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Proc-Type: 2001,MIC-CLEAR
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) Commission File Number 1-16137 WILSON GREATBATCH TECHNOLOGIES, INC. Delaware 16-1531026 (State of Incorporation) (I.R.S. Employer Identification No.) 10,000 Wehrle Drive (716) 759-6901 Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]
No [__] Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. WILSON GREATBATCH TECHNOLOGIES, INC. PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements. WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY March 29, December 28, $37,551 $43,272 17,616 17,373 31,602 29,026 2,124 2,316 2,888 2,888 91,781 94,875 46,874 44,149 136,069 137,135 5,417 5,417 2,967 1,944 $283,108 $283,520 $4,427 $6,553 12,073 13,721 13,501 13,005 30,001 33,279 57,897 61,397 87,898 94,676 21 21 202,567 200,880 (5,596 (8,935 196,992 191,966 (1,782 (3,122 195,210 188,844 $283,108 $283,520 WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY Three Months Ended March 29, March 30, $36,303 $29,571 20,351 15,560 15,952 14,011 44% 47% 5,657 3,780 3,653 3,188 886 1,639 5,756 5,404 747 712 26 59 4,983 4,633 1,644 1,714 3,339 2,919 0 (2,994 $3,339 ($75 $0.16 $0.16 0.00 (0.16 $0.16 ($0.00 $0.16 $0.15 0.00 (0.15 $0.16 ($0.00 20,872 18,713 21,268 19,059 See notes to condensed consolidated financial statements. WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY Three Months Ended March 29, March 30, 3,339 ($75 2,904 3,222 0 3,019 109 30 0 26 (243 (2,400 (2,576 (2,305 (831 (220 (2,126 912 350 248 1,024 29 1,950 2,486 (4,672 (1,552 0 (940 (4,672 (2,492 0 500 0 40,000 (3,004) (3 0 (40,265 5 11 (2,999 243 (5,721 237 43,272 16 $37,551 $253 WILSON GREATBATCH TECHNOLOGIES, INC. AND SUBSIDIARY 1. Basis of Presentation The accounting policies used in preparing these statements are the same
as those used in preparing the consolidated financial statements of Wilson
Greatbatch Technologies, Inc., a holding company, and its wholly owned
subsidiary Wilson Greatbatch Ltd. (collectively, the "Company") for the year
ended December 28, 2001. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's annual report on Form 10-K for the
year ended December 28, 2001. The foregoing balance sheet as of March 29, 2002, statements of
operations for the three months ended March 29, 2002 and March 30, 2001 and
statements of cash flows for the three months ended March 29, 2002 and March
30, 2001 are unaudited but, in the opinion of management, include all
adjustments (consisting of normal, recurring adjustments) necessary for a
fair presentation of results for these interim periods. The results of
operations for the three months ended March 29, 2002 are not necessarily
indicative of results to be expected for the entire year or for any other
period. Supplemental Cash Flow Information (in thousands): Three Months Ended March 29, March 30, $ 813 $ 704 605 314 2. Inventories Inventories consist of the following (in thousands): March 29, December 28, $ 15,106 $ 13,894 10,715 9,955 5,781 5,177 $ 31,602 $ 29,026 3. Goodwill and Other Intangible Assets, Net Intangible assets consist of the following (in thousands): March 29, December 28, $ 81,525 $ 76,883 28,923 28,923 16,099 16,512 9,522 14,817 $136,069 $137,135 Pursuant to the implementation of SFAS No. 141, assembled workforce has
been reclassified to goodwill as of December 29, 2001, the first day of
fiscal 2002 (see Note 6). The net book value of assembled workforce of
$4,642 and accumulated amortization of $2,737 has been re-characterized from
other intangible assets to goodwill. The following table reflects consolidated results, with 2001 data
adjusted as though the adoption of SFAS No. 141 and SFAS No. 142 had
occurred as of the beginning of the three-month period ended March 30, 2001
(in thousands except per share amounts): March 29, March 30, $ 3,339 $ 2,919 235 100 117 3,339 3,371 $ 3,339 $ 377 4. Comprehensive Income For all periods presented, the Company's only component of comprehensive
income is its net income (loss) for those periods. 5. Business Segment Information The company operates its business in two reportable segments: medical and
commercial power sources. The medical segment designs and manufactures power
sources, capacitors and components used in implantable medical devices,
which are instruments that are surgically inserted into the body to provide
diagnosis or therapy. The commercial power sources segment designs and
manufactures non-medical power sources for use in aerospace, oil and gas
exploration and oceanographic equipment. The Company's medical segment includes three product lines that have been
aggregated because they share similar economic characteristics and
similarities in the areas of products, production processes, types of
customers, methods of distribution and regulatory environment. The three
product lines are implantable power sources, capacitors and medical
components. The reportable segments are separately managed, and their performance is
evaluated based on income from operations. Mangement defines segment income
from operations as gross profit less costs and expenses attributable to
segment specific selling, general and administrative and research,
development and engineering expenses. Non-segment specific selling, general
and administrative, research, development and engineering expenses, interest
expense, intangible amortization and non-recurring items are not allocated
to reportable segments. Revenues from transactions between the two segments
are not significant. The accounting policies of the segments are the same as
those described and referenced in Note 1. All dollars are in thousands. Three Months Three Months $30,313 $22,582 5,990 6,989 $36,303 $29,571 $10,016 $ 8,415 2,052 2,578 12,068 10,993 (7,085 (6,360 $ 4,983 $ 4,633 6. Impact of Recently Issued Accounting Standards In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141, Business
Combinations (SFAS No. 141), and Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets (SFAS No.
142). SFAS No. 141 requires the purchase method of accounting for business
combination initiated after June 30, 2001 and eliminates the
pooling-of-interest method. The Company adopted SFAS No. 141 on July 1,
2001. Under provisions of SFAS No. 141, the Company has re-characterized its
assembled workforce to goodwill effective December 29, 2001, the beginning
of fiscal year 2002. Effective December 29, 2001, the beginning of fiscal year 2002, the
Company adopted SFAS No. 142. Under the new rules, the Company has
categorized trademarks and names as indefinite lived assets. Also, the
Company is no longer required to amortize goodwill and other intangible
assets with indefinite lives, but these assets will be subject to periodic
testing for impairment. As a result, amortization related to goodwill,
assembled workforce and trademark and names ceased as of December 28, 2001.
On an annual basis, and when there is reason to suspect that their values
have been diminished or impaired, these assets must be tested for
impairment, and write-downs to be included in results from operations may be
necessary. SFAS No. 142 also requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption and recognize
any goodwill impairment loss as a cumulative effect of a change in
accounting principle. The Company has determined that, based on the
transitional goodwill impairment test, no impairment of goodwill and other
intangible assets has occurred. In August 2001, the FASB also issued Statement of Financial Accounting
Standards No. 143, Accounting for Obligations Associated with the
Retirement of Long-Lived Assets (SFAS No. 143). SFAS No. 143 establishes
accounting standards for the recognition and measurement of an asset
retirement obligation and its associated asset retirement cost. It also
provides accounting guidance for legal obligations associated with the
retirement of tangible long-lived assets. SFAS No. 143 is effective in
fiscal years beginning after June 15, 2002, with early adoption permitted.
