<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR 13-WEEK PERIOD ENDED MARCH 30, 1996 COMMISSION FILE NO. 0-26228
MARTIN INDUSTRIES, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 63-0133054
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
301 EAST TENNESSEE STREET
FLORENCE, ALABAMA 35630
---------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(205) 767-0330
(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 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.
8,587,045 SHARES OF COMMON STOCK, $.01
PAR VALUE, AS OF MAY 8, 1996
<PAGE> 2
MARTIN INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS AS OF MARCH 30, 1996
(UNAUDITED) AND DECEMBER 31, 1995 2
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE 13-WEEK PERIODS ENDED MARCH 30, 1996
AND APRIL 1, 1995 4
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13-WEEK PERIODS ENDED MARCH 30, 1996
AND APRIL 1, 1995 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
</TABLE>
1
<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MARTIN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 15,716,000 $ 20,439,000
Accounts and notes receivable, less
allowance for doubtful accounts of
$819,000 and $594,000, respectively 17,717,000 13,824,000
Inventories 20,551,000 16,534,000
Refundable income taxes 744,000 512,000
Deferred tax benefits 2,141,000 2,049,000
Prepaid expenses and other assets 1,442,000 978,000
----------------- ----------------
Total current assets 58,311,000 54,336,000
----------------- ----------------
Property, plant and equipment, net 10,663,000 6,346,000
Deferred tax benefits 652,000 675,000
Other noncurrent assets 4,325,000 2,225,000
----------------- ----------------
15,640,000 9,246,000
----------------- ----------------
Total assets $ 73,951,000 $ 63,582,000
================= ================
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 4
MARTIN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 30, December 31,
1996 1995
----------- -------------
(Unaudited)
<S> <C> <C>
LIABILITIES
Current liabilities:
Short-term borrowings $ 4,520,000 $ 12,000
Current portion of long-term debt 1,939,000 1,315,000
Accounts payable 4,700,000 4,072,000
Accrued liabilities: --------------- ---------------
Payroll and employee benefits 3,627,000 3,090,000
Product liability 638,000 660,000
Warranty 514,000 617,000
Workers' compensation 546,000 603,000
Other 726,000 662,000
--------------- ---------------
Total current liabilities 17,210,000 11,031,000
--------------- ---------------
Long-term debt 11,126,000 7,228,000
Deferred compensation 2,015,000 2,013,000
Other noncurrent liabilities 205,000 232,000
--------------- ---------------
13,346,000 9,473,000
--------------- ---------------
Total liabilities 30,556,000 20,504,000
--------------- ---------------
STOCKHOLDERS' EQUITY
Preferred stock $.01 par value, 1,000,000
shares authorized; no shares issued and
outstanding 0 0
Common stock, $.01 par value, 20,000,000
shares authorized; 9,748,000
shares issued 97,000 97,000
Paid-in capital 23,927,000 23,457,000
Retained earnings 29,399,000 30,130,000
Unrealized gain on foreign currency translation 101,000 0
--------------- ---------------
53,524,000 53,684,000
Less:
Treasury stock at cost (1,160,955 and 1,269,715
shares, respectively) 2,140,000 2,319,000
Unearned compensation - ESOP 7,989,000 8,287,000
--------------- ---------------
Total stockholders' equity 43,395,000 43,078,000
--------------- ---------------
Total liabilities and stockholders' equity
$ 73,951,000 $ 63,582,000
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 5
MARTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
13-Week
Period Ended
-----------------------------------
March 30, April 1,
1996 1995
---------------- ----------------
<S> <C> <C>
NET SALES $ 21,044,000 $ 21,403,000
COST OF SALES 16,698,000 16,901,000
--------------- ----------------
Gross profit 4,346,000 4,502,000
--------------- ----------------
OPERATING EXPENSES:
Selling 2,587,000 2,116,000
General and administrative 1,675,000 1,312,000
Non-cash ESOP compensation expense 758,000 400,000
--------------- ----------------
5,020,000 3,828,000
--------------- ----------------
Operating income (loss) (674,000) 674,000
INTEREST EXPENSE 246,000 234,000
INTEREST INCOME (230,000) (59,000)
--------------- ----------------
Income (loss) before income taxes (690,000) 499,000
PROVISION (CREDIT) FOR INCOME TAXES (179,000) 218,000
--------------- ----------------
Net income (loss) $ (511,000) $ 281,000
=============== ================
NET INCOME (LOSS) PER SHARE $ (0.08) $ 0.07
=============== ================
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING 6,145,737 3,983,175
=============== ================
DIVIDENDS DECLARED
PER SHARE $ 0.036 $ 0.290
=============== ================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 6
MARTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
13-Week
Period Ended
--------------------------------
March 30, April 1,
1996 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (511,000) $ 281,000
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 306,000 212,000
Provision for doubtful accounts and notes receivable 6,000 84,000
Non-cash ESOP compensation expense 758,000 400,000
Provision for performance compensation 0 53,000
Other changes in operating assets and liabilities (5,521,000) (4,668,000)
-------------- ------------
Net cash used in operating activities (4,962,000) (3,638,000)
-------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (758,000) (232,000)
Proceeds from sales of assets 1,000 5,000
Net investment in companies acquired (1,374,000) 0
-------------- ------------
Net cash used in investing activities (2,131,000) (227,000)
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term borrowings 3,820,000 1,699,000
Net proceeds (repayments) of long-term debt 4,312,000 (629,000)
Repayment of debt of companies acquired (5,662,000) 0
Exercise of stock options 80,000 0
Cash dividends paid (180,000) (767,000)
-------------- ------------
Net cash provided by financing activities 2,370,000 303,000
-------------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (4,723,000) (3,562,000)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 20,439,000 3,630,000
-------------- ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 15,716,000 $ 68,000
============== ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 7
MARTIN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Unaudited Interim Consolidated Financial Statements
The accompanying unaudited interim consolidated financial statements
of Martin Industries, Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and are presented in accordance with the requirements of Form 10-Q and Article
10 of Regulation S-X. The financial statements should be read in conjunction
with the audited financial statements and notes thereto for the year ended
December 31, 1995 included on Form 10-K, as filed with the Securities and
Exchange Commission on March 29, 1996.
In the opinion of management, the unaudited consolidated financial
statements included herein reflect all adjustments (which include only normal
recurring adjustments) necessary to present fairly the information set forth
therein. The results of operations for the periods presented are not
necessarily indicative of results for the full year. The Company's business is
seasonal and cyclical with the potential for significant fluctuations in
quarterly earnings.
Principles of Consolidation and Fiscal Periods
The unaudited interim consolidated financial statements include the
accounts and transactions of the Company and its wholly owned Canadian
subsidiary, 1166081 Ontario Inc. All significant intercompany accounts and
transactions have been eliminated in consolidation. See Note 3 for discussion
of the business combination.
The Company's fiscal quarters end on the Saturday nearest each
calendar quarter-end. The Company utilizes a December 31 fiscal year-end.
Recapitalization and Stock Split
On April 7, 1995, the Company's stockholders approved a change in the
authorized number of shares of common stock from 300,000 shares to 20,000,000
shares. In addition, 1,000,000 shares of $.01 par value preferred stock were
authorized. The accompanying consolidated financial statements are presented
as if these changes had occurred at the beginning of the first period
presented. On April 7, 1995, the Board of Directors approved a 35-for-1 stock
split of the Company's common stock that was effected in the form of a stock
dividend on July 6, 1995, prior to the consummation of the Company's initial
public offering (the "Offering") discussed in Note 2. All share and per share
amounts have been retroactively restated for all periods presented to reflect
the stock split.
