<PAGE> 1
FORM 10-Q
---------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-7872
---------------------
TRANSTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 95-4062211
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
150 Allen Road 07938
Liberty Corner, New Jersey (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 903-1600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of November 5, 1998, the total number
of outstanding shares of registrant's one
class of common stock was 6,318,347.
<PAGE> 2
TRANSTECHNOLOGY CORPORATION
INDEX
PART I. Financial Information Page No.
--------
Item 1. Financial Statements........................................... 2
Statements of Consolidated Operations--
Three and Six Month Periods Ended September 27, 1998
and September 28, 1997......................................... 3
Consolidated Balance Sheets--
September 27, 1998 and March 31, 1998.......................... 4
Statements of Consolidated Cash Flows--
Six Month Periods Ended September 27, 1998 and
September 28, 1997............................................. 5
Statements of Consolidated Stockholders' Equity--
Six Month Period Ended September 27, 1998...................... 6
Notes to Consolidated Financial Statements..................... 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...........................10-16
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K...............................17
SIGNATURES.................................................................18
EXHIBIT 3.2 ...............................................................19-29
EXHIBIT 27.................................................................30
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited Statements of Consolidated Operations, Consolidated
Balance Sheets and Statements of Consolidated Cash Flows are of TransTechnology
Corporation and its consolidated subsidiaries. These reports reflect all
adjustments of a normal recurring nature, which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the interim periods reflected therein. The results reflected in the unaudited
Statements of Consolidated Operations for the period ended September 27, 1998
are not necessarily indicative of the results to be expected for the entire
year. The following unaudited Consolidated Financial Statements should be read
in conjunction with the notes thereto, and Management's Discussion and Analysis
of Financial Conditions and Results of Operations set forth in Item 2 of Part I
of this report, as well as the audited financial statements and related notes
thereto contained in the Form 10-K filed for the fiscal year ended March 31,
1998.
[THIS SPACE INTENTIONALLY LEFT BLANK]
2
<PAGE> 4
STATEMENTS OF CONSOLIDATED OPERATIONS
UNAUDITED
(In Thousands of Dollars Except Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- --------------------------------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997 SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ 56,368 $ 50,013 $ 107,851 $ 99,936
Cost of sales 38,419 34,080 73,002 68,655
----------- ----------- ----------- -----------
Gross profit 17,949 15,933 34,849 31,281
----------- ----------- ----------- -----------
General, administrative
and selling expenses 11,341 10,278 21,677 19,849
Interest expense 1,910 2,184 3,261 4,160
Increase in allowance on notes receivable 1,206 -- 1,206 --
Interest income (99) (323) (198) (566)
Royalty and other income (120) (217) (190) (220)
----------- ----------- ----------- -----------
Income from continuing operations
before income taxes 3,711 4,011 9,093 8,058
Income taxes 1,503 1,624 3,683 3,304
----------- ----------- ----------- -----------
Income from continuing operations 2,208 2,387 5,410 4,754
Loss from discontinued operations (a) -- (125) -- (227)
----------- ----------- ----------- -----------
Income before extradordinary charge 2,208 2,262 5,410 4,527
Extraordinary charge for refinancing of debt (b) (781) -- (781) --
----------- ----------- ----------- -----------
Net income $ 1,427 $ 2,262 $ 4,629 $ 4,527
=========== =========== =========== ===========
Basic Earnings per Share: (Note 1)
Income from continuing operations $ 0.35 $ 0.47 $ 0.86 $ 0.94
Loss from discontinued operations -- (0.02) -- (0.04)
Extraordinary charge for refinancing
of debt (0.12) -- (0.12) --
----------- ----------- ----------- -----------
Net income $ 0.23 $ 0.45 $ 0.74 $ 0.90
=========== =========== =========== ===========
Diluted Earnings per Share:
Income from continuing operations $ 0.34 $ 0.45 $ 0.84 $ 0.91
Loss from discontinued operations -- (0.02) -- (0.04)
Extraordinary charge for refinancing
of debt (0.12) -- (0.12) --
----------- ----------- ----------- -----------
Net income $ 0.22 $ 0.43 $ 0.72 $ 0.87
=========== =========== =========== ===========
Numbers of shares used in computation of
per share information:
Basic 6,302,000 5,083,000 6,293,000 5,048,000
Diluted 6,402,000 5,289,000 6,420,000 5,231,000
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(a) Loss from discontinued operations are net of applicable tax benefits of
$93 and $165 for the three and six month periods ended September 28,
1997, respectively.
(b) Extraordinary charge for refinancing of debt is net of applicable tax
benefits of $532 for the three and six month periods ended September
28, 1998, respectively.
3
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars Except Share Data)
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER 27, 1998 MARCH 31, 1998
------------------ --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 266 $ 2,960
Accounts receivable (net of allowance for doubtful accounts
of $532 at September 27, 1998 and $556 at March 31, 1998) 36,137 33,244
Notes receivable 1,269 5,086
Inventories 64,469 53,985
Prepaid expenses and other current assets 1,342 1,022
Deferred income taxes 3,471 2,773
Assets held for sale -- 5,442
--------- ---------
Total current assets 106,954 104,512
--------- ---------
Property, Plant and Equipment 109,922 92,981
Less accumulated depreciation and amortization 33,452 29,295
--------- ---------
Property, Plant and Equipment - net 76,470 63,686
--------- ---------
Other assets:
Notes receivable 3,525 7,181
Costs in excess of net assets of acquired businesses
(net of accumulated amortization:
September 27, 1998, $5,939; March 31, 1998, $5,115) 82,050 45,094
Other 23,657 15,600
--------- ---------
Total other assets 109,232 67,875
--------- ---------
Total $ 292,656 $ 236,073
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 45 $ 12,137
Accounts payable-trade 11,276 14,694
Accrued compensation 5,985 9,764
Accrued income taxes 969 332
Other current liabilities 19,694 11,154
--------- ---------
Total current liabilities 37,969 48,081
--------- ---------
Long-term debt payable to banks and others 112,983 51,350
--------- ---------
Other long-term liabilities 21,999 20,810
--------- ---------
Stockholders' equity:
Preferred stock-authorized, 300,000 shares;
none issued -- --
Common stock-authorized, 14,700,000 shares
of $.01 par value; issued 6,634,855 at September
27, 1998, and 6,564,079 at March 31, 1998 66 66
Additional paid-in capital 76,979 75,959
Retained earnings 50,348 46,537
Other stockholders' equity (2,206) (2,731)
--------- ---------
125,187 119,831
Less treasury stock, at cost - (356,507 shares at
September 27, 1998 and 292,054 at March 31, 1998) (5,482) (3,999)
--------- ---------
Total stockholders' equity 119,705 115,832
--------- ---------
Total $ 292,656 $ 236,073
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
STATEMENTS OF CONSOLIDATED CASH FLOWS
UNAUDITED
(In Thousands of Dollars)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,629 $ 4,527
