolutions of the Board of
Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to
all papers which may require it; but no such committee shall have the power
Or authority in reference to amending the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the
Board of Directors as provided in Section 151(a) of the Delaware General
Corporation Law fix the designations and any of the preferences or rights of
such shares relating to dividends, redemption, dissolution, any distribution
of assets of the Corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Corporation or fix the
number of shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the bylaws of the Corporation; and,
unless the resolution, these bylaws or the certificate of incorporation
expressly so provide, no such committee shall have the power of authority to
declare a dividend or to authorize the issuance of stock or to adopt a
certificate of ownership and merger.
Each committee shall keep regular minutes of its meetings and report the same
to the Board of Directors when required or requested.
-5-
<PAGE> 6
Section 3.10. Compensation. The Board of Directors is authorized to fix a
------------
reasonable compensation for directors and to provide a fee and reimbursement
of expenses for attendance at any meeting of the directors to be paid to each
director who is not otherwise a salaried officer or employee of the
Corporation or any of its wholly-owned subsidiaries. Members of committees
may be allowed like compensation for attending committee meetings.
ARTICLE IV
OFFICERS
--------
Section 4.1. Officers Designated. The Board of Directors shall elect a
-------------------
President, Treasurer and a Secretary, and in its discretion a Chairman of the
Board, one or more Vice Presidents, an Assistant Secretary, an Assistant
Treasurer, and such other officers as the directors may see fit. The Chairman
of the Board, if any, shall be chosen from among the directors. Any two or
more offices, other than that of President and Vice President, or Secretary
and Assistant Secretary, or Treasurer and Assistant Treasurer, may be held
simultaneously by the same person, but no officer shall execute, acknowledge,
verify, or countersign on behalf of the Corporation any instrument in more
than one capacity.
Section 4.2. Tenure of Office. The officers of the Corporation shall be
----------------
elected annually by the Board of Directors at its first regular meeting held
after the annual meeting of stockholders or as soon thereafter as
conveniently possible. Each officer shall hold office until his successor is
chosen and qualified, except in case of resignation, death or removal. Any
officer may be removed at any time with or without cause by the affirmative
vote of a majority of the Board of Directors, but such removal shall be
without prejudice to the contractual rights, if any, of the person so
removed. A vacancy in any office, however created, may be filled by the Board
of Directors.
Section 4.3. Chairman of the Board of Directors. The Chairman of the Board
----------------------------------
of Directors, if any, shall have such powers and duties as generally appertain
to that office and as may be prescribed by the Board of Directors.
Section 4.4. President. The President shall in general supervise and
---------
control the business and affairs of the Corporation and have such powers and
duties as generally appertain to that office and as may be prescribed by the
Board of Directors.
Section 4.5. Vice Presidents. The Vice Presidents, if any, in the order
---------------
designated by the Board of Directors, shall perform the duties of the
President in case of the absence or disability of the latter, or when
circumstances prevent the latter from acting, together with such other duties
as the Board of Directors may prescribe. In case the President and such Vice
Presidents are absent or unable to perform their duties, the Board of
Directors may appoint a President pro tempore.
Section 4.6. Secretary. The Secretary shall keep the minutes of all
---------
meetings of the stockholders and the Board of Directors. The Secretary shall
keep such books as may be required by the Board of Directors, shall have charge
of the seal, minute books and stock books of the Corporation, and shall give all
notices of meetings of the stockholders and of the directors, and shall have
such
-6-
<PAGE> 7
other powers and duties as generally appertain to that office and as the Board
of Directors may prescribe.
Section 4.7. Assistant Secretary. The Assistant Secretary, if any, shall
-------------------
perform the duties of the Secretary in case of the absence or disability of
the latter, or when circumstances prevent the latter from acting, together
with such other duties as the Board of Directors may prescribe.
Section 4.8. Treasurer. The Treasurer shall receive and have in his charge
---------
all money, bills, notes, bonds, shares in other corporations and similar
property belonging to the Corporation, and shall do with the same as may be
ordered by the Board of Directors. The Treasurer shall formulate and
administer credit and collection policies and procedures, and shall represent
the Corporation in its relations with banks and other financial institutions,
subject to instructions from the Board of Directors, and shall have such
other powers and duties as generally appertain to that office and as the
Board of Directors may prescribe.