The Company expects that the provisions of SFAS No. 143 will not have a
material impact on its consolidated financial statements upon adoption. The
Company plans to adopt SFAS No. 143 effective December 30, 2002, the
beginning of fiscal year 2003. ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. The following discussion should be read in conjunction with our condensed
consolidated financial statements (including the notes thereto) included
elsewhere herein. Introduction We are a leading developer and manufacturer of power sources, feedthroughs
and wet tantalum capacitors used in implantable medical devices. We also develop
and manufacture other components used in implantable medical devices. We
leverage our core competencies in technology and manufacturing to develop and
produce power sources for commercial applications that demand high performance
and reliability. Results of Operations Revenues Total revenues for the quarter ended March 29, 2002 were $36.3 million, a
$6.7 million, or 23%, increase from $29.6 million for the first quarter of 2001.
The increase included revenues in the first quarter of 2002 of Greatbatch-Sierra,
which we acquired in June 2001. Medical. Total medical revenues for the three months ended March 29, 2002
were $30.3 million, a $7.7 million, or 34%, increase from the $22.6 million for
the first quarter of 2001. Implantable power source revenues for the first
quarter of 2001 were $13.0 million, an increase of $1.8 million, or 16%, from
$11.2 million for the quarter ended March 30, 2001. This increase was primarily
due to demand for our implantable cardioverter defibrillators (ICD) batteries as
well as CFx and Lithium Ion cells from our customers. Partially offsetting this
increase was a $0.4 million decline in royalty revenues as compared to the prior
year's first quarter. These royalties were payable from Medtronic on patents
that have subsequently expired. Capacitor revenues for the quarter ended March
29, 2002 were $5.7 million, an increase of $2.3 million, or 65%, from $3.5
million in the first quarter of 2001. The increase is attributable to the
acceptance of our capacitors in the defibrillator market. Sales of medical
components were $11.5 million for the first quarter of 2002, an increase of $3.7
million, or 47%, from $7.9 million in the quarter ended March 30, 2001. The
increase was primarily due to the inclusion of revenues from Greatbatch-Sierra. Commercial. Commercial power sources revenues for the quarter ended March
29, 2002 were $6.0 million, a decrease of $1.0 million, or 14%, from $7.0
million for the first quarter of 2001. The decrease was primarily due to a
decreased level of exploration in the oil and gas industry. Further, the first
quarter of 2001 included a high volume of shipments in satisfaction of pent-up
demand. Gross profit Gross profit for the quarter ended March 29, 2002 was $16.0 million, an
increase of $1.9 million, or 14%, from $14.0 million for the first quarter of
2001. As a percentage of total revenues, gross profit for the first quarter of
2002 decreased to 44% from 47% for the first quarter of 2001. Reduced royalty
revenue, and restructuring charges at Greatbatch-Sierra each accounted for one
full percentage point of gross profit. Product mix, which included increased
Capacitor and Greatbatch-Sierra revenues that garner lower gross margins, also
affected gross profit as a percentage of total revenues in the first quarter of
2002. Selling, general and administrative expenses Selling, general and administrative expenses for the three months ended March
29, 2002 were $5.7 million, an increase of $1.9 million, or 50%, from $3.8
million for the three months ended March 30, 2001. As a percentage of total
revenues, selling, general and administrative expenses in the first quarter of
2002 were 16%, as compared to 13% for the same period in 2001. The increase in
selling, general and administrative expenses is primarily due to the inclusion
of costs associated with Greatbatch-Sierra in 2002, costs associated with our
Six SigmaTM quality initiatives, the development of our Emerging Technologies
infrastructure, and expenses related to patent activity. Emerging Technologies
is a new business unit within the Company in 2002. This business unit currently
includes implantable drug pumps and rechargeable lithium-ion battery technology
for implantable devices, such as in hearing-assist, artificial heart, and left
ventricular assist devices. Research, development and engineering expenses Research, development and engineering expenses for the quarter ended March
29, 2002 were $3.7 million, an increase of $0.5 million, or 15%, from $3.2
million in the first quarter of 2001. As a percentage of total revenues,
research, development and engineering expenses were 10% in the first quarter of
2002 as compared to 11% for the first quarter of 2001. We expect to maintain our
spending on research, development and engineering at a minimum of 10% of
revenues, a level that will support the new technologies demanded by the
implantable medical device markets. Other expenses Intangible amortization for the first quarter of 2002 was $0.9 million as
compared to $1.6 million for the three months ended March 30, 2001. This is due
to cessation of the amortization for goodwill and other intangible assets with
indefinite lives effective December 29, 2001, the beginning of our fiscal year
2002 (see further discussion below, under "Impact of Recently Issued Accounting
Standards"). Interest expense was $0.7 million for the quarters ended March 29, 2002, and
March 30, 2001. Provision for income taxes Our effective tax rate for the first quarter of 2002 was 33% as compared to
37% for the first quarter of 2001. Our effective tax rate in 2002 relative to
2001 has declined due to the anticipated benefits of tax planning projects
currently underway. Income before extraordinary loss Income from continuing operations was $3.3 million in the first quarter of
2002 versus $2.9 million for the first quarter of 2001. The increase was
primarily due to the increase in operating income in 2002 as compared to 2001.
Diluted earnings per share from continuing operations were $0.16 for the first
quarter of 2002 and $0.15 for the first quarter of 2001. If SFAS No. 142 had
been implemented December 29, 2001, income from continuing operations and
diluted earnings per share from continuing operations for first quarter 2001
would have been $3.4 million and $0.18, respectively. Extraordinary loss The extraordinary loss of $3.0 million, net of taxes, for the three months
ended March 30, 2001 has no comparable amount in 2002. The loss in 2001 was
associated with the restructuring of our long-term debt in the first quarter of
2001 and the related write-off of deferred financing fees, a call premium paid,
and loan discounts associated with the previous long-term debt. Net income (loss) Net income for the three months ended March 29, 2002 was $3.3 million as
compared to a net loss of $75 thousand for the first quarter of 2001. The change
from the net loss in the first quarter of 2001 to the net income in 2002 was
primarily due to the extraordinary loss in 2001 that is not present in 2002.