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Extraordinary charge for refinancing of debt 781 --
Depreciation and amortization 5,191 4,359
Provision for losses on notes and accounts receivable 1,283 317
(Gain) loss on sale or disposal of fixed assets (6) 77
Change in assets and liabilities net of acquisitions:
Decrease (increase) in accounts receivable 1,933 (837)
(Increase) decrease in inventories (1,506) 2,369
Decrease in assets held for sale -- 565
(Increase) decrease in other assets (290) 86
Decrease in accounts payable (5,791) (603)
Decrease in accrued compensation (3,823) (1,179)
Increase (decrease) in income tax payable 884 (225)
Decrease in other liabilities (5,415) (434)
--------- ---------
Net cash (used in) provided by operating activities (2,130) 9,022
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisitions net of cash acquired (44,160) (33,929)
Capital expenditures (5,114) (3,247)
Proceeds from sale of fixed assets 248 283
Decrease in notes receivable 2,901 828
--------- ---------
Net cash used in investing activities (46,125) (36,065)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 133,627 53,033
Payments on long-term debt (86,408) (29,543)
Proceeds from forward exchange rate contracts -- 2,036
Proceeds from issuance of stock under stock option plan 466 889
Dividends paid (818) (658)
Treasury stock purchases (1,363) --
--------- ---------
Net cash provided by (used in) financing activities 45,504 25,757
--------- ---------
Effect of exchange rate changes on cash 57 (63)
Decrease in cash and cash equivalents (2,694) (1,349)
Cash and cash equivalents at beginning of period 2,960 3,540
--------- ---------
Cash and cash equivalents at end of period $ 266 $ 2,191
========= =========
Supplemental Information:
Interest payments $ 2,994 $ 3,060
Income tax payments $ 2,501 $ 2,227
Noncash investing activities:
Exchange of note receivable for equity interest $ 3,170 $ --
</TABLE>
- ----------
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE> 7
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
UNAUDITED
(In Thousands of Dollars Except Share Data)
<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK ADDITIONAL OTHER
FOR THE SIX MONTHS --------------------- ---------------------- PAID-IN RETAINED STOCKHOLDERS'
ENDED SEPTEMBER 27, 1998 SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS EQUITY TOTAL
- ------------------------- --------- --------- --------- ---------- ---------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1998 6,564,079 $ 66 (292,054) $ (3,999) $ 75,959 $ 46,537 $ (2,731) $ 115,832
Net Income -- -- -- -- -- 4,629 -- 4,629
Expenses relating to public
sale of common stock -- -- -- -- (4) -- -- (4)
Cash dividends
($.13 per share) -- -- -- -- -- (818) -- (818)
Purchase of Treasury Stock -- -- (60,000) (1,363) -- -- -- (1,363)
Unrealized investment
holding loss -- -- -- -- -- -- (9) (9)
Issuance of stock under
stock option plan - net 65,714 -- -- -- 887 -- -- 887
Effects of stock under
incentive bonus plan - net 5,062 -- (4,453) (120) 137 -- (59) (42)
Foreign translation
adjustments -- -- -- -- -- -- 593 593
--------- --------- --------- --------- --------- --------- --------- ---------
Balance, September 27, 1998 6,634,855 $ 66 (356,507) $ (5,482) $ 76,979 $ 50,348 $ (2,206) $ 119,705
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 8
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands of Dollars)
NOTE 1. Earnings Per Share:
Basic earnings per share is computed by dividing net income by the
weighted-average number of shares outstanding. Diluted earnings per
share is computed by dividing net income by the sum of the
weighted-average number of shares outstanding plus the dilutive effect
of shares issuable through the exercise of stock options.
The components of the denominator for basic earnings per share and
diluted earnings per share are reconciled as follows: (in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------------- --------------------------------------
September 27, 1998 September 28, 1997 September 27, 1998 September 28, 1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Basic Earnings per Share:
Weighted average common
shares outstanding 6,302 5,083 6,293 5,048
===== ===== ===== =====
Diluted Earnings per Share:
Weighted average common
shares outstanding 6,302 5,083 6,293 5,048
Stock Options 100 206 127 183
----- ----- ----- -----
Denominator for Diluted
Earnings per Share 6,402 5,289 6,420 5,231
===== ===== ===== =====
</TABLE>
7
<PAGE> 9
NOTE 2. Comprehensive Income
Effective April 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
This statement requires that the Company report the change in its net
assets during the period from nonowner sources. This statement only
requires additional disclosures, and does not impact the Company's
consolidated financial position or cash flows. For the three and six
month periods ended September 27, 1998 and September 28, 1997, other
comprehensive income is comprised of foreign currency translation
adjustments and unrealized holding gains/(losses) on marketable
securities. Comprehensive income is summarized below.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------------------- -----------------------------------------
September 27, 1998 September 28, 1997 September 27, 1998 September 28, 1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net income $ 1,427 $ 2,262 $ 4,629 $ 4,527
Other comprehensive
income (loss), net of tax:
Foreign currency
translation adjustment 495 (173) 593 (366)
Unrealized investment
holding gain (loss) (44) 90 (9) 50
------- ------- ------- -------
Total comprehensive
income $ 1,878 $ 2,179 $ 5,213 $ 4,211
======= ======= ======= =======
</TABLE>
NOTE 3. Inventories:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
September 27, 1998 March 31, 1998
------------------ --------------
<S> <C> <C>
Finished goods $26,219 $22,515
Work-in-process 12,996 11,330
Purchased and
manufactured parts 25,254 20,140
------- -------
Total inventories $64,469 $53,985
======= =======
</TABLE>
NOTE 4. Acquisitions
On June 29, 1998, the Company acquired all of the outstanding common
stock of Aerospace Rivet Manufacturers Corporation ("ARM") for $27
million in cash, plus direct acquisition costs, and other contingent
consideration. ARM, located in Santa Fe Springs, California, produces
rivets and externally threaded fasteners for the aerospace industry.
8
<PAGE> 10
On July 28, 1998, the Company acquired all of the outstanding common
stock of NORCO, Inc. for $18 million in cash, plus direct acquisition
costs, and other contingent consideration. NORCO, Inc., located in
Ridgefield, Connecticut, produces aircraft parts and motion control
components for the aerospace industry.
NOTE 5. Long-Term Debt Payable to Banks and Others
Long-term debt payable, including current maturities, consisted of the
following:
<TABLE>
<CAPTION>
September 27, 1998 March 31, 1998
------------------ --------------
<S> <C> <C> <C>
Credit agreement - 7.20% $ 109,725 -
Credit agreement - 8.50% 2,600 $ 2,676
Term loan - 6.85% - 36,099
Term loan - 9.79% - 24,000
Other 703 712
--------- --------
113,028 63,487
Less current maturities 45 12,137
--------- --------
Total $ 112,983 $ 51,350
========= ========
</TABLE>
Credit Agreement
Effective July 24, 1998, the Company's revolving credit line ("the
Revolver") was revised and amended to increase the Revolver to $125
million and eliminate Term Loan A and Term Loan B. The new credit
agreement is substantially with the same group of lenders and has
similar collateral and customary financial covenants, but is no longer
asset based, and does not require principal payments until maturity on
July 23, 2003.
