-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MH3BXNUaX23fg6/Iukk6m6vI9usQQw41YhQPfivORm39HUoTjd9g8qMYAv6XyGeY eM0P32pnsrv7kv7LP41wTQ== /in/edgar/work/0000350621-00-000021/0000350621-00-000021.txt : 20001107 0000350621-00-000021.hdr.sgml : 20001107 ACCESSION NUMBER: 0000350621-00-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000929 FILED AS OF DATE: 20001106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: C COR NET CORP CENTRAL INDEX KEY: 0000350621 STANDARD INDUSTRIAL CLASSIFICATION: [3663 ] IRS NUMBER: 240811591 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10726 FILM NUMBER: 753920 BUSINESS ADDRESS: STREET 1: 60 DECIBEL RD CITY: STATE COLLEGE STATE: PA ZIP: 16801 BUSINESS PHONE: 8142382461 MAIL ADDRESS: STREET 1: 60 DECIBEL ROAD CITY: STATE COLLEGE STATE: PA ZIP: 16801 FORMER COMPANY: FORMER CONFORMED NAME: C COR ELECTRONICS INC DATE OF NAME CHANGE: 19920703 10-Q 1 0001.txt 10-Q QUARTER ENDING 09/29/00 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the thirteen-week period ended: September 29, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 0-10726 C-COR.net Corp. (Exact name of registrant as specified in its charter) Pennsylvania 24-0811591 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 60 Decibel Road, State College, PA 16801 (Address of principal executive offices) (Zip Code) (814) 238-2461 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.05 Par Value - 33,455,876 shares as of October 25, 2000. INDEX C-COR.net Corp. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. Condensed consolidated balance sheets -- September 29, 2000 and June 30, 2000. Condensed consolidated statements of operations (unaudited) -- thirteen weeks ended September 29, 2000 and September 24, 1999. Condensed consolidated statements of cash flows (unaudited) -- thirteen weeks ended September 29, 2000 and September 24, 1999. Notes to condensed consolidated financial statements -- September 29, 2000. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Item 3. Quantitative and Qualitative Disclosures About Market Risk PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. Item 1. Financial Statements
C-COR.net Corp. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) September 29, June 30, 2000 2000 --------- --------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents ............................ $ 94,669 $ 95,379 Marketable securities ................................ 48,034 42,154 Interest receivable .................................. 866 1,007 Accounts and notes receivables, net .................. 54,314 49,325 Inventories .......................................... 29,385 31,760 Deferred taxes ....................................... 6,603 7,470 Other current assets ................................. 2,586 3,826 --------- --------- TOTAL CURRENT ASSETS ................................. 236,457 230,921 Property, plant, and equipment, net .................. 26,529 28,322 Intangible assets, net ............................... 2,395 2,477 Deferred taxes ....................................... 3,857 4,909 Other long-term assets ............................... 6,442 6,410 --------- --------- TOTAL ASSETS.......................................... $ 275,680 $ 273,039 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable ..................................... $ 26,941 $ 21,341 Accrued liabilities .................................. 16,707 20,056 Current portion of long-term debt .................... 225 225 --------- --------- TOTAL CURRENT LIABILITIES ............................ 43,873 41,622 Long-term debt, less current portion ................. 1,479 1,527 Other long-term liabilities .......................... 2,169 2,232 --------- --------- TOTAL LIABILITIES .................................... 47,521 45,381 SHAREHOLDERS' EQUITY Common stock, $.05 par; authorized shares 100,000,000; issued shares of 35,274,137 on September 29, 2000 and 35,219,825 on June 30, 2000 . 1,763 1,761 Additional paid-in capital ........................... 197,898 197,240 Accumulated other comprehensive income (loss) ........ 57 (30) Unearned compensation ................................ (6) (8) Retained earnings .................................... 41,767 35,952 Treasury stock at cost ............................... (13,320) (7,257) --------- --------- TOTAL SHAREHOLDERS' EQUITY ........................... 228,159 227,658 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........... $ 275,680 $ 273,039 ========= ========= See notes to condensed consolidated financial statements.