Diluted earnings per share for the first quarter of 2002 were $0.16 versus
($0.00) per diluted share for the first quarter of 2001. If SFAS No. 142 had
been implemented December 29, 2001, net income and diluted earnings per share
for first quarter 2001 would have been $0.4 million and $0.02, respectively. Liquidity and Capital Resources Overview The restructuring of our senior and subordinated debt in 2001 at more
favorable terms, the receipt of the proceeds from our secondary offering of
stock in July 2001, and the acquisition of Greatbatch-Sierra contributed to a
solid balance sheet position at March 29, 2002. Total assets at March 29, 2002
were $283.1 million. Liquidity At March 29, 2002 we had $37.6 million of cash and cash equivalents. Cash
provided by operating activities for the period ended March 29, 2002 was $2.0
million as compared to $2.5 million for the period ended March 30, 2001. While
higher net income in the first quarter 2002 had a positive effect on cash
provided by operating activities as compared to first quarter 2001, this
increase was off-set by a year to year net reduction in accounts payable of $3.0
million, attributable to normal payment patterns on payable balances
outstanding. Net cash used in investing activities was $4.7 million in the three months
ended March 29, 2002 as compared to a use of $2.5 million in the three months
ended March 30, 2001. Capital expenditures were $4.7 million and $1.6 million
for the first quarters of 2002 and 2001, respectively. Cash used by financing activities for the period ending March 29, 2002 was
$3.0 million, compared with cash provided by financing activities of $0.2
million in 2001. In the first three months of 2002, substantially all of the
cash used in financing activities was for debt repayment. In first quarter 2001,
we used the $40.0 million of proceeds from a new term loan to pay off the
remaining $15.2 million of our senior debt and the remaining $18.3 million of
our 13% subordinated notes. We also pre-paid $5.0 million of the new term loan
by March 30, 2001. We believe that cash generated from operations will be sufficient to meet our
working capital needs and planned capital expenditures for the near term.
Capital expenditures for 2002 are expected to increase from historical levels,
as we invest in increased production capacity and product development
opportunities. These investments include completion of an expansion to our
research and development facilities, which began in 2001. Should additional,
suitable investment opportunities arise during fiscal 2002, we believe that our
earnings, cash flows and balance sheet will permit us to obtain additional debt
or equity capital, if necessary. There can be no assurance, however, that
additional financing will be available to us or, if available, that it can be
obtained on a timely basis or on terms acceptable to us. Capital Structure Our capital structure consists of interest-bearing debt and equity.
Interest-bearing debt as a percentage of our total capitalization decreased to
27% at March 29, 2002 compared to 28% at December 28, 2001. Our long-term
obligations at March 29, 2002 consisted primarily of a $71.0 million term loan. In January 2001, we entered into a $60.0 million credit facility consisting
of a $40.0 million term loan and a $20.0 million revolving line of credit. In
June 2001, we amended our credit facility to facilitate the acquisition of
Greatbatch-Sierra. The amendment provided for a $100.0 million facility
consisting of an $80.0 million term loan and a $20.0 million revolving line of
credit. Both the term loan and revolving line of credit have a term of five
years, maturing in July 2006. The amended credit facility is secured by our
accounts receivable and inventories and requires us to comply with various
quarterly financial covenants related to EBITDA, as defined in the credit
agreement, and ratios of leverage, interest and fixed charges as they relate to
EBITDA. The Company is in compliance with these quarterly financial covenants.
Both the term loan and revolving line of credit bear interest at a rate that
varies with our level of leverage. Through March 29, 2002, the applicable
interest rates for both the term loan and the revolving line of credit were
prime less 0.75%, or the London Interbank Offered Rate, or LIBOR, plus 1.25%, at
the Company's option. At March 29, 2002, there was $71.0 million outstanding on the term loan and
no amounts outstanding under the revolving line of credit. The weighted average
interest rate as of April 20, 2002 for the term loan was 3.2%. Inflation We do not believe that inflation has had a significant effect on our
operations to date. Impact of Recently Issued Accounting Standards In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 141 addresses financial accounting and reporting for business combinations
and supersedes APB No. 16, "Business Combinations." Effective July 1, 2001, all
business combinations in the scope of this new Statement are to be accounted for
using one method, the purchase method. SFAS No. 142 addresses financial
accounting and reporting for acquired goodwill and other intangible assets and
supersedes APB No. 17, "Intangible Assets." It changes the accounting for
goodwill and other intangible assets with indefinite lives from an amortization
method to an impairment-only approach. We adopted SFAS No. 142 effective
December 29, 2001, which was the first day of fiscal 2002, and have ceased the
amortization of goodwill and any other intangible assets with an indefinite life
which were recorded in past business combinations. Total amortization expense of
intangible assets was $0.9 million ($0.04 before tax, per diluted share) for the
quarter ended March 29, 2002 and $1.6 million ($0.09 before tax, per diluted
share) for the quarter ended March 30, 2001. For first quarter 2001, reported
net loss included $0.7 million ($0.5 million after tax) of amortization expense
related to goodwill and other intangible assets with indefinite lives that would
not have been amortized if SFAS No. 142 had been in effect for that year. SFAS
No. 142 also requires the Company, in the year of adoption and for each year
thereafter, to analyze all intangible assets for possible impairment, and to
write such assets down to fair market value. The Company has determined that,
based on the transitional goodwill impairment test, no impairment of goodwill
and other intangible assets has occurred. Forward-Looking Statements Some of the statements contained in this Quarterly Report on Form 10-Q and
other written and oral statements made from time to time by us and our
representatives, are not statements of historical or current fact. As such, they
are "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. We have based these forward-looking statements on our
current expectations, which are subject to known and unknown risks,
uncertainties and assumptions. They include statements relating to: You can identify forward-looking statements by terminology such as "may",
"will", "should", "could", "expects", "intends", "plans", "anticipates",
"believes", "estimates", "predicts", "potential" or "continue" or the negative
of these terms or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially from those suggested
by these forward-looking statements. In evaluating these statements and our
prospects generally, you should carefully consider the factors set forth below.
All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by these cautionary factors and
to others contained throughout this report. We are under no duty to update any
of the forward-looking statements after the date of this report or to conform
these statements to actual results. Although it is not possible to create a comprehensive list of all factors
that may cause actual results to differ from the results expressed or implied by
our forward-looking statements or that may affect our future results, some of
these factors include the following: dependence upon a limited number of
customers, product obsolescence, inability to market current or future products,
pricing pressure from customers, reliance on third party suppliers for raw
materials, products and subcomponents, fluctuating operating results, inability
to maintain high quality standards for our products, challenges to our
intellectual property rights, product liability claims, inability to
successfully consummate and integrate acquisitions, unsuccessful expansion into
new markets, competition, inability to obtain licenses to key technology,
regulatory changes or consolidation in the healthcare industry, and other risks
and uncertainties described in the Company's Annual Report on Form 10-K and
other periodic filings with the Securities and Exchange Commission. ITEM 3. Quantitative and Qualitative Disclosures About Market Risk. Under the new credit facility both the term loan and any borrowings under the
line of credit bear interest at fluctuating market rates. An analysis of the
impact on our interest rate sensitive financial instruments of a hypothetical
10% change in short-term interest rates shows an impact on expected 2002
earnings of approximately $0.2 million of higher or lower earnings, depending on
whether short-term rates rise or fall by 10%. The discussion and the estimated
amounts referred to above include forward-looking statements of market risk
which involve certain assumptions as to market interest rates. Actual future
market conditions may differ materially from such assumptions. Accordingly, the
forward-looking statements should not be considered projections of future events
by the Company. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. None. ITEM 2. Changes in Securities and Use of Proceeds. None. ITEM 3. Defaults Upon Senior Securities. None. ITEM 4. Submission of Matters to a Vote of Security Holders. None. ITEM 5. Other Information. None. ITEM 6. Exhibits and Reports on Form 8-K. (a) Exhibits See the Exhibit Index for a list of those exhibits filed herewith. (b) Reports on Form 8-K None. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. WILSON GREATBATCH TECHNOLOGIES, INC. Dated: May 10, 2002 By: /s/ Edward F. Voboril By: /s/ Frank J. Forkl, Jr.