6
<PAGE> 8
2. INITIAL PUBLIC OFFERING
On July 13, 1995, the Company commenced its underwritten initial
public offering of 2,000,000 shares of common stock at an initial price to the
public of $9.50 per share. The closing of the transaction was completed on
July 18, 1995, at which time the underwriters of the Offering exercised their
over-allotment option to purchase an additional 300,000 shares of common stock
to be sold to the public at $9.50 per share. The proceeds of the Offering, net
of an underwriting discount of $1,530,000 and expenses of $923,000, were
$19,397,000. The net proceeds will be used to fund capital expenditures and
possible future acquisitions (see Note 3) and, to the extent not so used, to
reduce outstanding indebtedness, for working capital or other general corporate
purposes. Pending such uses, the Company has invested the net proceeds in
commercial paper, U.S. agency discount notes and other low-risk, highly liquid
securities.
3. BUSINESS COMBINATION
On February 1, 1996, the Company's newly formed, wholly owned Canadian
subsidiary, 1166081 Ontario Inc. ("Martin Canada"), acquired all of the
capital stock of Hunter Energy and Technologies Inc. ("HEAT") and 1061099
Ontario Inc. ("1061099"), a sister company which owned the land and building
leased by HEAT for its manufacturing operation. The transaction was accounted
for under the purchase method of accounting. The aggregate purchase price of
approximately $2,102,000 included $850,000 in cash, $728,000 in promissory
notes, $364,000 paid into escrow and transaction expenses of $160,000. The
promissory notes bear interest at a rate of 9% per annum and mature on February
1, 1997. The purpose of the escrow is to make funds available to meet the
sellers' indemnification obligations to the Company. The aggregate purchase
price exceeded the fair value of the net assets acquired by $2,110,000, which
amount is reflected as goodwill in the unaudited interim consolidated balance
sheet to be amortized over 40 years. Pursuant to the purchase agreement,
Martin Canada caused to be repaid all of the outstanding bank indebtedness of
HEAT and 1061099 in the aggregate amount of approximately $5,662,000. The
results of operations of the acquired companies are included in the unaudited
interim consolidated statements of operations for the period from the purchase
date, February 1, 1996, through March 30, 1996.
4. ESOP ACCOUNTING
In 1992 the Company established the Employee Stock Ownership Plan
("ESOP") and in January 1993 the Company borrowed $11.9 million from its
primary lender (the "bank loan"), which funds were then loaned by the Company
to the ESOP (the "ESOP loan") on terms substantially similar to those of the
bank loan. The ESOP utilized the ESOP loan proceeds, together with a $54,000
cash contribution from the Company, to purchase 3,489,115 shares of the
Company's common stock from existing stockholders. The bank loan and ESOP loan
are payable in equal semi-annual principal installments over a 10-year period.
At the time of the origination of the bank loan and the ESOP loan and
subsequent purchase by the ESOP of Company shares, the Company recorded the
principal amount of the bank loan as long-term debt and recorded unearned
compensation for the principal amount of the ESOP loan, which is reflected as a
reduction to stockholders' equity on the balance sheet. Pending repayment of
the ESOP loan, shares owned by the ESOP are held in a suspense account and are
unallocated to participants. Shares of
7
<PAGE> 9
common stock are committed to be released from the suspense account and
subsequently allocated to participants' accounts based on the ratio that the
annual principal debt repayment of the ESOP loan bears to the original
principal balance (approximately 347,340 shares of common stock per year). The
Company recognizes non-cash compensation expense and credits equity each month
in an amount equal to one-twelfth of the number of shares of common stock
committed to be released each year, net of shares committed to be released in
lieu of cash dividends declared on allocated shares, multiplied by the average
fair value of such shares during the period. Prior to the Offering, the
average fair value of the common stock was based on independent appraisals.
For all periods subsequent to the Offering, non-cash compensation expense will
be based on the average market price at which the shares of common stock are
traded in the open market during the applicable period.
Accordingly, if the average market price of the common stock
increases, the Company's non-cash ESOP compensation expense will also increase,
thereby having a negative impact on the Company's net income and net income per
share. Because the Company cannot predict the price at which its shares will
trade in the future, it cannot predict the amount of non-cash ESOP compensation
expense or the resulting effect on net income or net income per share for
future periods.
5. NET INCOME (LOSS) PER SHARE
Net income (loss) per share has been computed based on the weighted
average number of common shares outstanding, including the dilutive effect of
outstanding stock options, if applicable, in each respective period. Shares of
stock owned by the ESOP that have been committed to be released to participants
have been considered outstanding on a weighted average basis for the purpose of
computing net income (loss) per share. Shares of stock owned by the ESOP that
have not been committed to be released have not been considered outstanding for
such purpose. The computation of the weighted average number of common and
common equivalent shares outstanding for the interim periods reported herein is
summarized as follows:
<TABLE>
<CAPTION>
13-Week
Period Ended
-----------------------------------
March 30, April 1,
1996 1995
--------------- ---------------
<S> <C> <C>
Weighted average shares,
excluding ESOP and
stock option effects 5,036,656 2,683,170
Weighted average effect
of ESOP shares committed
to be released 1,109,081 753,725
Dilutive effect of stock options -- 546,280
--------- ---------
Weighted average number
of common and common
equivalent shares outstanding 6,145,737 3,983,175
========= =========
</TABLE>
8
<PAGE> 10
6. INVENTORIES
Substantially all of the Company's inventories are valued at last-in,
first-out ("LIFO") cost, which is not in excess of market. An analysis of
inventories at March 30, 1996 and December 31, 1995 follows:
<TABLE>
<CAPTION>
March 30, December 31,
1996 1995
-------- ----------
(Unaudited)
<S> <C> <C>
Inventories valued at first-in, first-out ("FIFO") cost:
Raw materials and purchased parts $10,226,000 $ 8,391,000
Work-in-process 4,474,000 4,043,000
Finished goods 11,858,000 10,020,000
----------- -----------
26,558,000 22,454,000
Less excess of FIFO over LIFO cost 6,007,000 5,920,000
----------- -----------
$20,551,000 $16,534,000
=========== ===========
</TABLE>
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the unaudited
interim consolidated financial statements of the Company and notes thereto
appearing elsewhere in this Form 10-Q. All references to the first quarter of
1996 and the first quarter of 1995 are referring to the 13-week periods ended
March 30, 1996 and April 1, 1995, respectively.
On February 1, 1996, as discussed in Note 3 to Notes to Consolidated
Financial Statements, the Company's wholly owned Canadian subsidiary acquired
all of the capital stock of HEAT and 1061099 through the direct and indirect
purchase of all of the outstanding shares of these companies. HEAT
manufactures gas space heaters and pre-engineered fireplaces at a 100,000
square foot manufacturing plant located on approximately 12 acres in Orillia,
Ontario, Canada which it leases from 1061099. The results of operations of the
acquired companies are included in the unaudited interim consolidated statement
of operations for the period from the purchase date through March 30, 1996.
All references to HEAT in the following discussion refers to the acquired
companies.
RESULTS OF OPERATIONS
The following tables set forth, for the periods indicated, information
derived from the Company's financial statements expressed as a percentage of
net sales together with industry segment information.