On September 27, 1998 the Company's domestic debt consisted of $90.6
million of borrowings under the Revolver and $0.7 million of other
borrowings. Letters of credit outstanding under the line at September
27, 1998 were $0.1 million. Amounts outstanding under International
Lines of Credit were $21.7 million at September 27, 1998.
Other
Other long-term debt is comprised principally of an obligation due
under a collateralized borrowing arrangement with a fixed interest rate
of 3% due December 2004 and loans on life insurance policies owned by
the Company with a fixed interest rate of 5%.
NOTE 6. New Accounting Pronouncements Not Yet Adopted
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information", which will be effective for
the Company's current fiscal year. SFAS No. 131 redefines how operating
segments are determined and requires expanded quantitative and
qualitative disclosures relating to the Company's operating segments.
The Company is currently evaluating which operating segments, if any,
it will disclose differently than previously reported.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits - an amendment of FASB
Statements No. 87, 88 and 106." This statement, which will be effective
for the Company's current fiscal year, requires revised disclosures
about pension and other postretirement benefit plans. The adoption of
this statement will not have any impact on the Company's consolidated
financial position, results of operations or cash flows.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued and is effective for the Company for
its fiscal year ending March 31, 2001. SFAS No. 133 requires that all
derivative instruments be measured at fair value and recognized in the
balance sheet as either assets or liabilities. The Company is currently
evaluating the impact this pronouncement will have on its consolidated
financial statements.
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
All references to three and six month periods in this Management's Discussion
refer to the three and six month periods ended September 27, 1998 for fiscal
year 1999 and the three and six month periods ended September 28, 1997 for
fiscal year 1998. Also when referred to herein, operating profit means net sales
less operating expenses, without deduction for general corporate expenses,
interest and income taxes. Unless otherwise indicated, amount per share refers
to diluted amounts per share.
Sales from continuing operations for the six month period in 1999 were $107.9
million, an increase of $7.9 million or 8% from the comparable period in 1998.
For the three month period in 1999 sales were $56.4 million, a $6.4 million or
13% increase from the comparable period in 1998. As further discussed below, the
increased sales performance for the six and three month periods in 1999 resulted
primarily from the acquisitions of ARM on June 29, 1998 and NORCO, Inc. on July
28, 1998.
Gross profit for the six month period in 1999 increased $3.6 million or 11% from
the comparable period in 1998. For the three month period in 1999, gross profit
increased $2.0 million or 13%. Operating profit from continuing operations for
the six month period in 1999 was $18.1 million, an increase of $1.9 million or
12% from the comparable period in 1998. For the three month period in 1999
operating profit from continuing operations was $8.8 million, an increase of
$0.7 million or 9% from the comparable period in 1998. Changes in sales,
operating profit and new orders from continuing operations are discussed below
by segment.
Net income, after an extraordinary item for the six month period in 1999 was
$4.6 million or $0.72 per share, compared to $4.5 million or $0.87 per share,
for the comparable period of 1998. The three month period in 1999 reported net
income of $1.4 million or $0.22 per share after the extraordinary item, compared
to $2.3 million or $0.43 per share for the year earlier period. Net income for
both the six month and three month periods in 1999 includes an extraordinary
charge in the amount of $0.8 million or $0.12 per share after tax for the
refinancing of debt. Net income for both periods also includes the establishment
of a $1.2 million pretax allowance for a possible loss on a note receivable from
the sale of a previously discontinued company. The extraordinary charge for the
refinancing of debt is discussed in more detail in the discussion of liquidity
and capital resources section.
Interest expense decreased $0.9 million and $0.3 million for the six month and
three month periods in 1999, respectively. The decreases were primarily the
result of reduced bank debt following the November 1997 common stock offering.
These proceeds were subsequently used for acquisitions during the second quarter
of fiscal 1999 as discussed in Note 4.
10
<PAGE> 12
New orders received during the six month period in 1999 totaled $112.4 million,
an increase of $11.2 million or 11% from 1998's comparable period. For the three
month period, new orders totaled $61.9 million, an increase of $12.5 million or
25% from last year's comparable period. The increased new orders for both the
six month and three month periods were primarily due to the acquisitions of ARM
and NORCO, Inc. as well as increased new orders at Breeze-Eastern and our
European operations. At September 27, 1998, total backlog of unfilled orders was
$101.6 million compared to $73.2 million at September 28, 1997, primarily due to
the acquisition of ARM and NORCO, Inc., as well as increased backlog at
Breeze-Eastern, Breeze Industrial, TCR and our European operations.
11
<PAGE> 13
FINANCIAL SUMMARY BY PRODUCT SEGMENT
(In Thousands of Dollars)
<TABLE>
<CAPTION>
SIX MONTHS ENDED NET CHANGE
---------------------------------------- -------------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997 $ %
------------------ ------------------ ---------- ---
<S> <C> <C> <C> <C>
Sales:
Specialty fastener products $ 87,367 $ 82,698 $ 4,669 6
Aerospace products 20,484 17,238 3,246 19
--------- --------- ----------
Total $ 107,851 $ 99,936 $ 7,915 8
========= ========= ==========
Operating profit:
Specialty fastener products $ 13,383 $ 12,425 $ 958 8
Aerospace products 4,676 3,745 931 25
--------- --------- ----------
Total $ 18,059 $ 16,170 $ 1,889 12
Corporate expense (a) (5,894) (4,596) (1,298) (28)
Corporate interest and other income 189 644 (455) (71)
Interest expense (3,261) (4,160) 899 22
--------- --------- ----------
Income from continuing
operations before
income taxes $ 9,093 $ 8,058 $ 1,035 13
========= ========= ==========
</TABLE>
(a) The corporate expense for the six month period ended September 27,
1998, includes a $1.2 million increase to the allowance to offset a
possible loss on notes receivable.
12
<PAGE> 14
FINANCIAL SUMMARY BY PRODUCT SEGMENT
(In Thousands of Dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NET CHANGE
----------------------------------------- -----------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997 $ %
------------------ ------------------ ------- ---
<S> <C> <C> <C> <C>
Sales:
Specialty fastener products $ 45,147 $ 41,543 $ 3,604 9
Aerospace products 11,221 8,470 2,751 32
-------- --------- -------
Total $ 56,368 $ 50,013 $ 6,355 13
======== ========= ======
Operating profit:
Specialty fastener products $ 6,504 $ 6,333 $ 171 3
Aerospace products 2,287 1,766 521 30
-------- --------- -------
Total $ 8,791 $ 8,099 $ 692 9
Corporate expense (a) (3,259) (2,341) (918) (39)
Corporate interest and other income 89 437 (348) (80)
Interest expense (1,910) (2,184) 274 13
-------- --------- -------
Income from continuing
operations before
income taxes $ 3,711 $ 4,011 $ (300) (7)
======== ========= ======
</TABLE>
(a) The corporate expense for the three month period ended September 27,
1998, includes a $1.2 million increase to the allowance to offset a
possible loss on notes receivable.