EXHIBIT INDEX Exhibit 3.2 AMENDED Article 1 Section 1.1
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended March 29, 2002
(Exact name of Registrant as specified in its charter)
Clarence, New York
14031
(Address of principal executive offices)
(Zip Code)
(Registrant's telephone number, including area code)
As of May 3, 2002
Common stock, $.001 per value per share
20,933,392 shares
TABLE OF CONTENTS FOR FORM 10-Q
QUARTER ENDED MARCH 29, 2002
Page
COVER PAGE
1
TABLE OF CONTENTS
2
PART I -
FINANCIAL INFORMATION
ITEM 1.
Financial Statements
Condensed Consolidated Balance Sheets
3
Condensed Consolidated Statements of Operations
4
Condensed Consolidated Statements of Cash Flows
5
Notes to Condensed Consolidated Financial
Statements
6
ITEM 2.
Management's Discussion and Analysis of
Financial Condition and
Results of Operations
11
ITEM 3.
Quantitative and Qualitative
Disclosures About Market Risk
17
PART II -
OTHER INFORMATION
ITEM 1.
Legal Proceedings
18
ITEM 2.
Changes in Securities and Use of
Proceeds
18
ITEM 3.
Defaults Upon Senior Securities
18
ITEM 4.
Submission of Matters to a Vote of
Security Holders
18
ITEM 5.
Other Information
18
ITEM 6.
Exhibits and Reports on Form 8-K
18
SIGNATURE
19
EXHIBIT INDEX
20
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In thousands)
2002
2001
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents
Accounts receivable,
net
Inventories
Prepaid expenses and
other assets
Deferred tax asset
Total current assets
PROPERTY, PLANT AND
EQUIPMENT, NET
INTANGIBLE ASSETS,
NET
DEFERRED TAX ASSET
OTHER ASSETS
TOTAL ASSETS
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued liabilities
Current maturities
of long-term obligations
Total current
liabilities
LONG-TERM
OBLIGATIONS
Total liabilities
STOCKHOLDERS'
EQUITY:
Common stock
Capital in excess of
par value
Retained deficit
)
)
Subtotal
Less treasury stock,
at cost
)
)
Total stockholders'
equity
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY
See notes to
condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share amounts)
2002
2001
Revenues
Cost of goods
sold
Gross profit
Gross profit as a
percentage of revenues
Selling, general
and administrative expense
Research,
development and engineering costs, net
Intangible
amortization
Interest expense
Other expense
Income before
income taxes and extraordinary loss
Income tax
expense
Income before
extraordinary loss
Extraordinary
loss on retirement of debt, net of tax
)
Net income (loss)
)
Basic earnings
(loss) per share:
Income from
continuing operations
Extraordinary
loss on retirement of debt
)
Net income (loss)
)
Diluted earnings
(loss) per share:
Income from
continuing operations
Extraordinary
loss on retirement of debt
)
Net income (loss)
)
Weighted average
shares outstanding
Basic
Diluted
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
2002
2001
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss)
)
Adjustments to
reconcile net income (loss) to
net cash provided
by operating activities:
Depreciation and
amortization
Extraordinary
loss on retirement of debt
Deferred
financing costs
Loss on disposal
of assets
Changes in
operating assets and liabilities:
Accounts
receivable
)
)
Inventories
)
)
Prepaid expenses
and other assets
)
)
Accounts payable
)
Accrued
liabilities
Income taxes
Net cash provided
by operating activities
CASH FLOWS FROM
INVESTING ACTIVITIES:
Acquisition of
property, plant and equipment
)
)
Increase in
intangible assets
)
Net cash used in
investing activities
)
)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Borrowings under
line of credit, net
Proceeds from
long-term debt
Scheduled
payments of long-term debt
)
Prepayments of
long-term debt
)
Issuance of
common stock
Net cash (used
in) provided by financing activities
)
NET (DECREASE)
INCREASE IN CASH AND CASH EQUIVALENTS
)
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH
EQUIVALENTS, END OF PERIOD
See notes to
condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarter Ended March 29, 2002
(Unaudited)
2002
2001
Cash paid during the year for:
Interest
Income taxes
2002
2001
Raw material
Work-in-progress
Finished goods
Total
2002
2001
Goodwill, net of accumulated amortization of
$8,679
And $5,942
Patented technology, net of accumulated
amortization
Of $5,776 and $5,363
Other intangible assets, net
Total
2002
2001
Reported income before extraordinary loss
Add: Goodwill amortization, net of tax
-
Add: Assembled workforce amortization, net of
tax
-
Add: Trademark and names amortization, net of
tax
-
Adjusted income before
extraordinary loss
Less: Extraordinary loss on retirement of debt,
net of tax
-
(2,994
)
Adjusted net income
Basic earnings per share:
Reported income before extraordinary loss
$ 0.16
$ 0.16
Adjusted income before extraordinary loss
$ 0.16
$ 0.18
Adjusted net income
$ 0.16
$ 0.02
Diluted earnings per share:
Reported income before extraordinary loss
$ 0.16
$ 0.15
Adjusted income before extraordinary loss
$ 0.16
$ 0.18
Adjusted net income
$ 0.16
$ 0.02
Ended
March 29,
2002
Ended
March 30,
2001
Revenues:
Medical
Commercial power sources
Total revenues
Segment income from operations:
Medical
Commercial power sources
Total segment income from operations
Unallocated
)
)
Income before income taxes and extraordinary
loss
(Registrant)
Edward F. Voboril
President and Chief Executive Officer
Frank J. Forkl, Jr.
Controller (Principal Financial and Accounting Officer)
Exhibit No.
Description
3.1
Amended and Restated Certificate of
Incorporation Filed as Exhibit 3.1 to our Registration Statement on Form S-1
(No. 333-37554) filed May 22, 2000, and incorporated by reference herein.
3.2
Amended Bylaws (filed herewith)
BY-LAWS
OF
WILSON GREATBATCH TECHNOLOGIES, INC.
(A DELAWARE CORPORATION)
(Amended as of March 1, 2002)
STOCKHOLDERS
The Annual Meeting of Stockholders may be adjourned by the presiding officer of the meeting for any reason (including, if the presiding officer determines that it would be in the best interests of the Corporation, to extend the period of time for the solicitation of proxies) from time to time and place to place until such presiding officer shall determine that the business to be conducted at the meeting is completed, which determination shall be conclusive.