<TABLE>
<CAPTION>
13-Week
Period Ended
--------------------------
March 30, April 1,
1996 1995
--------------------------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 79.4 79.0
----- ----
Gross profit 20.6 21.0
Operating expenses:
Selling 12.3 9.9
General and administrative 7.9 6.1
Non-cash ESOP compensation expense 3.6 1.9
----- ---
Operating income (loss) (3.2) 3.1
Interest expense, net .1 .8
----- ---
Income (loss) before income taxes (3.3) 2.3
Provision (credit) for income taxes (.9) 1.0
---- ---
Net income (loss) (2.4)% 1.3%
==== ===
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
Segment Information
--------------------------------
13-Week
Period Ended
--------------------------------
March 30, April 1,
1996 1995
----------- ----------
(In Thousands)
<S> <C> <C>
Net sales:
Home heating products $ 10,574 $ 9,761
Metal office furniture 5,649 5,556
Leisure and other products 4,821 6,086
-------- --------
$ 21,044 $ 21,403
======== ========
Gross profit:
Home heating products $ 2,511 $ 2,632
Metal office furniture 963 867
Leisure and other products 872 1,003
-------- --------
$ 4,346 $ 4,502
======== ========
Segment contribution (1):
Home heating products $ 841 $ 1,408
Metal office furniture 473 410
Leisure and other products 445 568
-------- --------
$ 1,759 $ 2,386
======== ========
</TABLE>
(1) Segment contribution consists of gross profit less selling expenses.
13-WEEK PERIOD ENDED MARCH 30, 1996 COMPARED TO 13-WEEK PERIOD ENDED APRIL 1,
1995
Net Sales
Net sales in the 13-week period ended March 30, 1996 decreased to
$21.0 million from $21.4 million in the 13-week period ended April 1, 1995, a
decrease of $359,000, or 1.7%.
Home Heating Products. Net sales of home heating products increased from
$9.8 million in the first quarter of 1995 to $10.6 million in the first quarter
of 1996, an increase of $813,000, or 8.3%. The increase in net sales of home
heating products was primarily the result of the acquisition of HEAT. HEAT's
net sales for the period from February 1, 1996 through March 30, 1996 were
$837,000. See Note 3 to Notes to Consolidated Financial Statements.
Metal Office Furniture. Net sales of metal office furniture were $5.6
million in the first quarter of 1996 as compared to $5.6 million in the first
quarter of 1995, an increase of $93,000, or 1.7%. The increase in net sales
was primarily the result of an increase in prices for the Company's metal
office furniture. On July 1, 1995, prices were increased approximately 5% to
6%.
11
<PAGE> 13
Leisure and Other Products. Net sales of leisure and other products decreased
$1.3 million, or 20.8%, in the first quarter of 1996 to $4.8 million as
compared to $6.1 million in the first quarter of 1995. Gross sales of utility
trailer kits decreased $1.0 million in the first quarter of 1996 as compared to
the first quarter of 1995. Shipments to four primary utility trailer kit
customers have decreased $1.1 million. The decrease in utility trailer kit
sales was the result of a late selling season caused by the unseasonably cool
weather during the first quarter of 1996. Gross sales of barbecue gas grills
decreased $290,000 in the first quarter of 1996 as compared to the first
quarter of 1995 primarily as a result of customer shipment delays caused by
vendor delivery problems on grill components.
Gross Profit
Gross profit in the first quarter of 1996 was $4.3 million as compared
to $4.5 million in the first quarter of 1995, a decrease of $156,000, or 3.5%.
Gross margin, defined as gross profit as a percentage of net sales, decreased
from 21.0% in the first quarter of 1995 to 20.7% in the first quarter of 1996.
Home Heating Products. Gross profit on net sales of home heating products in
the first quarter of 1996 was $2.5 million as compared to $2.6 million in the
first quarter of 1995, a decrease of $121,000, or 4.6%. The increase in net
sales for the quarter of 8.3% as discussed above was more than offset by the
decrease in gross profit caused by the shift in sales mix from higher margin,
gas heating products to HEAT and Martin fireplace products. Gas heating
product sales, excluding HEAT, were 39.7% of home heating product sales in the
first quarter of 1996 as compared to 50.6% in the first quarter of 1995. The
gross margin on HEAT and Martin fireplace product sales in the first quarter of
1996 was 19.5% as compared to 29.9% on gas heating product sales.
Metal Office Furniture. Gross profit on net sales of metal office furniture
increased $96,000, or 11.1%, from $867,000 in the first quarter of 1995 to
$963,000 in the first quarter of 1996. The increase was the result of the 1.7%
increase in net sales discussed above and a 1.4% improvement in gross margin
from 15.6% in the first quarter of 1995 to 17.0% in the first quarter of 1996.
The increase in gross margin was primarily the result of improved product
pricing as previously discussed.
Leisure and Other Products. Gross profit on net sales of leisure and other
products in the first quarter of 1996 was $872,000 as compared to $1.0 million
in the first quarter of 1995, a decrease of $131,000, or 13.1%. The decrease
was primarily the result of the 20.8% decrease in net sales discussed above
partially offset by an increase in gross margin from 16.5% in the first quarter
of 1995 to 18.1% in the first quarter of 1996. The increase in gross margin
was primarily the result of an increase in the mix of higher margin, gas grill
sales in the first quarter of 1996.
Selling Expenses
Selling expenses in the first quarter of 1996 increased to $2.6
million from $2.1 million in the first quarter of 1995, an increase of
$471,000, or 22.3%, primarily in the home heating product segment. The
acquisition of HEAT resulted in $198,000 of the increase. Cooperative
advertising expenses increased $131,000 primarily as a result of an increase in
customer credit claims in the home heating and metal office furniture segments.
In addition, promotion and travel expenses have increased $106,000 primarily as
a result of the increased effort to promote the Company's new gas heating and
fireplace products for
12
<PAGE> 14
the 1996 season. Selling expenses as a percentage of net sales increased to
12.3% in the first quarter of 1996 from 9.9% in the first quarter of 1995
primarily as a result of the 1.7% decrease in net sales together with the
increases discussed herein.
Segment Contribution
Total segment contribution, defined as gross profit less selling
expenses, decreased from $2.4 million in the first quarter of 1995 to $1.8
million in the first quarter of 1996, a decrease of $627,000, or 26.3%. The
decrease was primarily the result of the 3.5% decrease in gross profit, the
22.3% increase in selling expenses and other factors discussed above.
General and Administrative Expenses
General and administrative expenses increased $363,000, or 27.7%, in
the first quarter of 1996 as compared to the first quarter of 1995. The
increase is primarily the result of the $169,000 in general and administrative
expenses incurred by HEAT, a $150,000 increase in the Company's Supplemental
Executive Retirement Plan ("SERP") expense and a $33,000 increase in franchise
tax expense as a result of the Company's change from an Alabama corporation to
a Delaware corporation in 1995. The increase in SERP expense in the first
quarter of 1996 was primarily the result of an increase in the fair value of
the Company's common stock from $6.94 per share at April 1, 1995, to $11.00 per
share at March 30, 1996.