Section 4.9. Assistant Treasurer. The Assistant Treasurer, if any, shall
-------------------
perform the duties of the Treasurer in case of the absence or disability of
the latter, or when circumstances prevent the latter from acting, together
with such other duties as the Board of Directors may prescribe.
Section 4.10. Other Officers. The other officers, if any, shall have such
--------------
powers and duties as the Board of Directors may prescribe.
Section 4.11. Change in Power and Duties of Officers. Anything in this
--------------------------------------
Article IV to the contrary notwithstanding, the Board of Directors may, from
time to time, increase or reduce the powers and duties of the respective
officers of the Corporation whether or not the same are set forth in these
bylaws and may permanently or temporarily delegate the duties of any officer
to any other officer, agent or employee and may generally control the action
of the officers and require performance of all duties imposed upon them.
Section 4.12. Compensation. The Board of Directors is authorized to
------------
determine or to provide the method of determining the compensation of
officers.
Section 4.13. Bond. Any officer, if required by the Board of Directors,
----
shall give bond for the faithful performance of his duties. Any surety on
such bond shall be at the expense of the Corporation.
Section 4.14. Signing Checks and Other Instruments. The Board of Directors
------------------------------------
is authorized to determine or provide the method of determining how checks,
notes, bills of exchange and similar instruments shall be signed,
countersigned or endorsed.
Section 4.15. Authority to Transfer and Vote Securities. The Chairman of
-----------------------------------------
the Board, if any, the President, the Secretary or the Treasurer of the
Corporation are each authorized to sign the name of the Corporation and to
perform all acts necessary to effect a transfer of any shares, bonds, or
other evidences of indebtedness or obligations, subscription rights, warrants
and other securities of another corporation owned by the Corporation and to
issue the necessary powers of attorney
-7-
<PAGE> 8
for the same; and each such officer is authorized on behalf of the Corporation
to vote such securities, to appoint proxies with respect thereto, and to
execute consents, waivers and releases with respect thereto, or to cause any
such action to be taken.
ARTICLE V
ISSUE AND TRANSFER OF STOCK
---------------------------
Section 5.1. Certificates. Each stockholder of the Corporation shall be
------------
entitled to a certificate or certificates showing the number of shares of
stock registered in his name on the books of the Corporation. The
certificates shall be in such form as may be determined by the Board of
Directors, shall be issued in numerical order and shall be entered in the
books of the Corporation as they are issued. They shall exhibit the holder's
name and number of shares and shall be signed by the Chairman of the Board or
the President or a Vice President and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary. If the Corporation
shall be authorized to issue more than one class of stock or more than one
series of any class, the powers, designations, preferences and relative
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and Rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent
such class of stock; provided that, except as otherwise provided by statute,
in lieu of the foregoing requirements there may be set forth on the face or
back of the certificate which the Corporation shall issue to represent such
class or series of stock, a statement that the Corporation will furnish to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and rights.
Section 5.2. Facsimile Signatures. Any of or all the signatures on a
--------------------
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
Section 5.3. Lost Certificates. The Board of Directors may direct a new
-----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or destroyed.
When authorizing such issue of a new certificate or certificates, the Board
of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the
same in such manner as it shall require and/or to give the Corporation a bond
in such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate or certificates
alleged to have been lost, stolen or destroyed.
-8-
<PAGE> 9
Section 5.4. Transfer of Stock. Upon surrender to the Corporation or the
-----------------
transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty 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 5.5. Fixing Record Date. In order that the Corporation may
------------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect to any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix
in advance, a record date, which shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting, nor more than sixty (60)
days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 5.6. Registered Stockholders. The Corporation shall be entitled to
-----------------------
treat 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 claims 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 the laws of Delaware.
ARTICLE VI
GENERAL PROVISIONS
------------------
Section 6.1. Dividends. Dividends upon the capital stock of the
---------
Corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to applicable law. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the certificate
of incorporation.