At the Annual Meeting of Stockholders, the only business which shall be conducted thereat shall be that which shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement or addendum thereto) given by or at the direction of the Board of Directors, (b) brought before the meeting by or at the direction of the Board of Directors or (c) otherwise brought before the meeting by a stockholder in the manner prescribed immediately below. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have delivered timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received by the Secretary at the principal executive offices of the Corporation, not less than 90 calendar days in advance of the anniversary date of the previous year's annual meeting of stockholders (or if there was no such prior annual meeting, not less than 90 calendar days prior to the date which represents the fourth Thursday in May of the current year); PROVIDED, HOWEVER, that in the event that the date of the annual meeting is advanced by more than 20 days, or delayed by more than 60 days, from such anniversary date, then, to be considered timely, notice by the stockholder must be received not later than the close of business on the later of (x) the 90th day prior to such annual meeting or (y) the seventh day following the date on which notice of the date of the annual meeting was mailed to stockholders or public disclosure thereof was otherwise made.
A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be transacted, (b) the name and address, as they appear on the Corporation's most recent stockholder lists, of the stockholder proposing such proposal, (c) the class and number of shares of capital stock of the Corporation that are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Any stockholder who desires to propose any matter at an annual meeting shall, in addition to the aforementioned requirements described in clauses (a) through (d), comply in all material respects with the content and procedural requirements of Rule 14a-8 of Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), irrespective of whether the Corporation is then subject to such Rule or said Exchange Act. In addition, if the stockholder's ownership of shares of the Corporation, as set forth in the notice, is solely beneficial (and not of record) documentary evidence satisfactory to the Corporation of such ownership must accompany the notice in order for such notice to be considered validly and timely received.
Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 1.1. The presiding officer at an annual meeting shall, if the facts warrant, determine and declare to the meeting that any business which was not properly brought before the meeting is out of order and shall not be transacted at the meeting.
Section 1.2
SPECIAL MEETINGS. Special Meetings of stockholders for the transaction of such business as may properly come before the meeting may be called by order of the Board of Directors, and shall be held at such date and time, within or without the State of Delaware, as may be specified by such order. Whenever the directors shall fail to fix such place, the meeting shall be held at the principal executive office of the Corporation.Section 1.3
NOTICE OF MEETINGS. Written notice of all meetings of the stockholders, stating the place, date and hour of the meeting and the place within the city or other municipality or community at which the list of stockholders may be examined, shall be mailed or delivered to each stockholder not less than 10 nor more than 60 days prior to the meeting. Notice of any special meeting shall state with reasonable specificity the purpose or purposes for which the meeting is to be held and the business proposed to be transacted thereat.Section 1.4
STOCKHOLDER LISTS. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 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 10 calendar 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 in person thereat.Section 1.5
QUORUM. Except as otherwise provided by law or the Corporation's Certificate of Incorporation, a quorum for the transaction of business at any meeting of stockholders shall consist of the holders of record of a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote at the meeting, present in person or by proxy. At all meetings of the stockholders at which a quorum is present, all matters, except as otherwise provided by law, the Certificate of Incorporation or these By-laws, shall be decided by the vote of the holders of a majority of the shares entitled to vote thereat present in person or by proxy. If there be no such quorum, the holders of a majority of such shares so present or represented may adjourn the meeting from time to time, without further notice, until a quorum shall have been obtained. When a quorum is once present it is not broken by the subsequent withdrawal from the meeting of any stockholder.Section 1.6
ORGANIZATION. Meetings of stockholders shall be presided over by the Chairman, if any, or if none or in the Chairman's absence the Vice-Chairman, if any, or if none or in the Vice-Chairman's absence the President, if any, or if none or in the President's absence a Vice-President, or, if none of the foregoing is present, by a chairman to be chosen by the stockholders entitled to vote who are present in person or by proxy at the meeting. The Secretary of the Corporation, or in the Secretary's absence an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the presiding officer of the meeting shall appoint any person present to act as secretary of the meeting.Section 1.7
VOTING; PROXIES; REQUIRED VOTE. At each meeting of stockholders, every stockholder shall be entitled to vote in person or by proxy appointed by instrument in writing, subscribed by such stockholder or by such stockholder's duly authorized attorney-in-fact (but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period), and, unless the Certificate of Incorporation provides otherwise, shall have one vote for each share of stock entitled to vote registered in the name of such stockholder on the books of the Corporation on the applicable record date fixed by applicable law or pursuant to these By-laws in respect of each matter properly presented to the meeting. At all elections of directors the voting may but need not be by ballot and a plurality of the votes cast there shall elect. Except as otherwise required by law or the Certificate of Incorporation, any other action shall be authorized by a majority of the votes cast.Section 1.8
INSPECTORS. The Board of Directors shall, in advance of any meeting, appoint one or more inspectors of election to act at the meeting or any adjournment thereof and make a written report thereof. If an inspector or inspectors are not so appointed, the person presiding at the meeting shall appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall (i) ascertain the number of shares outstanding and the voting power of each, (ii) determine the shares represented at a meeting, the existence of a quorum and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and (v) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.Section 1.9
ACTION BY WRITTEN CONSENT.(a)
Any action which is required to be or may be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice to stockholders and without a vote if consents in writing, setting forth the action so taken, shall have been signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or to take such action at a meeting at which all shares entitled to vote thereto were present and voted.(b)
In order that the Corporation's stockholders shall have an opportunity to receive and consider the information germane to an informed judgment as to whether to give a written consent and in accordance with the procedures contained in the New York Stock Exchange policies and rules, any corporate action to be taken by written consent shall not be effective until, and the stockholders of the Corporation shall be able to give or revoke written consents for, at least twenty (20) days from the date of the commencement of a solicitation (as such term is defined in Rule 14a-1(k) promulgated under the Exchange Act) of consents, other than corporate action by written consent taken pursuant to solicitations of not more than ten (10) persons. For purposes of this Section 1.9, a consent solicitation shall be deemed to have commenced when a proxy statement or information statement containing the information required by law is first furnished to the Corporation's stockholders.Consents to corporate action shall be valid for a maximum of sixty (60) days after the date of the earliest dated consent delivered to the Corporation in the manner provided in Section 228(c) of the Delaware General Corporation Law. Consents may be revoked by written notice (i) to the Corporation, (ii) to the stockholder or stockholders soliciting consents or soliciting revocations in opposition to action by consent proposed by the Corporation (the "Soliciting Stockholders"), or (iii) to a proxy solicitor other agent designated by the Corporation or the Soliciting Stockholders.
Notwithstanding the foregoing, if independent counsel to the Corporation delivers to the Corporation a written opinion stating, or a court of competent jurisdiction determines, that this Section 1.9, or any portion thereof, is illegal with respect to any corporate action to be taken by written consent for which a consent has theretofore been delivered to the Corporation, in the manner provided in Section 228(c) of the Delaware General Corporation Law, whether prior or subsequent to the date of the adoption of this Section 1.9, then this Section 1.9, or such portion thereof, as the case may be, shall after the date of such delivery of such opinion or such determination be null and void and of no effect with respect to any other corporate action to be taken by written consent.