C-COR.net Corp. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Thirteen Weeks Ended ---------------------------- September 29, September 24, 2000 1999 -------- -------- Net sales ........................................ $ 78,335 $ 70,888 Cost of sales .................................... 57,063 52,247 -------- -------- Gross margin ..................................... 21,272 18,641 -------- -------- Operating expenses: Selling and administrative ..................... 8,863 8,895 Research and product development ............... 4,424 3,175 Merger and restructuring costs ................. - 3,673 -------- -------- Total operating expenses ..................... 13,287 15,743 -------- -------- Income from operations ........................... 7,985 2,898 Interest expense ................................. (13) (621) Investment income ................................ 2,015 63 Other expense, net ............................... (239) (340) -------- -------- Income before income taxes ....................... 9,748 2,000 Income tax expense ............................... 3,934 1,659 -------- -------- Income from continuing operations ................ 5,814 341 Discontinued operations: Gain on disposal of discontinued business segment, net of tax .......................... 1 36 -------- -------- Net income ....................................... $ 5,815 $ 377 ======== ======== Net income per share-basic: Continuing operations .......................... $ 0.17 $ 0.01 Gain on disposal of discontinued operations .... - - -------- -------- Net income ................................... $ 0.17 $ 0.01 ======== ======== Net income per share-diluted: Continuing operations .......................... $ 0.16 $ 0.01 Gain on disposal of discontinued operations .... - - -------- -------- Net income ................................... $ 0.16 $ 0.01 ======== ======== Weighted average common shares and common share equivalents Basic .......................................... 34,040 23,410 Diluted ........................................ 36,419 28,274 See notes to condensed consolidated financial statements.
C-COR.net Corp. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands of dollars) Thirteen Weeks Ended -------------------- September 29, September 24, 2000 1999 -------- -------- OPERATING ACTIVITIES Net income ........................................... $ 5,815 $ 377 Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities: Depreciation and amortization ...................... 2,540 2,323 Amortization of debt discount ...................... - 381 Amortization of unearned compensation .............. 2 (14) Gain on disposal of discontinued operations, net of tax............................................... (1) (36) Provision for deferred retirement salary plan ...... 21 148 Loss on sales and write-down of property, plant and equipment......................................... 250 332 Tax benefit deriving from exercise and sales of stock option shares ..................... 207 - Changes in operating assets and liabilities: Interest receivable ............................. 141 (3) Accounts and notes receivable ................... (4,989) (3,936) Inventories ..................................... 2,375 (4,366) Other assets .................................... 873 (1,402) Accounts payable ................................ 5,600 (939) Accrued liabilities ............................. (3,433) 3,084 Deferred income taxes ........................... 1,919 (638) Discontinued operations - working capital changes and noncash charges ........................... 1 174 -------- -------- NET CASH AND CASH EQUIVALENTS PROVIDED BY (USED IN) OPERATING ACTIVITIES ......... 11,321 (4,515) -------- -------- INVESTING ACTIVITIES Purchase of property, plant, and equipment ........... (493) (3,275) Purchase of marketable securities and other short term investments .................................... (5,880) - Proceeds from sale of property, plant and equipment... - 3 -------- -------- NET CASH AND CASH EQUIVALENTS USED IN INVESTING ACTIVITIES ....................... (6,373) (3,272) -------- -------- FINANCING ACTIVITIES Payment of debt and capital lease obligations ........ (48) (220) Proceeds from short-term credit facilities, net ...... - 1,603 Issue common stock to employee stock purchase plan ... 39 25 Proceeds from exercise of stock options .............. 321 2,131 Proceeds from exercise of warrants ................... 93 - Purchase of treasury stock ........................... (6,063) - -------- -------- NET CASH AND CASH EQUIVALENTS (USED IN) PROVIDED BY FINANCING ACTIVITIES ......... (5,658) 3,539 -------- -------- DECREASE IN CASH AND CASH EQUIVALENTS ................ (710) (4,248) Cash and cash equivalents at beginning of year ....... 95,379 5,805 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ........... $ 94,669 $ 1,557 ======== ======== Supplemental cash flow information: Non-cash investing activities Fair value adjustment of available-for-sale securities $ 18 $ 6 See notes to condensed consolidated financial statements.