13
<PAGE> 15
SPECIALTY FASTENER PRODUCTS SEGMENT
Sales for the specialty fastener products segment were $87.4 million for the six
month period in 1999, an increase of $4.7 million or 6% from the comparable
period in 1998. Sales for the three month period in 1999 were up $3.6 million or
9% from the same period in 1998. The six and three month increases in 1999 were
primarily due to the inclusion of ARM's operations in the current year periods.
The increased sales from the ARM acquisition were partially offset in both
periods by lower domestic retaining ring sales relating to the consolidation of
our two North American retaining ring factories. International fastener sales
for both periods were slightly higher with an increase in European sales
partially offset by a decrease in Brazilian sales.
Operating profit for the segment was $13.4 million for the six month period in
1999, an increase of $1.0 million or 8% from the comparable period in 1998. The
three month period in 1999 reported an operating profit of $6.5 million, an
increase of $0.2 million or 3% from the comparable period in 1998. The increased
operating profit was mainly due to the ARM acquisition partially offset by
decreased operating profit due primarily to overhead absorption issues arising
from the consolidation of our North American retaining ring factories.
New orders increased by $2.8 million or 3% for the six month period in 1999, as
compared to the six month period in 1998. New orders for the three month period
in 1999 increased $0.5 million or 1% from the comparable period in 1998. The
primary reason for these increases was the acquisition of ARM and increased new
orders at our European operations. Backlog of unfilled orders at September 27,
1998 was $52.6 million compared to $41.5 million at September 28, 1997,
primarily due to the acquisition of ARM and increased backlog at Breeze
Industrial, TCR and our European operations.
AEROSPACE PRODUCTS SEGMENT
Sales for the aerospace products segment were $20.5 million for the six month
period in 1999, an increase of $3.2 million or 19% from the comparable period in
1998. Sales for the three month period in 1999 were $11.2 million, up $2.8
million or 32% from the comparable period in 1998. The increases were primarily
due to the acquisition of NORCO, Inc.
Operating profit for the six month period in 1999 was $4.7 million, an increase
of $0.9 million or 25% from the comparable period in 1998. The three month
period had an operating profit of $2.3 million, an increase of $0.5 million or
30% from the comparable period in 1998. The increased operating profit for both
periods was primarily due to the acquisition of NORCO, Inc.
New orders for the six month period in 1999 increased $8.4 million or 51% from
the comparable period in 1998. New orders for the three month period in 1998
increased $12.0 million or 167% from the comparable period in 1998. The
increases in both 1999 periods were due to the NORCO, Inc. acquisition as well
as a large increase at Breeze-Eastern, primarily due to customer timing and
placement of new orders. Backlog of unfilled orders at September 27, 1998 was
$49.0 million compared to $31.8 million at September 28, 1997, primarily due to
the NORCO, Inc. acquisition and higher backlog at Breeze-Eastern.
14
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES
The Company's debt-to-capitalization ratio was 49% as of September 27, 1998,
compared to 35% as of March 31, 1998, primarily due to increased bank borrowings
for the acquisitions of ARM and NORCO, Inc. in the second quarter of fiscal
1999. The current ratio at September 27, 1998, stood at 2.82 compared to 2.17 at
March 31, 1998. Working Capital was $69.0 million at September 27, 1998, up
$12.6 million from March 31, 1998.
During the six months ended September 27, 1998 the Company purchased 60,000
shares of treasury stock for $1.4 million. Treasury stock purchases are made in
the open market or in negotiated transactions when opportunities arise. Plans to
purchase Treasury stock are subject to the terms of the Company's credit
agreement and may be discontinued by the Company at any time.
On June 28, 1998, the Company reclassified approximately $5.4 million of assets
held for sale, primarily land and buildings, to other long term assets due to
the termination of sales negotiations. There are no current substantive
negotiations which could result in liquidation within the next twelve months,
although the Company continues to actively seek to sell the properties.
Management believes that the Company's anticipated cash flow from operations,
combined with the bank credit described above, will be sufficient to support
working capital requirements, capital expenditures and dividend payments at
their current or expected levels. Capital expenditures in the six month period
in 1999 were $5.1 million as compared with $3.2 million in the comparable period
in 1998.
EXTRAORDINARY CHARGE FOR REFINANCING OF DEBT
On July 24, 1998 the Company refinanced its long term debt. The new financing
agreement increased the Company's revolving credit limit to $125 million and
eliminated the Term A loan and the Term B loan. The new agreement is with
substantially the same group of lenders and has similar collateral and customary
covenants, but is no longer asset based and does not require principal payments
until maturity on July 23, 2003. Due to the termination of the old credit
agreement, the Company took a charge to earnings in the current period to write
off the unamortized portion of the loan origination costs associated with the
old agreement in the amount of $1.2 million before tax or $0.8 million after
tax. The after tax amount of $0.8 million is classified as an extraordinary
charge in the Statement of Consolidated Operations for the three month and six
month periods ended September 27, 1998.
YEAR 2000 ISSUE
The Company has recognized the year 2000 issue which relates to the computer
storage of dates with the format of the year as either a two digit or a four
digit data field. Computer programs which have only a two digit field for the
year must be modified prior to the year 2000 otherwise the year 2000 may be
confused with year 1900.
15
<PAGE> 17
The Company has taken steps to have all of its computer systems in compliance
with the year 2000 date requirement before that date is reached. Thus far the
Company has reviewed its internal computer systems at all locations for
compliance. Identification and testing of all internal systems has been underway
for the past year and is in the later stages of completion. Progress is
currently being monitored on a monthly basis at all business units. Some surveys
of key customers and suppliers have been obtained and are being updated on an
on-going basis. Based on the information obtained to date, the Company does not
believe there will be any significant interruptions in systems that will
adversely affect the company relative to the year 2000 issue. The Company is not
able however to identify all external year 2000 issues such as those which may
exist at the governmental, supplier and customer levels.
The Company's planned expenditure for year 2000 compliance is $0.5 million, most
of which has been or is expected to be spent during the current fiscal year. The
Company has addressed contingency planning for the year 2000 issue and has
outlined various plans for further development based upon additional test
results and survey findings. The anticipated completion date for all Year 2000
compliance is September 1999.