Non-cash ESOP Compensation Expense
Non-cash ESOP compensation expense was $758,000 in the first quarter
of 1996 as compared to $400,000 in the first quarter of 1995, an increase of
$358,000, or 89.5%. In the first quarter of 1996, 82,572 shares of unallocated
ESOP stock were committed to be released as compensation at an average fair
value of $9.18 per share, as compared to 57,610 shares committed to be released
as compensation at an average fair value of $6.94 per share in the first
quarter of 1995. The 24,962 increase in shares released as compensation
represents the decrease in shares committed to be released in lieu of dividends
payable on shares allocated to ESOP participants that were used to pay down the
ESOP loan. The increase in non-cash ESOP compensation expense in the first
quarter of 1996 was the result of an increase in the number of shares released
as compensation and a 32.3% increase in the average fair value of the Company's
common stock associated with the Offering discussed in Note 2 to Notes to
Consolidated Financial Statements. See discussion of ESOP accounting in Note 4
to Notes to Consolidated Financial Statements.
Interest Expense
Interest expense in the first quarter of 1996 was $246,000 as compared
to $234,000 in the first quarter of 1995, an increase of $12,000, or 5.1%. The
increase was primarily attributable to an increase in average short-term
borrowings of $2.5 million as a result of the acquisition of HEAT during the
quarter partially offset by a decrease in the interest rate on the Company's
bank line of credit and a lower average balance of long-term debt during the
quarter.
13
<PAGE> 15
Interest Income
Interest income in the first quarter of 1996 was $230,000 as compared
to $59,000 in the first quarter of 1995, an increase of $171,000. The increase
represents interest earned on the available net proceeds received in the
Offering, partially offset by a decrease in available operating cash during the
first quarter of 1996. Operating cash decreased primarily as a result of an
increase in average non-HEAT inventory levels of approximately $2.9 million.
See Note 2 to Notes to Consolidated Financial Statements for discussion of the
Offering.
Provision (Credit) for Income Taxes
The provision for income taxes decreased from $218,000 in the first
quarter of 1995 to a credit of $179,000 in the first quarter of 1996, a
decrease of $397,000. The decrease was the result of a $1.2 million decrease
in income before income taxes from $499,000 in the first quarter of 1995 to a
net loss of $690,000 in the first quarter of 1996. The decrease as a result of
the decrease in income before income taxes was partially offset by a decrease
in the effective tax rate from 43.7% in the first quarter of 1995 to 25.9% in
the first quarter of 1996. The decrease in the effective tax rate was
primarily the result of the non-recognition of a tax benefit on the $265,000
net loss of HEAT during the quarter. The realization of the tax benefit for
the HEAT loss is not certain at this time. No Canadian net operating loss
carrybacks are available to HEAT.
Net Income (Loss) and Net Income (Loss) Per Share
The net loss in the first quarter of 1996 was $511,000 as compared to
net income of $281,000 in the first quarter of 1995. The decrease in net
income was primarily the result of the factors discussed above.
Net loss per share was $0.08 per share in the first quarter of 1996 as
compared to net income per share of $0.07 in the first quarter of 1995. The
rate of decrease in net income per share was less than the rate of decrease in
net income as the result of a 2.2 million increase in the weighted average
number of common and common equivalent shares outstanding. The increase in
weighted average shares outstanding was primarily the result of the completion
of the Offering in July 1995. See Notes 2 and 5 to Notes to Consolidated
Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations in the first
quarter of the year from internally generated funds and seasonal borrowings
under its bank line of credit. The Company's primary capital requirements are
for working capital, debt service, capital expenditures and dividends.
The Company's operations in the 13-week period ended March 30, 1996
used $5.0 million in cash to finance increases in extended term ("dating")
receivables and inventories required to supply the Company's peak shipping
season which occurs primarily in the third and fourth quarters of each year.
The Company's operating cash and bank line of credit were utilized to provide
the funds needed for these working capital requirements, capital expenditures,
long-term debt repayments and dividends for the
14
<PAGE> 16
period. Historically, the Company's operations for the remainder of the year
have provided the funds required to repay the bank line of credit.
As discussed above, the Company finances temporary working capital
requirements under an unsecured bank line of credit with its principal lender.
The credit agreement provides a line of $20.0 million for a term expiring July
31, 1997. Interest on the line of credit is payable monthly at a variable rate
equivalent to 30-day LIBOR plus 1.25%, which at May 8, 1996 was 6.6875%.
In addition to the operating requirements for the period, the Company
utilized $1.4 million in cash to purchase the capital stock of HEAT and 1061099
as discussed in Note 3 to Notes to Consolidated Financial Statements. The
funds utilized to purchase the stock were provided from the Offering discussed
in Note 2 to Notes to Consolidated Financial Statements. In connection with
the acquisition of the stock, the Company also caused to be repaid
approximately $5.7 million in bank debt of HEAT, 1061099 and affiliates. In
March, 1996, the Company obtained a $5.0 million unsecured term loan from its
principal lender to refinance such bank debt. The term loan is due in
semi-annual principal payments of $250,000 over a seven-year period with a
balloon payment of $1.5 million due at maturity. Interest on the term loan is
payable monthly at a fixed rate of 6.9%.
FINANCIAL POSITION
Cash and short-term investments in the first quarter of 1996 decreased
$4.7 million as a result of the factors discussed above. Accounts receivable
and inventories in the first quarter increased $3.9 million and $4.0 million,
respectively. The increase in accounts receivable of $3.9 million, or 28.2%,
was the result of the $1.0 million of HEAT receivables acquired and a $5.6
million increase in dating receivables. In an effort to better control its
production schedule in light of the seasonal nature of its home heating product
and barbecue gas grill business, the Company utilizes early booking programs
under which customers receive favorable dating terms for placing their orders
early and permitting the Company to ship the products at "factory convenience."
The increase in inventories of $4.0 million, or 24.3%, was the result
of the $2.5 million of HEAT inventory acquired and the Company's general
practice of producing gas and solid fuel heaters in the late winter, spring and
summer to supply the typical peak shipping season in the last two quarters of
the year.
During the first quarter of 1996, net property, plant and equipment
increased $4.3 million, or 68.0%. The increase was the result of $3.9 million
of HEAT fixed assets acquired and $758,000 in capital expenditures during the
quarter.
15
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
*3(a) Form of Restated Certificate of Incorporation of
Martin Industries, Inc. which was filed as Exhibit
3(a) to the Registrant's Registration Statement on
Form S-1 filed with the Commission on July 10, 1995
(Registration No. 33-90432).
3(b) Bylaws of Martin Industries, Inc.
*4 Article 4 of the Restated Certificate of
Incorporation of Martin Industries, Inc. which was
included in Exhibit 3(a) to the Registrant's
Registration Statement on Form S-1 filed with the
Commission on July 10, 1995 (Registration No.
33-90432).
*10(a) Share Purchase Agreement dated February 1, 1996, by
and among Martin Industries, Inc., 1166081 Ontario
Inc., certain shareholders of Hunter Energy and
Technologies Inc., 1061099 Ontario Inc. and 679401
Ontario Inc. and all of the shareholders of Airform
Fabrics Inc. which was filed as Exhibit 2.1 to the
Registrant's Current Report on Form 8-K filed with
the Commission on February 16, 1996 (Commission File
No. 0-26228).
*10(b) Share Purchase Agreement dated February 1, 1996, by
and among 1166081 Ontario Inc., Iain J. Richmond,
Donald A. Hunter, Andre St. Germain and Donshardan
Investments Ltd. which was filed as Exhibit 2.2 to
the Registrant's Current Report on Form 8-K filed
with the Commission on February 16, 1996 (Commission
File No. 0-26228).
*10(c) Second Amendment to Loan Agreements and Other Loan
Documents dated as of March 28, 1996, by and between
Martin Industries, Inc. and AmSouth Bank of Alabama
which was filed as Exhibit 10(y) to the Registrant's
Annual Report on Form 10-K filed with the Commission
on March 29, 1996 (Commission File No. 0-26228).