C-COR.net Corp. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share data) 1. The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, and in the opinion of management, contain all adjustments (consisting only of normal, recurring adjustments) necessary to fairly present the Company's financial position as of September 29, 2000, and the results of its operations for the thirteen-week period then ended. Operating results for the thirteen-week period are not necessarily indicative of the results that may be expected for the year ending June 29, 2001. For further information, refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended June 30, 2000. 2. DESCRIPTION OF BUSINESS C-COR.net Corp. (the Company) designs, manufactures and markets network transmission products and provides services and support to hybrid fiber coax (HFC) network operators. The Company operates in two industry segments: the Telecommunications Equipment segment which provides a comprehensive range of products, including radio frequency (RF) amplifiers and fiber optic equipment for the network headend, node and RF plant; and the Broadband Management Services segment which focuses on enabling reliable, high speed, broadband communications over HFC networks and includes network management and enabling services, high-speed data certification, system integration services, data security solutions, network engineering and design, system activation, network optimization, and system maintenance. 3. INVENTORIES Inventories as of September 29, 2000 and June 30, 2000 consisted of the following:
September 29, June 30, 2000 2000 ------- ------- Finished goods .............................. $ 4,327 $ 5,288 Work-in-process ............................. 5,733 6,841 Raw materials ............................... 19,325 19,631 ------- ------- Total inventories ........................ $29,385 $31,760 ======= =======
4. ACCRUED LIABILITIES Accrued liabilities as of September 29, 2000 and June 30, 2000 consisted of the following:
September 29, June 30, 2000 2000 ------------- ------------- Accrued incentive plan expense .............. $ 1,259 $ 3,510 Accrued vacation expense .................... 1,665 1,880 Accrued salary expense ...................... 1,374 2,678 Accrued payroll and sales tax ............... 1,206 972 Accrued sales commissions and rebates payable ............................ 499 419 Accrued warranty expense .................... 2,322 2,232 Accrued workers compensation self-insurance expense .................... 1,753 1,577 Accrued merger-related costs ................ 484 489 Accrued income tax payable .................. 3,565 4,199 Accrued other ............................... 2,580 2,100 ------------- ------------- $ 16,707 $ 20,056 ============= =============
5. COMPREHENSIVE INCOME The components of accumulated other comprehensive income (loss), net of tax, of the Company are as follows:
September 29, June 30, 2000 2000 ------------- ------------- Unrealized gain on marketable securities ...... $ 54 $ 72 Foreign currency translation gain (loss) ...... 3 (102) ------------- ------------- Accumulated other comprehensive income (loss) . $ 57 $ (30) ============= =============
The components of comprehensive income (loss) of the Company for the thirteen-week periods ended September 29, 2000 and September 24, 1999, are as follows:
Thirteen Weeks Ended --------------------------- September 29, September 24, 2000 1999 ------------- ------------ Net income ....................................... $ 5,815 $ 377 Other comprehensive income (loss), net of tax: Unrealized loss on equity securities ........... (18) (4) Foreign currency translation gain .............. 105 - ------------- ------------ Other comprehensive income (loss) ................ 87 (4) ------------- ------------ Comprehensive income ............................. $ 5,902 $ 373 ============= ============
6. NET INCOME PER SHARE Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Dilutive net income per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding plus the dilutive effect of options, warrants and convertible preferred stock. The dilutive effect of options and warrants is calculated under the treasury stock method using the average market price for the period. The dilutive effect of the convertible preferred stock is calculated under the if-converted method. Net income per share is calculated as follows:
Thirteen Weeks Ended --------------------------- September 29, September 24, 2000 1999 ------------- ------------- Income from continuing operations ................ $ 5,814 $ 341 Gain from discontinued operations ................ 1 36 ------------- ------------- Net income ....................................... $ 5,815 $ 377 ============= ============= Weighted average common shares outstanding ....... 34,040 23,410 Common share equivalents ......................... 2,379 4,864 ------------- ------------- Weighted average common share and common share equivalents .............................. 36,419 28,274 ============= ============= Net income per share-basic: Continuing operations .......................... $ 0.17 $ 0.01 Discontinued operations ........................ - - ------------- ------------- Net income ....................................... $ 0.17 $ 0.01 ============= ============= Net income per share - diluted: Continuing operations .......................... $ 0.16 $ 0.01 Discontinued operations ........................ - - ------------- ------------- Net income ....................................... $ 0.16 $ 0.01 ============= =============