16
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of the Registrant, held on July 23, 1998, all seven
directors of the Company nominated for reelection were reelected for a term of
one year, and shareholders approved the 1998 Non-Employee Directors' Stock
Option Plan. The results of the voting on the election of directors were as
follows:
<TABLE>
<CAPTION>
VOTES VOTES
FOR WITHHELD
--- --------
<S> <C> <C>
Gideon Argov 4,332,043 1,222,579
Walter Belleville 4,333,099 1,221,523
Michael J. Berthelot 4,333,099 1,221,523
Thomas V. Chema 4,332,071 1,222,551
Michael Glouchevitch 4,333,071 1,221,551
James A. Lawrence 4,333,099 1,221,523
William Recker 4,332,553 1,222,069
</TABLE>
The results of the voting on the proposal to approve the 1998 Non-Employee
Directors' Stock Option Plan were as follows:
FOR - 4,216,510 AGAINST - 1,278,519 ABSTAIN - 59,592
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.2 Bylaws of the Company amended and restated as of July 23, 1998
27 Financial Data Schedule
(b) A report on Form 8-K was filed on July 13, 1998 to report the June 29,
1998 acquisition by the Company of all of the outstanding stock of
Aerospace Rivet Manufacturers Corporation. This report on Form 8-K was
amended by the filing on August 27, 1998 of a report on Form 8-K/A.
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.
TRANSTECHNOLOGY CORPORATION
(Registrant)
Dated: November 10, 1998 By: /s/ JOSEPH F. SPANIER
-------------------------------------
Joseph F. Spanier, Vice President
and Chief Financial Officer*
* On behalf of the Registrant and as Principal Financial Officer.
18
<PAGE> 20
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
3.2 Bylaws of the Company amended and restated
as of July 23, 1998
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
TRANSTECHNOLOGY CORPORATION
(A Delaware Corporation)
ARTICLE I
Offices
Section 1.01. REGISTERED OFFICE. The registered office of
TransTechnology Corporation (the "Corporation") in the State of Delaware shall
be at Corporation Trust Center, 100 West Tenth Street, in the City of
Wilmington, County of New Castle, State of Delaware, and the name of the
registered agent at that address shall be The Corporation Trust Company.
Section 1.02. PRINCIPAL EXECUTIVE OFFICE. Effective as of May 10, 1996
the principal executive address of the corporation shall be located at 150 Allen
Road, Liberty Corner, New Jersey 07938. The Board of Directors of the
Corporation (the "Board") may change the location of said principal executive
office.
Section 1.03. OTHER OFFICES. The Corporation may also have an office or
offices at such other place or places, either within or without the State of
Delaware, as the Board may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 2.01. ANNUAL MEETINGS. The annual meeting of stockholders of
the Corporation shall be held on such date and at such time as the Board shall
determine. At each annual meeting of stockholders, directors shall be elected in
accordance with the provisions of Section 3.03 and any other proper business may
be transacted.
Section 2.02. SPECIAL MEETINGS. Special meetings of stockholders for
any purpose may be called at any time by a majority of the Board, the Chairman
of the Board, the President or the Secretary. Special meetings may not be called
by any other person. Each special meeting shall be held at such date and time as
is requested by the person or persons calling the meeting, within the limits
fixed by law.
Section 2.03. PLACE OF MEETINGS. Each annual or special meeting of
stockholders shall be held at such location as may be determined by the Board
or, if no such determination is made, at such place as may be determined by the
Chairman of the Board. If no location is so determined, any annual or special
meeting shall be held at the principal executive office of the Corporation.
BYLAWS - Page 1 19
<PAGE> 2
Section 2.04. NOTICE OF MEETINGS. Except as otherwise required by law,
notice of each meeting of the stockholders, whether annual or special, shall be
given not less than 10 nor more than sixty days before the date of the meeting
to each stockholder of record entitled to vote at such meeting by delivering a
typewritten or printed notice thereof to him personally, or by depositing such
notice in the United States mail, in a postage prepaid envelope, directed to him
at his post-office address furnished by him to the Secretary for such purpose
or, if he shall not have furnished to the Secretary his address for such
purpose, then at his post-office address last known to the Secretary, or by
transmitting a notice thereof to him at such address by telegraph, cable or
wireless.
Except as otherwise expressly required by law, the notice shall state
the place, date and hour of the meeting, and, in the case of a special meeting,
shall also state the purpose for which the meeting is called. Notice of any
meeting of stockholders shall not be required to be given to any stockholder to
whom notice may be omitted pursuant to applicable Delaware law or who shall have
waived such notice and such notice shall be deemed waived by any stockholder who
shall attend such meeting in person or by proxy, except a stockholder who shall
attend such 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. Except as otherwise expressly required by law,
notice of any adjourned meeting of the stockholders need not be given if the
time and place thereof are announced at the meeting at which the adjournment is
taken.
Section 2.05. CONDUCT OF MEETINGS. All annual and special meetings of
stockholders shall be conducted in accordance with such rules and procedures as
the Board may determine subject to the requirements of applicable law and, as to
matters not governed by such rules and procedures, as the chairman of such
meeting shall determine. The chairman of any annual or special meeting of
stockholders shall be the Chairman of the Board if he is willing, and if not,
then the President. The Secretary, or in the absence of the Secretary, a person
designated by the Chairman of the Board or President, as the case may be, shall
act as secretary of the meeting.
Section 2.06. QUORUM. At any meeting of stockholders, the presence, in
person or by proxy, of the holders of record of a majority of shares then issued
and outstanding and entitled to vote at the meeting shall constitute a quorum
for the transaction of business; provided, however, that this Section 2.06 shall
not affect any different requirement which may exist under statute, pursuant to
the rights of any authorized class or series of stock, or under the Certificate
of Incorporation of the Corporation (the "Certificate") for the vote necessary
for the adoption of any measure governed thereby. In the absence of a quorum,
the stockholders present in person or by proxy, by majority vote and without
further notice, may adjourn the meeting from time to time until a quorum is
attained. At any reconvened meeting following such an adjournment at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 2.07. VOTES REQUIRED. A majority of the votes cast at a duly
called meeting of stockholders, at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting, unless the vote of a greater or different number thereof is
required by statute, by the rights of any authorized class of stock or by the
Certificate. Unless the Certificate or a resolution of the Board of Directors
adopted in connection with the issuance of shares of any class or series of
stock provides for a greater or lesser number
BYLAWS - Page 2 20
<PAGE> 3
of votes per share, or limits or denies voting rights, each outstanding share of
stock, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders.
Section 2.08. PROXIES. A stockholder may vote the shares owned of
record by him either in person or by proxy executed in writing (which shall
include writings sent by telex, telegraph, cable or facsimile transmission) by
the stockholder himself or by his duly authorized attorney-in-fact. No proxy
shall be valid after 3 years from its date, unless the proxy provides for a
longer period. Each proxy shall be in writing, subscribed by the stockholder or
his duly authorized attorney-in-fact, and dated, but it need not be sealed,
witnessed or acknowledged.