(c)
Within three (3) business days after receipt of the earliest dated consent delivered to the Corporation in the manner provided in Section 228(c) of the Delaware General Corporation Law or the determination by the Board of Directors of the Corporation that the Corporation should seek corporate action by written consent, as the case may be, the Secretary shall engage independent inspectors of elections for the purpose of performing a ministerial review of the validity of the consents and revocations. The cost of retaining inspectors of election shall be borne by the Corporation.Consents and revocations shall be delivered to the inspectors upon receipt by the Corporation, the Soliciting Stockholders or their proxy solicitors or other designated agents. As soon as consents and revocations are received, the inspectors shall review the consents and revocations and shall maintain a count of the number of valid and unrevoked consents. The inspectors shall keep such count confidential and shall not reveal the count to the Corporation, the Soliciting Stockholder or their representatives or any other entity. As soon as practicable after the earlier of (i) sixty (60) days after the date of the earliest dated consent delivered to the Corporation in the manner provided in Section 228(c) of the Delaware General Corporation Law or (ii) a written request therefor by the Corporation or the Soliciting Stockholders (whichever is soliciting consents) (which request may be made no earlier than twenty (20) days after the commencement of the applicable solicitation of consents, except in the case of corporate action by written consent taken pursuant to solicitations of not more than ten (10) persons), notice of which request shall be given to the party opposing the solicitation of consents, if any, which request shall state that the Corporation or Soliciting Stockholders, as the case may be, have a good faith belief that the requisite number of valid and unrevoked consents to authorize or take the action specified in the consents has been received in accordance with these By-Laws, the inspectors shall issue a preliminary report to the Corporation and the Soliciting Stockholders stating: (i) the number of valid consents; (ii) the number of valid revocations; (iii) the number of valid and unrevoked consents; (iv) the number of invalid consents; (v) the number of invalid revocations; (vi) whether, based on their preliminary count, the requisite number of valid and unrevoked consents has been obtained to authorize or take the action specified in the consents.
Unless the Corporation and the Soliciting Stockholders shall agree to a shorter or longer period, the Corporation and the Soliciting Stockholders shall have 48 hours to review the consents and revocations and to advise the inspectors and the opposing party in writing as to whether they intend to challenge the preliminary report of the inspectors. If no written notice of an intention to challenge the preliminary report is received within 48 hours after the inspectors' issuance of the preliminary report, the inspectors shall issue to the Corporation and the Soliciting Stockholders their final report containing the information from the inspectors' determination with respect to whether the requisite number of valid and unrevoked consents was obtained to authorize and take the action specified in the consents. If the Corporation or the Soliciting Stockholders issue written notice of an intention to challenge the inspectors' preliminary report within 48 hours after the issuance of that report, a challenge session shall be scheduled by the inspectors as promptly as practicable. A transcript of the challenge session shall be recorded by a certified court reporter. Following completion of the challenge session, the inspectors shall as promptly as practicable issue their final report to the Soliciting Stockholders and the Corporation, which report shall contain the information included in the preliminary report, plus all changes in the vote totals as a result of the challenge and a certification of whether the requisite number of valid and unrevoked consents was obtained to authorize or take the action specified in the consents. A copy of the final report of the inspectors shall be included in the book in which the proceedings of meetings of stockholders are recorded.
(d)
The Corporation shall given prompt notice to the stockholders of the results of any consent solicitation or the taking of any corporate action without a meeting and by less than unanimous written consent.Article 2
Section 2.1
GENERAL POWERS. The business, property and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors.Section 2.2
QUALIFICATION; NUMBER; TERM; REMUNERATION.(a)
Each director shall be at least 18 years of age. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The number of directors constituting the entire Board shall be no fewer than one (1) and no more than twelve (12), or such other number as may be fixed from time to time by action of the Board of Directors, one of whom may be selected by the Board of Directors to be its Chairman. The use of the phrase "entire Board" herein refers to the total number of directors which the Corporation would have if there were no vacancies.(b)
Directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal.(c)
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 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 2.3
NOMINATION OF DIRECTORS. Nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors or, to the extent permitted by this Section 2.3, by any holder of record of capital stock of the Corporation entitled to vote generally in the election of directors. Any stockholder entitled to vote generally in the election of directors may nominate one or more persons for election as directors only in accordance with the procedures specified in the next sentence, and only if written notice of such stockholder's intent to make such nomination or nominations has been received, either by hand delivery or by United States mail, postage prepaid, by the Secretary of the Corporation not later than (i) with respect to an election to be held at the Annual Meeting of Stockholders, not less than 90 calendar days prior to the anniversary date of the date of the immediately preceding annual meeting (or if there was no such prior annual meeting, not less than 90 calendar days prior to the date which represents the fourth Thursday in May of the current year), and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the fifth calendar day following the date on which notice of such meeting is first delivered to stockholders. Each such notice from a stockholder shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of capital stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all contracts, arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy or information statement filed pursuant to the Exchange Act and the rules and regulations promulgated thereunder (or any subsequent provisions replacing such Exchange Act, rules or regulations); and (e) the consent of each nominee to serve as a director of the Corporation if so elected. The presiding officer of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.Section 2.4
QUORUM AND MANNER OF VOTING. Except as otherwise provided by law, a majority of the entire Board shall constitute a quorum. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting from time to time to another time and place without notice. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.Section 2.5
PLACES OF MEETINGS. Meetings of the Board of Directors may be held at any place within or without the State of Delaware, as may from time to time be fixed by resolution of the Board of Directors, or as may be specified in the notice of meeting.Section 2.6
ANNUAL MEETING. Following the annual meeting of stockholders, the newly elected Board of Directors shall meet for the purpose of the election of officers and the transaction of such other business as may properly come before the meeting. Such meeting may be held without notice immediately after the annual meeting of stockholders at the same place at which such stockholders' meeting is held.Section 2.7
REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at such times and places as the Board of Directors shall from time to time by resolution determine. Notice need not be given of regular meetings of the Board of Directors held at times and places fixed by resolution of the Board of Directors.Section 2.8
SPECIAL MEETINGS. Special meetings of the Board of Directors shall be held whenever called by the Chairman of the Board, President or by a majority of the directors then in office.Section 2.9
NOTICE OF MEETINGS. A notice of the place, date and time and the purpose or purposes of each meeting of the Board of Directors shall be given to each director by mailing the same at least two days before the special meeting, or by telegraphing or telephoning the same or by delivering the same personally not later than the day before the day of the meeting.Section 2.10
ORGANIZATION. At all meetings of the Board of Directors, the Chairman, if any, or if none or in the Chairman's absence or inability to act the President, or in the President's absence or inability to act any Vice-President who is a member of the Board of Directors, or in such Vice-President's absence or inability to act a chairman chosen by the directors, shall preside. The Secretary of the Corporation shall act as secretary at all meetings of the Board of Directors when present, and, in the Secretary's absence, the presiding officer may appoint any person to act as secretary.Section 2.11
RESIGNATION AND REMOVAL. Any director may resign at any time upon written notice to the Corporation and such resignation shall take effect upon receipt thereof by the President or Secretary, unless otherwise specified in the resignation. Subject to the rights of the holders of any series of Preferred Stock or any other class of capital stock of the Corporation (other than the Common Stock) then outstanding, any director may be removed, with or without cause, by the holders of a majority of the shares of stock outstanding and entitled to vote for the election of directors.Section 2.12