7. SEGMENT INFORMATION The Company operates in two industry segments: the Telecommunications Equipment segment which provides a comprehensive range of products, including RF amplifiers and fiber optic equipment for the network headend, node and RF plant; and the Broadband Management Services segment which focuses on enabling reliable, high- speed, broadband communications over HFC networks and includes network management and enabling services, high-speed data certification, system integration services, data security solutions, network engineering and design, system activation, network optimization, and system maintenance. Information about industry segments for the thirteen-week periods ended September 29, 2000 and September 24, 1999, are as follows:
Continuing Operations ---------------------------- Broadband Telecommunications Management Equipment Services Total --------------------------------------------------- 13 week period ended September 29, 2000 Total revenue ......................................... $ 65,233 $ 13,102 $ 78,335 Operating income ...................................... 7,753 232 7,985 Investment income ..................................... 2,015 Interest expense ...................................... 13 Income tax expense .................................... 3,934 Cash equivalents and marketable securities ............ 121,360 Identifiable assets at September 29, 2000 (B).......... 129,735 24,206 153,941 Capital expenditures .................................. 359 134 493 Depreciation and amortization ......................... 1,910 630 2,540 13 week period ended September 24, 1999 Total revenue ......................................... $ 61,986 $ 8,902 $ 70,888 Operating income (loss)(A) ............................ 7,487 (916) 6,571 Investment income ..................................... 63 Interest expense ...................................... 621 Income tax expense (A) ................................ 2,219 Identifiable assets at September 24, 1999 ............. 101,040 14,550 115,590 Capital expenditures .................................. 2,652 623 3,275 Depreciation and amortization ......................... 2,068 255 2,323 (A) Operating income and income tax expense exclude the impact of the one-time merger-related costs related to the Convergence and SVCI mergers. (B) Identifiable assets at September 29, 2000, exclude cash equivalents and marketable securities related to the Company's follow-on public offering.
The Company and its subsidiaries operate in various geographic areas as indicated by the following:
U.S. Europe Eliminations Total --------------------------------------------------------- 13 week period ended September 29, 2000 Sales to unaffiliated customers: Domestic $ 68,869 $1,398 $ - $ 70,267 Export 8,068 - - 8,068 Transfers between geographic areas 18 - (18) - Total revenue 76,955 1,398 (18) 78,335 Operating income 7,863 122 - 7,985 Investment income 2,014 1 - 2,015 Interest expense 13 - - 13 Income tax expense 3,887 47 - 3,934 Identifiable assets at September 29, 2000 273,403 1,898 - 275,301 Capital expenditures 493 - - 493 Depreciation and amortization 2,428 112 - 2,540 13 week period ended September 24, 1999 Sales to unaffiliated customers: Domestic $ 64,301 $ 43 $ - $ 64,344 Export 6,544 - - 6,544 Transfers between geographic areas 12 - (12) - Total revenue 70,857 43 (12) 70,888 Operating income (loss) (A) 6,762 (191) - 6,571 Investment income 62 1 - 63 Interest expense 621 - - 621 Income tax expense (A) 2,215 4 - 2,219 Identifiable assets at September 24, 1999 115,426 164 - 115,590 Capital expenditures 3,274 1 - 3,275 Depreciation and amortization 2,318 5 - 2,323 (A) Operating income (loss) and income tax expense exclude the impact of the one-time merger-related costs related to the Convergence and SVCI mergers.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General The following discussion addresses the financial condition of C-COR.net Corp. (the Company, or we) as of September 29, 2000, and the results of operations for the thirteen-week period ended September 29, 2000, compared with the same period of the prior year. This discussion should be read in conjunction with the Management's Discussion and Analysis section for the fiscal year ended June 30, 2000, included in the Company's Annual Report on Form 10-K. Disclosure Regarding Forward-Looking Statements Some of the information presented in this report contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding the ability of the Company to expand its product offering, the continuation of network upgrade activity, the trend toward more fiber in the network, the Company's ability to develop new and enhanced products, global demand for the Company's products and services, and statements relating to the Company's business strategy. Forward-looking statements represent the Company's judgment regarding future events. Although the Company believes it has a reasonable basis for these forward-looking statements, the Company cannot guarantee their accuracy and actual results may differ materially from those the Company anticipated due to a number of uncertainties, many of which we are not aware. Factors which could cause actual results to differ from expectations include, among others, capital spending patterns of the communications industry, the Company's ability to develop new and enhanced products, continued industry consolidation, the development of competing technology, and the Company's ability to achieve its strategic objectives. For additional information concerning these and other important factors which may cause the Company's actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the Company with the Securities and Exchange Commission. Results of Operations Net Sales for the thirteen-week period ended September 29, 2000 were $78.3 million, an increase of 11% from the prior year's sales of $70.9 million for the same period. Telecommunications Equipment segment sales increased by 5% to $65.2 million during the thirteen-week period, compared to $62.0 million for the same period of the prior year. The increase was attributable primarily to increased sales of fiber optics products as we continue to expand our product offering through development of new products and strategic partnerships to meet domestic and international customer demands. Broadband Management Services (BMS) segment sales increased by 47% to $13.1 million during the thirteen-week period, compared to $8.9 million for the same period of the prior year. The increase was primarily attributable to technical services performed in our customers' plants, including system sweep, reverse path activation, ingress mitigation, node certification and system maintenance. Domestic sales increased by 7% for the thirteen-week period ended September 29, 2000 to $68.9 million from $64.3 million for the same period of the prior year. This growth occurred in our BMS segment sales, primarily for technical services. We believe the continuation of network upgrade activities to enable two-way interactive broadband services has translated into increased demand for our products and services. Total domestic sales were 88% of net sales for the thirteen-week period ended September 29, 2000, as compared to 91% for the same period of the prior year. International sales increased by 43% for the thirteen-week period ended September 29, 2000 to $9.4 million from $6.6 million for the same period of the prior year. This growth was principally in sales of telecommunications equipment and reflected sales to a major customer in Canada and increased demand from customers in the EuroPacific region. We expect international markets will continue to represent a substantial portion of our sales base, but believe demand will continue to be highly variable. The international markets represent distinct markets in which capital spending decisions for hybrid fiber coax (HFC) network distribution equipment can be impacted by a variety of factors including access to financing and general economic conditions. Our total international sales were 12% of consolidated net sales for the thirteen-week period ended September 29, 2000, as compared to 9% for the same period of the prior year. Gross margin was 27.2% for the thirteen-week period ended September 29, 2000, compared to 26.3% for the same period of the prior year. For the Telecommunications Equipment segment, gross margin was 26.7% for the thirteen-week period ended September 29, 2000, compared to 28.0% for the same period of the prior year. The decrease in gross margin resulted primarily from changes in product mix. For the BMS segment, gross margin was 29.6% for the thirteen-week period ended September 29, 2000, compared to 14.2% for the same period of the prior year. The increase in gross margin is due primarily to improvements in productivity and changes in various costs associated with our technical services, as we have substantially completed the integration of our legacy service organization with the acquisitions of Worldbridge Broadband Services, Inc. and Advanced Communications Services, Inc., consummated in the third quarter of fiscal year 2000. Selling and administrative expenses were $8.9 million (11.3% of net sales) for the thirteen-week period ended September 29, 2000, compared to $8.9 million (12.5% of net sales) for the same period of the prior year. The Company's selling and administrative expenses remained flat for the quarter, but we anticipate increasing selling and administrative expense in future periods, related to international expansion, although these expenses may vary as a percentage of net sales. Research and product development expenses were $4.4 million (5.6% of net sales) for the thirteen-week period ended September 29, 2000, compared to $3.2 million (4.5% of net sales) for the same period of the prior year. The increase in research and product development expenditures resulted from higher personnel costs and additional expenses primarily for development of fiber optic transmission products and the continued development of network management products and capabilities. We anticipate continuing increases in research and product development expenses in future periods, related to ongoing initiatives, although these expenses may vary as a percentage of net sales. Operating income (excluding non-recurring business combination costs) for the Telecommunications Equipment segment for the thirteen-week period ended September 29, 2000, was $7.8 million, compared to $7.5 million for the same period of the prior year. The increase in operating income was attributable primarily to increased volume. Operating income (excluding non-recurring business combination costs) for the BMS segment for the thirteen-week period ended September 29, 2000, was $232,000, compared to an operating loss of $916,000 for the same period of the prior year. The improvement in operating income derives from higher volumes, which absorbed our fixed operating costs, as well as improved gross margin deriving from our technical services. These improved factors were offset partially by a continued increase in investment and development costs associated with our network management products. Interest expense was $13,000 for the thirteen-week period ended September 29, 2000, compared to $621,000 for the same period of the prior year. The decrease in interest expense resulted from reductions of long-term debt and borrowings on various short-term credit facilities, and a decrease in the amortization related to the fair market value of warrants issued in fiscal year 1999 in connection with certain debt financing arrangements by Silicon Valley Communications, Inc.