Section 2.09. LIST OF STOCKHOLDERS. The Secretary of the Corporation
shall prepare and make (or cause to be prepared and made), at least 10 days
before every meeting of stockholders, a complete list of stockholders entitled
to vote at the meeting, arranged in alphabetical order and showing the address
of, 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
10 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 duration thereof, and may be inspected by any stockholder who is
present.
Section 2.10. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board may appoint Inspectors of Election to act at such
meeting or at any adjournments thereof. If such Inspectors are not so appointed
or fail or refuse to act, the chairman of any such meeting may (and, upon the
demand of any stockholder or stockholder's proxy, shall) make such an
appointment.
The number of Inspectors of Election shall be 1 or 3. If there are 3
Inspectors of Election, the decision, act or certificate of a majority shall be
effective and shall represent the decision, act or certificate of all. No such
Inspector need be a stockholder of the Corporation.
The Inspectors of Election shall determine the number of shares
outstanding, the voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and effect of proxies;
they shall receive votes, ballots or consents, hear and determine all challenges
and questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine when the polls shall close and
determine the result; and finally, they shall do such acts as may be proper to
conduct the election or vote with fairness to all stockholders. On request, the
Inspectors shall make a report in writing to the secretary of the meeting
concerning any challenge, question or other matter as may have been determined
by them and shall execute and deliver to such secretary a certificate of any
fact found by them.
ARTICLE III
Directors
Section 3.01. GENERAL POWERS. Subject to any requirements in the
Certificate or the Bylaws, and of applicable law as to action which must be
authorized or approved by the
BYLAWS - Page 3 21
<PAGE> 4
stockholders, any and all corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Corporation shall be under the
direction of, the Board to the fullest extent permitted by law. Without limiting
the generality of the foregoing, it is hereby expressly declared that the
directors shall have the following powers, to wit:
First - To select and remove all the officers, agents and employees of
the Corporation, prescribe such powers and duties for them as may not
be inconsistent with law, with the Certificate or the Bylaws and fix
their compensation.
Second - To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not
inconsistent with law, or with the Certificate or the Bylaws, as they
may deem best.
Third - To change the location of the registered office of the
Corporation in Section 1.01; to change the principal executive office
for the transaction of the business of the Corporation from one
location to another as provided in Section 1.02; to fix and locate,
from time to time, one or more subsidiary offices of the Corporation
within or without the State of Delaware as provided in Section 1.03; to
designate any place within or without the State of Delaware for the
holding of any stockholders' meeting; and to adopt, make and use a
corporate seal, and to prescribe the forms of certificates of stock,
and to alter the form of such seal and of such certificates, from time
to time, and in their judgment as they may deem best; provided,
however, that such seal and such certificates shall at all times comply
with the law.
Fourth - To authorize the issuance of shares of stock of the
Corporation, from time to time, upon such terms and for such
considerations as may be lawful.
Fifth - To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust and
securities therefor.
Section 3.02. NUMBER AND TERM OF OFFICE. Effective as of July 23, 1998,
the authorized number of directors of the corporation shall be seven until this
section is amended by a resolution duly adopted by the Board or by the
stockholders, in either case in accordance with the provisions of Article V of
the Certificate. Directors need not be stockholders. Each of the directors shall
hold office until his successor shall have been duly elected and shall qualify
or until he shall resign or shall have been removed in the manner hereinafter
provided.
Section 3.03. ELECTION OF DIRECTORS. The directors shall be elected by
the stockholders of the Corporation, and at each election the persons receiving
the greater number of votes, up to the number of directors then to be elected,
shall be the persons then elected. The election of directors is subject to any
provisions contained in the Certificate relating thereto.
Section 3.04. RESIGNATIONS. Any director may resign at any time by
giving written notice to the Board or to the Secretary. Any such resignation
shall take effect at the time specified therein, or, if the time is not
specified, it shall take effect immediately upon receipt; and, unless
BYLAWS - Page 4 22
<PAGE> 5
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 3.05. VACANCIES. Except as otherwise provided in the
Certificate, any vacancy in the Board, whether because of death, resignation,
disqualification, an increase in the number of directors, or any other cause,
may be filled by vote of the majority of the remaining directors, although less
than a quorum. Each director so chosen to fill a vacancy shall hold office until
his successor shall have been elected and shall qualify or until he shall resign
or shall have been removed.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 3.06. PLACE OF MEETING, ETC. The Board or any committee thereof
may hold any of its meetings at any place, within or without the State of
Delaware, as the Board or such committee may, from time to time, by resolution
designate or as shall be designated by the person or persons calling the meeting
or in the notice or a waiver of notice of any such meeting. Directors may
participate in any regular or special meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment
pursuant to which all persons participating in the meeting of the Board or such
committee can hear each other, and such participation shall constitute presence
in person at such meeting.
Section 3.07. FIRST MEETING. The Board shall meet as soon as
practicable after each annual election of directors and notice of such first
meeting shall not be required.
Section 3.08. REGULAR MEETING. Regular meetings of the Board may be
held at such times as the Board shall, from time to time, by resolution
determine. If any date fixed for a regular meeting shall be a legal holiday at
the place where the meeting is to be held, then the meeting shall be held at the
same hour and place on the next succeeding business day not a legal holiday.
Except as provided by law, notice of regular meetings need not be given.
Section 3.09. SPECIAL MEETING. Special meetings of the Board for any
purpose shall be called at any time by the Chairman of the Board or, if he is
absent or unable or refuses to act, by the President or, if he is absent or
unable or refuses to act, by any Vice President, Secretary or by any two
directors. For any special meeting of the Board of Directors, the Executive
Committee, if such a committee has been created pursuant to Section 3.13 hereof,
may by resolution change the location of that meeting, provided the Executive
Committee resolution to that effect is adopted not later than the later of a)
five days before the called date of the meeting, or b) one day after the receipt
of the call of the meeting by the Chairman of the Executive Committee. Except as
otherwise provided by law or by the Bylaws, written notice of the time and place
of special meetings shall be delivered personally to each director, or sent to
each director by mail or by other form of written communication, charges
prepaid, addressed to him at his address as it is shown upon the records of the
Corporation, or if it is not so shown on such records and is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held. In case such notice is mailed or telegraphed, it shall be deposited in the
United States mail or delivered to the telegraph company in the county in which
the principal executive office for the transaction of business of the
Corporation is located at least forty-eight hours prior to the time of the
holding of the meeting. In case such notice is delivered personally as above
provided, it shall be so delivered at least 24 hours prior to the time of the
holding of
BYLAWS - Page 5 23
<PAGE> 6
the meeting. Such mailing, telegraphing or delivery as above provided shall be
due, legal and personal notice to such director. Except where otherwise required
by law or by the Bylaws, notice of the purpose of a special meeting need not be
given. Notice of any meeting of the Board shall not be required to be given to
any director who is present at such meeting, except a director who shall attend
such 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.