VACANCIES. Unless otherwise provided in these By-laws, vacancies on the Board of Directors, whether caused by resignation, death, disqualification, removal, an increase in the authorized number of directors or otherwise, may be filled only by the affirmative vote of a majority of the remaining directors, although less than a quorum, or by a sole remaining director, and any directors so chosen shall hold office until their successors are elected and qualified.Section 2.13
ACTION BY WRITTEN CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all the directors consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors.Article 3
Section 3.1
INDEMNIFICATION. (a) The Corporation shall indemnify, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as amended from time to time, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, have reasonable cause to believe that his or her conduct was unlawful.Section 3.2
ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture or trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.Section 3.3
INDEMNIFICATION AGAINST EXPENSES. To the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 3.1 and 3.2 hereof, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.Section 3.4
BOARD DETERMINATIONS. Any indemnification under Sections 3.1 and 3.2 hereof (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in Sections 3.1 and 3.2 hereof. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who were not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such disinterested directors or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.Section 3.5
ADVANCEMENT OF EXPENSES. Expenses including attorneys' fees incurred by an officer or director in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized by law or in this section. Such expenses incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.Section 3.6
NONEXCLUSIVE. The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall not be deemed exclusive of any other rights to which any director, officer, employee or agent of the Corporation seeking indemnification or advancement of expenses may be entitled under any other bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such a person.Section 3.7
INSURANCE. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, 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 the provisions of applicable statutes, the certificate of incorporation or this section.Section 3.8
CERTAIN DEFINITIONS. For purposes of this Article 3, (a) references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger that, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued; (b) references to "other enterprises" shall include employee benefit plans; (c) references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and (d) references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation that imposes duties on, or involves services by, such director, officer, employee or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this section.Section 3.9
CHANGE IN GOVERNING LAW. In the event of any amendment or addition to Section 145 of the General Corporation Law of the State of Delaware or the addition of any other section to such law that limits indemnification rights thereunder, the Corporation shall, to the extent permitted by the General Corporation Law of the State of Delaware, indemnify to the fullest extent authorized or permitted hereunder, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the Corporation), by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding. indemnify, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as amended from time to time, all persons whom it may indemnify pursuant thereto and in the manner prescribed thereby.Article 4
Section 4.1
APPOINTMENT. From time to time the Board of Directors by a resolution adopted by a majority of the entire Board may appoint any committee or committees for any purpose or purposes, to the extent lawful, which shall have powers as shall be determined and specified by the Board of Directors in the resolution of appointment.Section 4.2
PROCEDURES, QUORUM AND MANNER OF ACTING. Each committee shall fix its own rules of procedure, and shall meet where and as provided by such rules or by resolution of the Board of Directors. Except as otherwise provided by law, the presence of a majority of the then appointed members of a committee shall constitute a quorum for the transaction of business by that committee, and in every case where a quorum is present the affirmative vote of a majority of the members of the committee present shall be the act of the committee. Each committee shall keep minutes of its proceedings, and actions taken by a committee shall be reported to the Board of Directors.ACTION BY WRITTEN CONSENT. Any action required or permitted to be taken at any meeting of any committee of the Board of Directors may be taken without a meeting if all the members of the committee consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the committee.
Section 4.3
AUDIT COMMITTEE. The Board of Directors, by resolution, shall appoint from its members an Audit Committee consisting of at least three directors, each of which shall be independent of management and free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment as a committee member. The Audit Committee shall:(a)
Prior to each Annual Meeting of Stockholders, submit a recommendation in writing to the Board of Directors for the selection of independent public accountants to be appointed by the Board of Directors in advance of the Annual Meeting of Stockholders, subject to ratification or rejection by the stockholders at such meeting;(b)
Consult, at least annually, with the independent public accountants with regard to the proposed plan of audit and from time to time consult privately with them and also with the internal auditor and the principal accounting officer with regard to the adequacy of internal controls;(c)
Upon completion of the report of audit by the independent public accountants and before the date of the Annual Meeting of Stockholders, (i) review the financial statements of the Corporation, and (ii) meet with the independent public accountants and review with them the results of their audit and any recommendations made to the management; and(d)
Periodically, but at least annually, review the terms of all material transactions and arrangements entered into between the Corporation and its affiliates and subsidiaries.Section 4.4
TERM; TERMINATION. In the event any person shall cease to be a director of the Corporation, such person shall simultaneously therewith cease to be a member of any committee appointed by the Board of Directors.Article 5
Section 5.1
ELECTION AND QUALIFICATIONS. The Board of Directors shall elect the officers of the Corporation, which shall include a Chief Executive Officer, a President and a Secretary, and may include, by election or appointment, a Chief Financial Officer, one or more Vice-Presidents (any one or more of whom may be given an additional designation of rank or function), a Controller, a Treasurer and such Assistant Secretaries, Assistant Controllers and Assistant Treasurers and such other officers as the Board may from time to time deem proper. Each officer shall have such powers and duties as may be prescribed by these By-laws and as may be assigned by the Board of Directors or the President. Any two or more offices may be held by the same person except the offices of President and Secretary.Section 5.2
TERM OF OFFICE AND REMUNERATION. The term of office of all officers shall be one year and until their respective successors have been elected and qualified, but any officer may be removed from office, either with or without cause, at any time by the Board of Directors. Any vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors. The remuneration of all officers of the Corporation may be fixed by the Board of Directors or in such manner as the Board of Directors shall provide.Section 5.3
RESIGNATION; REMOVAL. Any officer may resign at any time upon written notice to the Corporation and such resignation shall take effect upon receipt thereof by the President or Secretary, unless otherwise specified in the resignation. Any officer shall be subject to removal, with or without cause, at any time by vote of a majority of the entire Board.Section 5.4
CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors shall preside at all meetings of the stockholders and at all meetings of the Board of Directors and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chairman of the Board of Directors, as such, shall not be an officer of the Corporation.Section 5.5
PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President shall be the chief executive officer of the Corporation, and shall have such duties as customarily pertain to that office. The President shall have general management and supervision of the property, business and affairs of the Corporation and over its other officers; may appoint and remove assistant officers and other agents and employees, other than officers referred to in Section 5.1; and may execute and deliver in the name of the Corporation powers of attorney, contracts, bonds and other obligations and instruments.Section 5.6
CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall in general have all duties incident to such position, including, without limitation, the organization and review of all accounting, tax and related financial matters involving the Corporation, the implementation of appropriate Corporation financial controls and procedures, and the supervision and assignment of the duties of all other financial officers and personnel employed by the Corporation, and shall have such other duties as may be assigned by the Board of Directors or the President.Section 5.7
VICE-PRESIDENT. A Vice-President may execute and deliver in the name of the Corporation contracts and other obligations and instruments pertaining to the regular course of the duties of said office, and shall have such other authority as from time to time may be assigned by the Board of Directors or the President.Section 5.8