*10(d) Term Note by Martin Industries, Inc. in favor of
AmSouth Bank of Alabama dated March 28, 1996, in the
principal amount of $5,000,000 which was filed as
Exhibit 10(z) to the Registrant's Annual Report on
Form 10-K filed with the Commission on March 29, 1996
(Commission File No. 0-26228).
27 Financial Data Schedule (for SEC use only).
16
<PAGE> 18
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Registrant with
the Commission on February 16, 1996 concerning the
acquisition by the Registrant, directly and
indirectly, of all of the issued and outstanding
shares of capital stock of Hunter Energy and
Technologies Inc., an Ontario corporation, and
1061099 Ontario Inc., an Ontario corporation, on
February 1, 1996. On April 15, 1996, the Registrant
filed a report on Form 8-K/A with the Commission
amending the report on Form 8-K filed with the
Commission on February 16, 1996 by adding financial
statements and pro forma financial information
pursuant to Item 7 of Form 8-K.
- - - ------------------------------------
*Incorporated by reference.
17
<PAGE> 19
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.
MARTIN INDUSTRIES, INC.
Date: May 14, 1996 By /s/ James W. Truitt
----------------------------
James W. Truitt,
Vice-President, Chief
Financial Officer,
Secretary and Treasurer
(Executed on behalf of
Registrant and as Principal
Financial Officer)
18
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits Page No.
------ ----------------------- -------------
<S> <C>
*3(a) Form of Restated Certificate of Incorporation of Martin Industries, Inc. which was
filed as Exhibit 3(a) to the Registrant's Registration Statement on Form S-1 filed
with the Commission on July 10, 1995 (Registration No. 33-90432).
3(b) Bylaws of Martin Industries, Inc.
*4 Article 4 of the Restated Certificate of Incorporation of Martin Industries, Inc.
which was included in Exhibit 3(a) to the Registrant's Registration Statement on
Form S-1 filed with the Commission on July 10, 1995 (Registration No. 33-90432).
*10(a) Share Purchase Agreement dated February 1, 1996, by and among Martin Industries, Inc.,
1166081 Ontario Inc., certain shareholders of Hunter Energy and Technologies, Inc.,
1061099 Ontario Inc. and 679401 Ontario Inc. and all of the shareholders of Airform
Fabrics Inc. which was filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K
filed with the Commission on February 16, 1996 (Commission File No. 0-26228).
*10(b) Share Purchase Agreement dated February 1, 1996, by and among 1166081 Ontario Inc.,
Iain J. Richmond, Donald A. Hunter, Andre St. Germain and Donshardan Investments Ltd.
which was filed as Exhibit 2.2 to the Registrant's Current Report on Form 8-K filed
with the Commission on February 16, 1996 (Commission File No. 0-26228).
*10(c) Second Amendment to Loan Agreements and Other Loan Documents dated as of March 28, 1996,
by and between Martin Industries, Inc. and AmSouth Bank of Alabama which was filed as
Exhibit 10(y) to the Registrant's Annual Report on Form 10-K filed with the Commission on
March 29, 1996 (Commission File No. 0-26228).
</TABLE>
19
<PAGE> 21
<TABLE>
<S> <C>
*10(d) Term Note by Martin Industries, Inc. in favor of AmSouth Bank of Alabama dated
March 28, 1996, in the principal amount of $5,000,000 which was filed as
Exhibit 10(z) to the Registrant's Annual Report on Form 10-K filed with the
Commission on March 29, 1996 (Commission File No. 0-26228).
27 Financial Data Schedule (for SEC use only).
</TABLE>
--------------------------
*Incorporated by reference.
20
<PAGE> 1
EXHIBIT 3(b)
B Y - L A W S
OF
MARTIN INDUSTRIES, INC.
A DELAWARE CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I OFFICES
Section 1 Registered Office
Section 2 Additional Offices
ARTICLE II MEETINGS OF STOCKHOLDERS
Section 1 Place of Meeting
Section 2 Annual Meetings
Section 3 Notice of Annual Meetings
Section 4 List of Stockholders
Section 5 Special Meetings
Section 6 Notice of Special Meetings
Section 7 Business at Special Meetings
Section 8 Quorum
Section 9 Voting
Section 10 Proxies
Section 11 Action by Consent
ARTICLE III DIRECTORS
Section 1 Number and Term
Section 2 Qualifications and Composition
Section 3 Vacancies; Removal
Section 4 Powers
Section 5 Place of Meetings
Section 6 Annual Meetings
Section 7 Regular Meetings
Section 8 Special Meetings
Section 9 Quorum; Telephone Meetings
Section 10 Action by Consent
Section 11 Committees
Section 12 Minutes of Committees
Section 13 Compensation
Section 14 Conflict of Interest
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV NOTICES
Section 1 Notice to Stockholders
Section 2 Notice to Directors
Section 3 Waiver of Notice
ARTICLE V OFFICERS
Section 1 Officers
Section 2 Additional Officers
Section 3 Compensation
Section 4 Term of Office; Removal; Vacancies
Section 5 Duties of Officers
ARTICLE VI CERTIFICATES OF STOCK
Section 1 Certificates
Section 2 Signatures
Section 3 Lost, Stolen or Destroyed Certificates
Section 4 Transfer of Stock
Section 5 Record Date
Section 6 Registered Stockholders
ARTICLE VII INDEMNIFICATION
Section 1 Indemnification
Section 2 Insurance
Section 3 Survival of Right
ARTICLE VIII GENERAL PROVISIONS
Section 1 Dividends
Section 2 Reserves
Section 3 Annual Statement
Section 4 Checks
Section 5 Fiscal Year
Section 6 Seal
Section 7 Contracts
Section 8 Voting of Corporation's Securities
</TABLE>
ii
<PAGE> 4
ARTICLE IX AMENDMENT OF BY-LAWS
Section 1 Procedure
HISTORY OF BY-LAWS
iii
<PAGE> 5
BY-LAWS OF
MARTIN INDUSTRIES, INC.
A DELAWARE CORPORATION
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. ADDITIONAL OFFICES. The principal office of
the corporation shall be located in Florence, Alabama. The corporation may
also 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 1. PLACE OF MEETING. All meetings of the
stockholders for the election of directors shall be held in the City of
Florence, State of Alabama, at such place as may be fixed from time to time by
the board of directors, or at such other place either within or without the
State of Delaware as shall be designated from time to time by the board of
directors and stated in the notice of the meeting. Meetings of stockholders
for any other purpose may be held at such time and place, within or without the
State of Delaware, as shall be stated in the notice of the meeting.
SECTION 2. ANNUAL MEETINGS. Annual meetings of
stockholders shall be held on the first Friday of May if not a legal holiday,
and if a legal holiday, then on the next secular day following, at 11:00 a.m.,
or at such other date and time as shall be designated from time to time by the
board of directors and stated in the notice of the meeting, at which they shall
elect a board of directors and transact such other business as may properly be
brought before the meeting. If the annual meeting of stockholders for election
of directors is not held on the date designated therefor, the directors shall
cause the meeting to be held as soon thereafter as convenient.
1
<PAGE> 6
SECTION 3. NOTICE OF ANNUAL MEETINGS. Unless otherwise
required by law, written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
SECTION 4. LIST OF STOCKHOLDERS. The officer who has
charge of the stock ledger of the corporation shall prepare and make, at least
ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present. The original stock
transfer books shall be prima facie evidence as to who are the stockholders
entitled to examine such list or stock ledger or to vote, in person or by
proxy, at any meeting of stockholders. Except as otherwise required by law,
failure to comply with the requirements of this section shall not affect the
validity of any action taken at such meeting.