Section 3.10. QUORUM AND MANNER OF ACTING. Except as otherwise provided
in the Bylaws, the Certificate or by applicable law, the presence of a majority
of the total number of directors shall be required to constitute a quorum for
the transaction of business at any meeting of the Board, and all matters shall
be decided at any such meeting, a quorum being present, by the affirmative votes
of a majority of the directors present. In the absence of a quorum, a majority
of directors present at any meeting may adjourn the same, from time to time,
until a quorum shall be present. Notice of any adjourned meeting need not be
given. The directors shall act only as a Board, and the individual directors
shall have no power as such.
Section 3.11. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if consent in writing is given thereto by all members of the
Board or of such committee, as the case may be, and such consent is filed with
the minutes of proceedings of the Board or committee.
Section 3.12. COMPENSATION. Directors who are not employees of the
Corporation or any of its subsidiaries may receive an annual fee for their
services as directors in an amount fixed by resolution of the Board, and in
addition, a fixed fee, with or without expenses of attendance, may be allowed by
resolution of the Board for attendance at each meeting, including each meeting
of a committee of the Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity as an
officer, agent, employee, or otherwise, and receiving compensation therefor.
Section 3.13. COMMITTEES. The Board 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. Any such committee,
to the extent provided in the resolution of the Board and subject to any
restrictions or limitations on the delegation of power and authority imposed by
applicable law, shall have and may exercise all the powers and authority of the
Board 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. Any such committee may keep written minutes of its meetings and
shall report on its meetings to the Board at the next regular meeting of the
Board.
Section 3.14 MEETINGS OF COMMITTEES. Each committee of the Board shall
fix its own rules of procedure consist with the provisions of applicable law and
of any resolutions of the Board governing such committee. Each committee shall
meet as provided by such rules or such resolution of the Board. Unless otherwise
provided by such rules or by such resolution, the provisions of the Bylaws under
Article III entitled "Directors" relating to the place of holding meetings and
the notice required for meetings of the Board of Directors shall govern the
place of
BYLAWS - Page 6 24
<PAGE> 7
meetings and notice of meetings for committees of the Board. A majority of the
members of each committee shall constitute a quorum thereof, except that when a
committee consists of 1 member, then the 1 member shall constitute a quorum. In
the absence of a quorum, a majority of the members present at the time and place
of any meeting may adjourn the meeting from time to time until a quorum shall be
present and the meeting may be held as adjourned without further notice or
waiver. Except in cases where it is otherwise provided by the rules of such
committee or by a resolution of the Board, the vote of a majority of the members
present at a duly constituted meeting at which a quorum is present shall be
sufficient to pass any measure by the committee.
ARTICLE IV
Officers
Section 4.01 DESIGNATION, ELECTION AND TERM OF OFFICE. The Corporation
shall have a Vice-Chairman of the Board, a President, a chief financial officer,
such vice presidents as the Board deems appropriate, and a Secretary. These
officers shall be elected annually by the Board at the organizational meeting
immediately following the annual meeting of stockholders, and each such officer
shall hold office until the corresponding meeting of the Board in the next year
and until his successor shall have been elected and qualified or until his
earlier resignation, death or removal. In its discretion, the Board may leave
unfilled for any period it may fix any office to the ext allowed by law. Any
vacancy in any of the above offices may be filled for the unexpired portion of
the term by the Board at any regular or special meeting.
Section 4.02. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside, if present and willing, at all stockholders and Board of Directors'
meetings. In addition, he shall have such other duties as may, from
time-to-time, be assigned to him by the Board of Directors.
Section 4.03. VICE-CHAIRMAN OF THE BOARD. The Vice-Chairman of the
Board shall, in the absence or inability of the Chairman of the Board to perform
such duties, assume the duties and responsibilities of the Chairman of the Board
as defined in Section 4.02 of these Bylaws; and shall have such other duties as
may, from time-to-time, be assigned him by the Board of Directors.
Section 4.04. PRESIDENT. Except to the extent that the Bylaws or the
Board of Directors assign specific powers and duties to the Chairman of the
Board and/or the Vice-Chairman of the Board, the President shall be the
Corporation's General Manager and Chief Executive Officer and, subject to the
control of the Board of Directors, shall have general charge, supervision and
control over the Corporation's assets, businesses, operations and its officers.
The managerial powers and duties of the President include, but are not limited
to, all of the general powers and duties of management usually vested in the
office of a president of a corporation, and the making of reports to the Board
of Directors and stockholders.
Section 4.05. EXECUTIVE VICE PRESIDENT. The Board may appoint an
Executive Vice President, who shall be accountable to the President. He shall
perform such duties as may be assigned to him, from time to time, by the Board
in its enabling resolution and by the President.
Section 4.06. VICE PRESIDENT/CHIEF FINANCIAL OFFICER. The chief
financial officer of the Corporation shall be a vice president. He shall report
to the President and be responsible
BYLAWS - Page 7 25
<PAGE> 8
for the management and supervision of all financial matters and for the
financial growth and stability of the Corporation. In addition, he shall have
the duties usually vested in the treasurer's office of a corporation.
Section 4.07. VICE PRESIDENTS. Vice Presidents of the Corporation that
are elected by the Board shall perform such duties as may be assigned to them,
from time to time, by the President. Such vice presidents may be designated as
Group Vice Presidents, Senior Vice Presidents or other appropriate designations
given by the Board in its enabling resolutions.
Section 4.08. SECRETARY. The Secretary shall keep the minutes of the
meetings of the stockholders, the Board and all committee meetings. He shall be
the custodian of the corporate seal and shall affix it to all documents which he
is authorized by law or the Board to sign and seal. He also shall perform such
other duties as may be assigned to him, from time to time, by the Chairman of
the Board or the Board.
Section 4.09. OTHER OFFICERS. The Board may also elect one or more
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers.
Section 4.10. WHEN DUTIES OF AN OFFICER MAY BE DELEGATED. In the case
of the absence or disability of an officer or for any other reason that may seem
sufficient to the Board, the Board, or any officer designated by it, or the
Chairman of the Board may, for the time of the absence or disability, delegate
such officer's duties and powers to any other officer of the Corporation.
Section 4.11. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board, to the Chairman of the Board, to the
President, or to the Secretary. Any such resignation shall take effect at the
time specified therein unless otherwise determined by the Board. The acceptance
of a resignation by the Corporation shall not be necessary to make it effective.
Section 4.12. REMOVAL. Any officer of the Corporation may be removed,
with or without cause, by the affirmative vote of a majority of the entire
Board.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
Section 5.01. EXECUTION OF CONTRACTS. The Board, except as otherwise
provided in the Bylaws, may authorize any officer or officers, agent or agents,
to enter into any contract or execute any instrument in the name of and on
behalf of the Corporation, and such authority may be general or confined to
specific instances; and unless so authorized by the Board or by the Bylaws, no
officer, agent or employee shall have any power or authority to bind the
Corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
Section 5.02. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money, notes or other evidence of indebtedness, issued in the
name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from
BYLAWS - Page 8 26
<PAGE> 9
time to time, shall be determined by resolution of the Board. Each such officer,
assistant, agent or attorney shall give such bond, if any, as the Board may
require.