TREASURER. The Treasurer shall in general have all duties incident to the position of Treasurer and such other duties as may be assigned by the Board of Directors or the President.Section 5.9
SECRETARY. The Secretary shall in general have all the duties incident to the office of Secretary and such other duties as may be assigned by the Board of Directors or the President.Section 5.10
CONTROLLER. The Controller shall in general have all the duties incident to the office of Controller and such other duties as may be assigned by the Board of Directors or the Chief Financial Officer.Section 5.11
ASSISTANT OFFICERS. Any assistant officer shall have such powers and duties of the officer such assistant officer assists as such officer or the Board of Directors shall from time to time prescribe.Article 6
Section 6.1
LOCATION. The books and records of the Corporation may be kept at such place or places within or outside the State of Delaware as the Board of Directors or the respective officers in charge thereof may from time to time determine. The record books containing the names and addresses of all stockholders, the number and class of shares of stock held by each and the dates when they respectively became the owners of record thereof shall be kept by the Secretary or by the transfer agent or registrar as shall be designated by the Board of Directors.Section 6.2
ADDRESSES OF STOCKHOLDERS. Notices of meetings and all other corporate notices may be delivered personally or mailed to each stockholder at the stockholder's address as it appears on the records of the Corporation.Section 6.3
FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.(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 be more than 60 nor less than 10 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 date shall not be more than 10 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 by delivery to its registered office in this State, 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. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by this chapter, the record date for 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 be not more than 60 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.Article 7
Section 7.1
CERTIFICATES; SIGNATURES. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate, signed by or in the name of the Corporation by the Chairman or Vice-Chairman of the Board of Directors, or the President or Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares registered in certificate form. Any and all signatures on any such certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The name of the holder of record of the shares represented thereby, with the number of such shares and the date of issue, shall be entered on the books of the Corporation.Section 7.2
TRANSFERS OF STOCK. Upon compliance with any provisions restricting the transfer or registration of transfer of shares of stock, including, without limitation, restrictions set forth in the Certificate of Incorporation, shares of capital stock shall be transferable on the books of the Corporation only by the holder of record thereof in person, or by duly authorized attorney or legal representative, upon surrender and cancellation of certificates for a like number of shares (or upon compliance with the provisions of Section 7.5, if applicable), properly endorsed, and the payment of all taxes due thereon. Upon such surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer (or upon compliance with the provisions of Section 7.5, if applicable) and of compliance with any transfer restrictions applicable thereto contained in an agreement to which the Corporation is a party or of which the Corporation has knowledge by reason of legend with respect thereto placed on any such surrendered stock certificate, 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 7.3
OWNERSHIP OF SHARES. The Corporation shall be entitled to treat the holder of record of any shares or shares of capital stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.Section 7.4
FRACTIONAL SHARES. The Corporation may, but shall not be required to, issue certificates for fractions of a share where necessary to effect authorized transactions, or the Corporation may pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or it may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the Corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a stockholder except as therein provided.The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation.
Section 7.5
LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation may issue a new certificate of stock in place of any certificate, theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Board of Directors may require the owner of any lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.Article 8
Subject always to the provisions of law and the Certificate of Incorporation, the Board of Directors shall have full power to determine whether any, and, if any, what part of any, funds legally available for the payment of dividends shall be declared as dividends and paid to stockholders; the division of the whole or any part of such funds of the Corporation shall rest wholly within the lawful discretion of the Board of Directors, and it shall not be required at any time, against such discretion, to divide or pay any part of such funds among or to the stockholders as dividends or otherwise; and 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 Board of Directors from time to time, in its absolute discretion, thinks 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 Board of Directors shall think conducive to the interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.
Article 9
Any transaction, questioned in any law suit on the ground of lack of authority, defective or irregular execution, adverse interest of director, officer or stockholder, non-disclosure, miscomputation, or the application of improper principles or practices of accounting, may be ratified before or after judgment, by the Board of Directors or by the stockholders, and if so ratified shall have the same force and effect as if the questioned transaction had been originally duly authorized. Such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.
Article 10
The corporate seal shall have inscribed thereon the name of the Corporation and the year of its incorporation, and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine. The corporate seal may be used by printing, engraving, lithographing, stamping or otherwise making, placing or affixing, or causing to be printed, engraved, lithographed, stamped or otherwise made, placed or affixed, upon any paper or document, by any process whatsoever, an impression, facsimile or other reproduction of said corporate seal.
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors. Unless otherwise fixed by the Board of Directors, the fiscal year of the Corporation shall be the calendar year.
Article 11
Whenever notice is required to be given by these By-laws or by the Certificate of Incorporation or by law, a written waiver thereof, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice.
Article 12
Section 12.1
BANK ACCOUNTS AND DRAFTS. In addition to such bank accounts as may be authorized by the Board of Directors, the primary financial officer or any person designated by said primary financial officer, whether or not an employee of the Corporation, may authorize such bank accounts to be opened or maintained in the name and on behalf of the Corporation as he may deem necessary or appropriate, payments from such bank accounts to be made upon and according to the check of the Corporation in accordance with the written instructions of said primary financial officer, or other person so designated by the Treasurer.Section 12.2
CONTRACTS. The Board of Directors may authorize any person or persons, in the name and on behalf of the Corporation, to enter into or execute and deliver any and all deeds, bonds, mortgages, contracts and other obligations or instruments, and such authority may be general or confined to specific instances.Section 12.3
PROXIES; POWERS OF ATTORNEY; OTHER INSTRUMENTS. The Chairman, the President or any other person designated by either of them shall have the power and authority to execute and deliver proxies, powers of attorney and other instruments on behalf of the Corporation in connection with the rights and powers incident to the ownership of stock by the Corporation. The Chairman, the President or any other person authorized by proxy or power of attorney executed and delivered by either of them on behalf of the Corporation may attend and vote at any meeting of stockholders of any company in which the Corporation may hold stock, and may exercise on behalf of the Corporation any and all of the rights and powers incident to the ownership of such stock at any such meeting, or otherwise as specified in the proxy or power of attorney so authorizing any such person. The Board of Directors, from time to time, may confer like powers upon any other person.Section 12.4
FINANCIAL REPORTS. The Board of Directors may appoint the primary financial officer or other fiscal officer or any other officer to cause to be prepared and furnished to stockholders entitled thereto any special financial notice and/or financial statement, as the case may be, which may be required by any provision of law.Article 13
The Board of Directors shall have power to alter, adopt, amend or repeal By-laws. By-laws adopted by the Board of Directors may be repealed or changed, and new By-laws made, by the affirmative vote of the holders of a majority of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote at any regular meeting of stockholders, or at any special meeting of stockholders, provided notice of such alteration, adoption, amendment or repeal shall have been stated in the notice of such meeting, and the stockholders may prescribe that any By-law made by them shall not be altered, amended or repealed by the Board of Directors.
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