SECTION 5. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the certificate of incorporation, may be called by the chairman
of the board or the president and shall be called by the chairman of the board,
the president or the secretary at the request in writing of a majority of the
board of directors. Such request shall state the purpose or purposes of the
proposed meeting.
SECTION 6. NOTICE OF SPECIAL MEETINGS. Unless otherwise
required by law, written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting.
SECTION 7. BUSINESS AT SPECIAL MEETINGS. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
SECTION 8. QUORUM. The holders of a majority of the
total votes (as determined in the manner provided in Section 9 below) of all
classes of the stock issued and outstanding and entitled to vote thereat (all
such classes being aggregated together as a single class for purposes of
determining a quorum under this Section 8), present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. At any meeting of stockholders, whether annual
or special, or any adjournment thereof, including any such meeting at which a
quorum shall not be present or represented, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting. At such adjourned meeting at
2
<PAGE> 7
which a quorum shall be present or represented any business may be transacted
which might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
SECTION 9. VOTING. Each holder of a class of stock of
the corporation shall be entitled to the number of votes for each share of such
class of stock as authorized by the certificate of incorporation. When a
quorum is present at any meeting, the vote of the holders of a majority of the
"total votes" of the stock present in person or represented by proxy at such
meeting shall decide any question, other than the election of directors,
brought before such meeting, unless the question is one upon which by express
provision of the statutes or of the certificate of incorporation a different
vote is required in which case such express provision shall govern and control
the decision of such question. All classes of stock of the corporation will
vote together as a single class on all matters coming before the stockholders,
except as otherwise provided by the Delaware General Corporation Law or by the
certificate of incorporation. For purposes of these by-laws, "total votes"
shall be determined (i) by multiplying the number of shares of each class of
stock entitled to vote by the number of votes for each share of such class as
authorized by the certificate of incorporation, and (ii) by totaling the sum of
the votes of each class as determined in (i), which shall produce the number of
"total votes." Subject to the provisions of the certificate of incorporation,
all elections of directors by the stockholders of the corporation shall be by
plurality vote of the "total votes."
SECTION 10. PROXIES. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
SECTION 11. ACTION BY CONSENT.
(A) Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by
hand or by certified or registered mail, return receipt requested.
3
<PAGE> 8
(B) Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent
shall be effective to take the corporate action referred to therein unless,
within sixty days of the earliest dated consent delivered to the corporation in
the manner required by paragraph (a) of this Section 11, written consents
signed by a sufficient number of holders to take action are delivered to the
corporation in the manner provided in said paragraph (a).
(C) Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. The initial board of
directors shall consist of two members. Thereafter, the exact number of
members of the board of directors shall be fixed by resolution of the board of
directors or shareholders of the corporation. The number of directors may be
increased or decreased from time to time in the manner provided by the by-laws
for the amendment thereof, but no decrease shall have the effect of shortening
the term of any incumbent director. In the event the certificate of
incorporation of the corporation is amended to provide for a classified board
of directors at the annual meeting of stockholders held in 1995, the directors
shall be divided into three classes, as nearly equal in number as possible.
The term of office of the first class of directors shall expire at the first
annual meeting of stockholders of the corporation after their election, the
term of office of the second class of directors shall expire at the second
annual meeting of stockholders of the corporation after their election, and the
term of office of the third class of directors shall expire at the third annual
meeting of stockholders of the corporation after their election. At each
annual meeting of stockholders of the corporation following such initial
classification and election, and except as otherwise so fixed by or pursuant to
the provisions of the corporation's certificate of incorporation relating to
the rights of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances and except as provided in Section 3
below in the case of electing a successor to a director elected by the board of
directors to fill a vacancy occurring in the membership of the board of
directors, directors elected to succeed those directors whose terms expire at
such annual meeting shall be elected for a term or office to expire at the
third succeeding annual meeting of stockholders of the corporation after their
election. Any director whose term of office has expired shall continue to hold
office until his successor shall be elected and qualify.
SECTION 2. QUALIFICATIONS AND COMPOSITION. The
directors shall designate from among their members one director to serve as the
chairman of the board of the Company, who shall serve at the pleasure of the
board of directors. In the event that the president is not a member of the
board of directors or his term will expire at the next meeting at which
directors are to be elected, management shall nominate the president to fill
the first vacancy arising in the
4
<PAGE> 9
board of directors or to be the successor with respect to the term which is
expiring, as the case may be, and, in the event of any vacancy created by the
resignation, removal, retirement or other termination of the president, the
successor to the president will be elected by the board of directors to fill
the unexpired term of the former president. Of the remaining positions to be
filled on the board of directors of the Company, management shall not nominate
any persons who are officers or employees of the Company if such nominees would
cause, upon their election, the board of directors of the Company to have more
than three (3) members, including the president of the Company, who are also
officers or employees of the Company. Directors need not be stockholders.
SECTION 3. VACANCIES; REMOVAL. Subject to the
certificate of incorporation of the corporation, vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors are duly
elected and shall qualify, unless sooner removed. If there are no directors in
office, then an election of directors may be held in the manner provided by
statute. If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a
majority of the whole board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office. Subject to the certificate of incorporation of the corporation, any
director of the corporation may be removed from office at any time with or
without cause, by the holders of a majority of shares of the corporation then
entitled to vote at an election of directors.
SECTION 4. POWERS. The business and operations 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 by-laws directed or required to be exercised or done
by the stockholders.
SECTION 5. PLACE OF MEETINGS. The board of directors of
the corporation may hold meetings, both regular and special, either within or
outside the State of Delaware.
SECTION 6. ANNUAL MEETINGS. The first meeting of each newly
elected board of directors shall be held at the same place as the annual
meeting of the stockholders immediately following the adjournment thereof, and
no notice of such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be present.
In the event of the failure of the board of directors to hold such meeting at
the same place as the annual meeting of the stockholders immediately following
the adjournment thereof, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided
5
<PAGE> 10
for special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
SECTION 7. REGULAR MEETINGS. Regular meetings of the
board of directors may be held without notice at such time and at such place as
shall from time to time be determined by the board.
SECTION 8. SPECIAL MEETINGS. Special meetings of the
board may be called by the chairman of the board or the president on three
days' notice to each director, delivered in the manner provided in Section 2 of
Article IV of these by-laws; special meetings shall be called by the chairman
of the board or the president in like manner and on like notice upon the
written request of two directors.
SECTION 9. QUORUM; TELEPHONE MEETINGS. At all meetings
of the board, a majority of the directors then constituting the total number of
the board, but not less than two directors except when a board of one director
is authorized and acting, then one director, 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 may be otherwise specifically provided by statute or by
the certificate of incorporation. 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. Any director may participate in any
meeting of the board of directors or a committee of the board of directors by
means of conference telephone or similar communications equipment by means of
which all persons participating in such meeting can hear each other, and
participation in a meeting pursuant to the provisions of this Section 9 shall
constitute presence in person at such meeting.
SECTION 10. ACTION BY CONSENT. Unless otherwise
restricted by the certificate of incorporation or these by-laws, any action
required or permitted to be taken at any meeting of the board of directors or
of any committee thereof may be taken without a meeting, if all members of the
board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the board or
committee.