Section 5.03. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited, from time to time, to the credit of the Corporation
in such banks, trust companies or other depositaries as the Board may select, or
as may be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such powers shall
have been delegated by the Board. For the purpose of deposit and for the purpose
of collection for the account of the Corporation, the President, any Vice
President or the chief financial officer (or any other officer or officers,
assistant or assistants, agent or agents, or attorney or attorneys of the
Corporation who shall from time to time be determined by the Board) may endorse,
sign and deliver checks, drafts and other orders for the payment of money which
are payable to the order of the Corporation.
Section 5.04. GENERAL AND SPECIAL BANK ACCOUNTS. The Board may, from
time to time, authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositaries as the Board may
select or as may be selected by any officer, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of the Bylaws as it may deem expedient.
ARTICLE VI
Indemnification
Except to the extent prohibited by then applicable law, the Corporation
(i) shall indemnify and hold harmless each person who was or is a party to, or
is threatened to be made a party to, any threatened, pending or completed
action, suit or proceeding, whether or not by or in the right of the
Corporation, and whether civil, criminal, administrative, investigative or
otherwise (any such action, suit or proceeding being hereafter in this Article
referred to as a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Corporation, is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, or was a director or officer of a
foreign or domestic corporation which was a predecessor corporation of the
Corporation or of another enterprise at the request of such predecessor
corporation; and (ii) may indemnify and hold harmless each person who was or is
a party to, or is threatened to be made a party to, any such proceeding by
reason of the fact that such person is or was an employee or agent of the
Corporation, is or was serving at the request of the Corporation as an employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, or was an employee or agent of a foreign or domestic corporation
which was a predecessor corporation of the Corporation or of any enterprise at
the request of such corporation (any such person being hereafter in the Article
referred to as an "indemnifiable party"). Where required by law, the
indemnification provided for in this Article shall be made only as authorized in
the specific case upon a determination, in the manner provided by law, that the
indemnification of the indemnifiable party is proper in the circumstances. The
Corporation shall advance to indemnifiable parties expenses incurred in
defending any proceeding prior to the final disposition thereof except to the
ext prohibited by then applicable law. This Article shall create a right of
BYLAWS - Page 9 27
<PAGE> 10
indemnification for each such indemnifiable party whether or not the proceeding
to which the indemnification relates arose in whole or in part prior to adoption
of this Article (or the adoption of the comparable provisions of the Bylaws of
the Corporation's predecessor corporation) and, in the event of the death of an
indemnifiable party, such right shall extend to such indemnifiable party's legal
representatives. The right of indemnification hereby given shall not be
exclusive of any right such indemnifiable party may have, whether by law or
under any agreement, insurance policy, vote of the Board or stockholders, or
otherwise. The Corporation shall have power to purchase and maintain insurance
on behalf of any indemnifiable party against any liability asserted against or
incurred by the indemnifiable party in such capacity or arising out of the
indemnifiable party's status as such whether or not the Corporation would have
the power to indemnify the indemnifiable party against such liability.
ARTICLE VII
Stock
Section 7.01. CERTIFICATES. Except as otherwise provided by law, each
stockholder shall be entitled to a certificate or certificates which shall
represent and certify the number and class (and series, if appropriate) of
shares of stock owned by him in the Corporation. Each certificate shall be
signed in the name of the Corporation by the Chairman of the Board and the
President, together with the Secretary. Any or all of the signatures on any
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 an officer, transfer agent or registrar at the date of
issue.
Section 7.02. TRANSFER OF SHARES. Shares of stock shall be transferable
on the books of the Corporation only by the holder thereof, in person or by his
duly authorized attorney, upon the surrender of the certificate representing the
shares to be transferred, properly endorsed, to the Corporation's registrar if
the Corporation has a registrar. The Board shall have power and authority to
make such other rules and regulations concerning the issue, transfer and
registration of certificates of the Corporation's stock as it may deem
expedient.
Section 7.03. TRANSFER AGENTS AND REGISTRARS. The Corporation may have
one or more transfer agents and one or more registrars of its stock whose
respective duties the Board or the Secretary may, from time to time, define. No
certificate of stock shall be valid until countersigned by a transfer agent, if
the Corporation has a transfer agent, or until registered by a registrar, if the
Corporation has a registrar. The duties of transfer agent and registrar may be
combined.
Section 7.04. STOCK LEDGERS. Original or duplicate stock ledgers,
containing the names and addresses of the stockholders of the Corporation and
the number of shares of each class of stock held by them, shall be kept at the
principal executive office of the Corporation or at the office of its transfer
agent or registrar.
BYLAWS - Page 10 28
<PAGE> 11
Section 7.05. RECORD DATES. The Board shall fix, in advance, a date as
the record date for the purpose of determining stockholders entitled to notice
of, or to vote at, any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or in order to make a determination of
stockholders for any other proper purpose. Such date in any case shall be not
more than sixty days, and in case of a meeting of stockholders, not less than 10
days, prior to the date on which the particular action requiring such
determination of stockholders is to be taken. Only those stockholders of record
on the date so fixed shall be entitled to any of the foregoing rights,
notwithstanding the transfer of any such stock on the books of the Corporation
after any such record date fixed by the Board.
Section 7.06. NEW CERTIFICATES. In case any certificate of stock is
lost, stolen, mutilated or destroyed, the Board may authorize the issuance of a
new certificate in place thereof upon such terms and conditions as it may deem
advisable; or the Board may delegate such power to the Secretary; but the Board
or Secretary or agents, in their discretion, may refuse to issue such a new
certificate unless the Corporation is ordered to do so by a court of competent
jurisdiction.
ARTICLE VIII
General Provisions
Section 8.01. DIVIDENDS. Subject to limitations contained in Delaware
Law and the Certificate, the Board may declare and pay dividends upon the shares
of capital stock of the Corporation, which dividends may be paid either in cash,
securities of the Corporation or other property.
Section 8.02. VOTING OF STOCK IN OTHER CORPORATIONS. Any shares of
stock in other corporations or associations which may, from time to time, be
held by the Corporation, may be represented and voted at any of the
stockholders' meetings thereof by the Chairman of the Board, the President or
the Secretary. The Board, however, may by resolution appoint some other person
or persons to vote such shares, in which case such person or persons shall be
entitled to vote such shares upon the production of a certified copy of such
resolution.
Section 8.03. AMENDMENTS. These Bylaws may be adopted, repealed,
rescinded, altered or amended only as provided in the Certificate.
Restated: July 23, 1998
GH:2660
BYLAWS - Page 11 29
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