Section 6.2. Seal. The corporate seal shall have inscribed thereon the
----
name of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof
to be impressed or affixed or otherwise reproduced.
ARTICLE VII
AMENDMENTS
----------
Section 7.1. Amendment. These bylaws may be altered, amended or repealed,
---------
in whole or in part, by The affirmative vote of the holders of record of
shares entitling them to exercise a majority of the voting power of the
Corporation with respect thereto at an annual or special meeting called for such
purpose, except that, notwithstanding any other provisions of these bylaws or
any
-9-
<PAGE> 10
provision of law which might otherwise permit a lesser vote or no vote, but
in addition to any affirmative vote of the holders of any particular class or
series of stock required by law or these bylaws, the affirmative vote of at
least 80% of the Corporation's voting power shall be required to alter, amend
or repeal Section 2.2, Section 3.1 or Section 7.1 of these bylaws. These
bylaws also may be altered, amended or repealed at any regular meeting of the
Board of Directors without prior notice, or at any special meeting of the
Board of Directors if notice of such alteration, amendment or repeal is
contained in the notice of such special meeting; provided that any bylaw
adopted by the Board of Directors may be altered, amended or repealed by the
stockholders in the manner set forth above.
-10-
<PAGE> 1
<TABLE>
Exhibit 11.1
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share amounts)
<CAPTION>
Three Months Ended
June 30,
----------------------
1998 1997
------- -------
<S> <C> <C>
Basic EPS:
Net income $ 9,200 $ 6,813
======= =======
Shares
Weighted average number of common
shares outstanding 16,115 15,025
======= =======
Basic earnings per common share $ 0.57 $ 0.45
======= =======
Diluted EPS:
Net income $ 9,200 $ 6,813
======= =======
Shares
Weighted average number of common
shares outstanding 16,115 15,025
Assuming conversion of options issued
and outstanding 593 774
------- -------
Weighted average number of common
shares outstanding, as adjusted 16,708 15,799
======= =======
Diluted earnings per common share $ 0.55 $ 0.43
======= =======
<FN>
<F*>This calculation is submitted in accordance with SFAS 128, "Earnings Per
Share," which requires disclosure of the calculation of basic and diluted
earnings per share.
</TABLE>
<PAGE> 1
<TABLE>
Exhibit 11.2
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share amounts)
<CAPTION>
Six Months Ended
June 30,
----------------------
1998 1997
------- -------
<S> <C> <C>
Basic EPS:
Net income $17,281 $12,137
======= =======
Shares
Weighted average number of common
shares outstanding 16,035 14,935
======= =======
Basic earnings per common share $ 1.08 $ 0.81
======= =======
Diluted EPS:
Net income $17,281 $12,137
======= =======
Shares
Weighted average number of common
shares outstanding 16,035 14,935
Assuming conversion of options issued
and outstanding 645 804
------- -------
Weighted average number of common
shares outstanding, as adjusted 16,680 15,739
======= =======
Diluted earnings per common share $ 1.04 $ 0.77
======= =======
<FN>
<F*>This calculation is submitted in accordance with SFAS 128, "Earnings Per
Share," which requires disclosure of the calculation of basic and diluted
earnings per share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF GARDNER DENVER, INC. FOR THE YEAR-TO-DATE
PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 11,546
<SECURITIES> 0
<RECEIVABLES> 88,943
<ALLOWANCES> (3,432)
<INVENTORY> 62,617
<CURRENT-ASSETS> 167,886
<PP&E> 152,816
<DEPRECIATION> (102,919)
<TOTAL-ASSETS> 348,779
<CURRENT-LIABILITIES> 70,722
<BONDS> 90,340
<COMMON> 161
0
0
<OTHER-SE> 132,419
<TOTAL-LIABILITY-AND-EQUITY> 348,779
<SALES> 192,457
<TOTAL-REVENUES> 193,301
<CGS> 129,356
<TOTAL-COSTS> 129,529
<OTHER-EXPENSES> 173
<LOSS-PROVISION> 122
<INTEREST-EXPENSE> 2,639
<INCOME-PRETAX> 28,121
<INCOME-TAX> 10,840
<INCOME-CONTINUING> 17,281
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,281
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.04
</TABLE>