SECTION 11. COMMITTEES. The board of directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member
of a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the board of
directors, shall have and may exercise the powers and authority of the board of
directors in the management of the business and operations of the corporation,
and may authorize the seal of the corporation
6
<PAGE> 11
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 any
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of the State of Delaware, or any successor provision thereto,
fix the designation 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 by-laws of the corporation; and, unless the resolution or the certificate
of incorporation expressly so provides, no such committee shall have the power
or authority to declare a dividend or to authorize the issuance of stock, or to
adopt a certificate of ownership and merger pursuant to Section 253 of the
General Corporation Law of the State of Delaware, or any successor provision
thereto. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
SECTION 12. MINUTES OF COMMITTEES. Each committee shall
keep regular minutes of its meetings and report the same to the board of
directors when required.
SECTION 13. COMPENSATION. Unless otherwise restricted by
the certificate of incorporation, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the board of
directors or a stated salary as director. No such payment shall preclude any
other compensation for directors nor shall it preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
SECTION 14. CONFLICT OF INTEREST.
(A) No contract or other transaction between the
corporation and one or more of its directors or officers, or between the
corporation and any other corporation, partnership, association or other
organization in which one or more of the corporation's directors or officers
are directors or officers or have a financial interest, shall be void or
voidable solely for such reason, or solely because such director or directors
or officer or officers are present at or participates in the meeting of the
board of directors or a committee thereof which authorizes or approves the
contract or transaction, or solely because such director's or directors' votes
are counted for such purpose, if (1) the material facts as to such director's
or directors' relationships or interests and as to the contract or transaction
are disclosed or are known to the board of directors or the committee, and the
board or committee in good faith authorizes the contract or
7
<PAGE> 12
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum; or
(2) the material facts as to such director's or directors' relationships or
interests as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the corporation as of the time it is
authorized, approved or ratified, by the board of directors, a committee
thereof, or the stockholders.
(B) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
ARTICLE IV
NOTICES
SECTION 1. NOTICE TO STOCKHOLDERS. Whenever, under the
provisions of applicable law or of the certificate of incorporation or of these
by-laws, notice is required to be given to any stockholder, it shall not be
construed to mean personal notice only, but such notice may be given in
writing, by mail, addressed to such stockholder, at such stockholder's address
as it appears on the records of the corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail.
SECTION 2. NOTICE TO DIRECTORS. Whenever, under the
provisions of applicable law or of the certificate of incorporation or of these
by-laws, notice is required to be given to any director, it shall be delivered
by the chairman of the board, the president or the secretary to such director
within the time provided in Section 8 of Article III of these by-laws. Such
notice either (i) may be in writing (A) delivered personally, (B) delivered by
mailing to a director at such director's address as it appears in the records
of the corporation, (C) delivered by telecopier or other means of electronic
facsimile transmission or (D) delivered by telegram or (ii) may be oral given
either in person or by telephone. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, so addressed, with postage
thereon prepaid. If by telecopier or other electronic means of facsimile
transmittal, such notice shall be deemed delivered upon completion of
transmittal from the sender thereof, provided that it shall have been directed
to such a place as is reasonably calculated to cause actual receipt of such
notice by such director. If by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company, provided
that the notice shall have been directed to such a place as is reasonably
calculated to cause actual receipt of such notice by such director. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in any notice of such
meeting.
8
<PAGE> 13
SECTION 3. WAIVER OF NOTICE. Whenever any notice is
required to be given under the provisions of the Delaware General Corporation
Law or of the certificate of incorporation or of these by-laws to a stockholder
or director, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a wavier of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice unless
so required by the certificate of incorporation.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation
shall be chosen by the board of directors and shall include a president and a
secretary. The board of directors may also choose additional officers and
assistant officers as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same person unless the
certificate of incorporation otherwise provides.
SECTION 2. ADDITIONAL OFFICERS. The board of directors
may appoint such other officers and agents as it shall deem necessary who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the board.
SECTION 3. COMPENSATION. The salaries and other
compensation of all officers and agents of the corporation shall be fixed from
time to time by the board of directors, and no officer shall be prevented from
receiving such compensation by reason of the fact that he is also a director of
the corporation.
SECTION 4. TERM OF OFFICE; REMOVAL; VACANCIES. The
officers of the corporation shall serve at the pleasure of the board of
directors and shall hold office until their successors are duly elected and
qualified or until their earlier resignation or removal. Any officer elected
or appointed by the board of directors may be removed by the affirmative vote
of a majority of the board of directors whenever in its judgment the best
interests of the corporation will be served thereby. Any vacancy occurring in
any office of the corporation shall be filled by the board of directors.
SECTION 5. DUTIES OF OFFICERS. The officers of the
corporation, if and when elected by the board of directors of the corporation,
shall have the following duties:
9
<PAGE> 14
(A) PRESIDENT. The president shall be the chief
executive officer of the corporation and, subject to the direction of the board
of directors, shall have the general and active management, supervision and
control of the business and all operations of the corporation. The president
shall, when present, preside at all meetings of the stockholders and, in the
absence of the chairman of the board, shall preside at meetings of the board of
directors. The president may sign certificates for shares of the corporation
and deeds, mortgages, bonds, contracts or other instruments on behalf of the
corporation except where required by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the board of directors to some other officer or agent of the corporation.
In general, the president shall perform all duties incident to the office of
president and such other duties as may be prescribed by the board of directors.
(B) VICE PRESIDENTS. In the absence of the
president or in the event of the president's death or inability to act, the
vice president (or in the event there be more than one vice president, the vice
presidents in the order determined by the board of directors) shall perform the
duties of the president, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the president. Any vice president
shall perform such other duties as from time to time may be assigned to the
vice president by the president or the board of directors.
(C) SECRETARY. The secretary shall keep the
minutes of the proceedings of the stockholders and of the board of directors in
one or more books provided for that purpose; see that all notices are duly
given in accordance with the provisions of these bylaws or as required by law;
be custodian of the corporate records and of the seal of the corporation; see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; keep a
register of the post office address of each stockholder which shall be
furnished to the secretary by such stockholder; sign with the president or the
treasurer certificates for shares of the corporation, the issuance of which
shall have been authorized by resolution of the board of directors; have
general charge of the stock transfer books of the corporation; and in general
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to the secretary by the president, or the
board of directors. If there is no treasurer of the corporation, the secretary
shall assume the authority and duties of treasurer.
(D) TREASURER. If there is a treasurer of the
corporation, he shall have charge and custody of and be responsible for all
funds and securities of the corporation, receive and give receipts for moneys
due and payable to the corporation from any source whatsoever, and deposit all
such moneys in the name of the corporation in such banks, trust companies or
other depositaries as may be designated by the board of directors, and in
general perform all of the duties incident to the office of treasurer and such
other duties as from time to time may be assigned to the treasurer by
president, or the board of directors. The treasurer may sign certificates for
shares of the corporation. If required by the board of directors, the
treasurer shall give a bond for the faithful discharge of such treasurer's
duties in such sum and with such surety or sureties as the board of directors
shall determine.
10
<PAGE> 15
(E) ASSISTANT SECRETARIES AND ASSISTANT
TREASURERS. The assistant secretary, or if there shall be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary. The assistant treasurer, or, if there shall be
more than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. The board of directors may
require any assistant treasurer to give a bond for the faithful discharge of
such assistant treasurer's duties in such sums and with such surety or sureties
as the board of directors shall determine. The assistant secretaries and
assistant treasurers shall all perform such other duties as shall be assigned
to them by the secretary and treasurer, respectively, or by the president, or
the board of directors."
ARTICLE VI
CERTIFICATES OF STOCK
SECTION 1. CERTIFICATES. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman of the board of directors or the president
or a vice president, and by the treasurer or an assistant treasurer or the
secretary or an assistant secretary of the corporation, certifying the number
of shares owned by such holder of stock in the corporation. Certificates may
be issued for partly paid shares and in such case upon the face or back of the
certificates issued to represent any such partly paid shares, the total amount
of the consideration to be paid therefor and the amount paid thereon shall be
stated. 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/or 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 or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of the State
of Delaware, 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 without charge 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/or rights.
SECTION 2. SIGNATURES. Any of or all the signatures on
the certificate may be 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 such person were such officer, transfer agent or registrar at
the date of issue.
11
<PAGE> 16
SECTION 3. LOST, STOLEN OR DESTROYED 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 such owner's 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
alleged to have been lost, stolen or destroyed.
SECTION 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,
assignment 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. RECORD DATE.
(a) 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, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the board of directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. 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.
(b) In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the board of directors, and which date shall not be more than ten
days after the date upon which the resolution fixing the record date is adopted
by the board of directors. If no record date has been fixed by the board of
directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the
board of directors is required, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation in the manner provided by Section 11(a) of Article
II hereof. If no record date has been fixed by the board of directors and
prior action by the board of directors is required, the record date for
12
<PAGE> 17
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the board of directors adopts the resolution relating
thereto.
SECTION 6. REGISTERED STOCKHOLDERS. The corporation
shall be entitled to recognize the exclusive right of a person registered on
its books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered on its
books as the owner of shares, and shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of the State of Delaware.
ARTICLE VII
INDEMNIFICATION
SECTION 1. INDEMNIFICATION. The corporation shall indemnify,
and in connection with such indemnification may advance expenses to, any person
who is or was a director or officer of the corporation, and any officer or
director who is or was serving at the request of the corporation as a director,
officer, employee, partner or agent of another corporation, partnership, joint
venture, trust or other enterprise, to the fullest extent permitted by law,
including without limitation the General Corporation Law of the State of
Delaware. If the amount, extent, or quality of indemnification permitted by
law should be in any way restricted after the adoption of these by-laws, then
the corporation shall indemnify such persons to the fullest extent permitted by
law as or in effect at the time of the occurrence of the omission or the act
giving rise to the claimed liability with respect to which indemnification is
sought. The indemnification and advancement of expenses pursuant to this
Article VII shall be in addition to, and not exclusive of, any other right that
the person seeking indemnification may have under these by-laws, the
certificate of incorporation, any separate contract or agreement or applicable
law. The corporation shall have the power in its discretion to indemnify any
employee or agent of the corporation in the same manner as the corporation is
required to indemnify its officers and directors under this Section 1.
13
<PAGE> 18
SECTION 2. INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
agent or employee of the corporation, or any person who is or was serving at
the request of the corporation as a director, officer, partner, agent or
employee of another corporation, partnership, joint venture, trust, or other
enterprises, against any liability asserted against such person and incurred by
such person in any such capacity, or arising out of such person's status as
such, whether or not the corporation would have the power to indemnify such
person against such liability under applicable law.
SECTION 3. SURVIVAL OF RIGHT. Any right to indemnification
or advancement of expenses provided by or granted pursuant to this Article VII
shall continue as to a person who has ceased to be a director or officer of the
corporation (and at the election of the corporation may continue as to a person
who has ceased to be an employee or agent of the corporation) and shall inure
to the benefit of the heirs, executors, administrators and personal
representatives of such an officer or director (and may at the election of the
corporation inure to the benefit of the heirs, executors, administrators and
personal representatives of agents and employees of the corporation).
ARTICLE VIII
GENERAL PROVISIONS
SECTION 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 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 2. RESERVES. Before payment of any dividend,
there may be set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
think conducive to the interest of the corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
SECTION 3. ANNUAL STATEMENT. The board of directors
shall present at each annual meeting, and at any special meeting of the
stockholders when called for by vote of the stockholders, a full and clear
statement of the business and condition of the corporation.
SECTION 4. CHECKS. All checks or demands for money and
notes of the corporation shall be signed by such officer or officers or such
other person or persons as the board of directors may from time to time
designate.
14
<PAGE> 19
SECTION 5. FISCAL YEAR. The fiscal year of the
corporation shall be fixed by resolution of the board of directors.
SECTION 6. SEAL. The corporate seal shall have
inscribed thereon the name of the corporation and the words "Corporate Seal"
and "Delaware." The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
SECTION 7. CONTRACTS. The board of directors may
authorize any officer, agent or employee to enter into any contract, instrument
or agreement on behalf of the corporation, and the authority granted may be
general or confined to specific instances. Except as provided in this section
or as authorized by the board of directors, no officer, agent, or employee,
other than the chairman of the board, the president, any vice-president, the
secretary or the treasurer, shall have any power or authority to bind the
corporation by any contract, instrument or agreement, to pledge its credit, or
to render it liable, for any purpose or any amount.
SECTION 8. VOTING OF CORPORATION'S SECURITIES. Unless
otherwise ordered by the board of directors, the chairman of the board, the
president or any vice president, or, such other officer as may be designated by
the board of directors to act in the absence of the chairman of the board, the
president or any vice president, shall have full power and authority on behalf
of the corporation to attend and to act and to vote, and to execute a proxy or
proxies empowering others to attend and to act and to vote, at any meetings of
security holders of any corporation in which the corporation may hold
securities, and at such meetings the chairman of the board, or such other
officer of the corporation, or such proxy shall possess and may exercise any
and all rights and powers incident to the ownership of such securities, and
which as the owner thereof the corporation might have possessed and exercised,
if present. The secretary or any assistant secretary may affix the corporate
seal to any such proxy or proxies so executed by the chairman of the board, or
such other officer, and attest the same. The board of directors by resolution
from time to time may confer like powers upon any other person or persons.
ARTICLE IX
AMENDMENT OF BY-LAWS
SECTION 1. PROCEDURE. These by-laws may be altered,
amended or repealed or new by-laws may be adopted by the stockholders or by the
board of directors, when such power is conferred upon the board of directors by
the certificate of incorporation at any regular meeting of the stockholders or
of the board of directors or at any special meeting of the stockholders or of
the board of directors if notice of such alteration, amendment, repeal or
adoption of new by-laws be contained in the notice of such special meeting.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED MARCH
30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-30-1996
<CASH> $15,716
<SECURITIES> 0
<RECEIVABLES> 18,536
<ALLOWANCES> 819
<INVENTORY> 20,551
<CURRENT-ASSETS> 58,311
<PP&E> 21,605
<DEPRECIATION> 10,942
<TOTAL-ASSETS> 73,951
<CURRENT-LIABILITIES> 17,210
<BONDS> 11,126
0
0
<COMMON> 97
<OTHER-SE> 43,298
<TOTAL-LIABILITY-AND-EQUITY> 73,951
<SALES> 21,044
<TOTAL-REVENUES> 21,044
<CGS> 16,698
<TOTAL-COSTS> 16,698
<OTHER-EXPENSES> 5,014
<LOSS-PROVISION> 6
<INTEREST-EXPENSE> 16
<INCOME-PRETAX> (690)
<INCOME-TAX> (179)
<INCOME-CONTINUING> (511)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (511)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