(SVCI), a wholly-owned subsidiary of the Company. Investment income was $2.0 million for the thirteen-week period ended September 29, 2000, compared to $63,000 for the same period of the prior year. The increase in investment income resulted from short-term investments of the net proceeds received in our follow-on public offering completed on November 12, 1999. Our overall effective income tax rate was 40.4% for the thirteen-week period ended September 29, 2000, compared to 83.0% for the same period of the prior year. The higher effective income tax rate in the prior year resulted primarily from permanent differences for non-deductible business combination costs incurred in relation with the mergers with Convergence.com Corporation (Convergence) and SVCI. Liquidity and Capital Resources In November 1999, we completed a follow-on public offering of our common stock, resulting in net proceeds (after deducting issuance costs) of $133.3 million. As of September 29, 2000, cash and cash equivalents and marketable securities totaled $142.7 million, up from $137.5 million at June 30, 2000. Net cash and cash equivalents provided by operating activities were $11.3 million for the thirteen-week period ended September 29, 2000, compared to net cash and cash equivalents used in operating activities of $4.5 million for the same period of the prior year. The increase in net cash and cash equivalents provided by operating activities was primarily due to the increase in net income for the period, as well as higher accounts payable and reductions in inventories, and were partially offset by increases in accounts receivable and reductions of accrued liabilities. Net cash and cash equivalents used in investing activities were $6.4 million for the thirteen-week period ended September 29, 2000, compared to $3.3 million for the same period of the prior year. The increase in cash and cash equivalents used in investing activities was primarily due to purchases of marketable securities and other short-term investments. Other investing activities included our purchases of property, plant and equipment for $493,000, as compared to $3.3 million for the same period of the prior year. Net cash and cash equivalents used in financing activities were $5.7 million for the thirteen-week period ended September 29, 2000, compared to $3.5 million of net cash and cash equivalents provided by financing activities for the same period of the prior year. The increase in cash used in financing activities resulted primarily from the purchase of treasury stock during the period. On September 25, 2000, we announced that we were beginning a stock repurchase program, effective September 22, 2000. The new program allows the Company to repurchase up to 2,000,000 shares of C-COR.net common stock. The shares may be purchased from time to time in the open market through block or privately negotiated transactions, or otherwise. The Company intends to use its currently available capital resources to fund the purchases. The repurchased stock is expected to be held by the Company as treasury stock to be used to meet the Company's obligations under its present and future stock option plans and for other corporate purposes. As of September 29, 2000, 449,900 shares were repurchased under this stock repurchase program. Our other financing activities consisted primarily of payments on short-term and long-term debt and proceeds from the exercise of employee stock options and warrants. We have a credit agreement with three banks under which we may borrow up to $70.0 million. Under the credit agreement, $20.0 million is available as a revolving line-of-credit, subject to an aggregate sub-limit of $2.0 million for issuance of letters of credit which is committed through November 30, 2000. The credit agreement also permits us to borrow up to $50.0 million, for strategic acquisitions and/or investments, which is also committed through November 30, 2000. Credit pricing on these facilities is a function of our total funded indebtedness to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio. Borrowings under the credit agreement bear interest at various rates, at our option, and are limited to three times EBITDA. Borrowings on these facilities are unsecured, subject to a negative pledge on all business assets, and we are required to maintain certain financial ratios and comply with indebtedness tests. As of September 29, 2000, we had no borrowings outstanding under the credit agreement and based upon our EBITDA, as measured on a rolling four quarter basis, the full $70.0 million facility was available. We anticipate renewing this credit agreement on or before November 30, 2000. Management believes that operating cash flow, proceeds received from the follow-on public offering, as well as the aforementioned credit agreement, will be adequate to provide for all cash requirements for the foreseeable future, subject to requirements that strategic developments might dictate. Item 3. Quantitative and Qualitative Disclosures About Market Risk (Not Applicable) PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K The following exhibit is included herein: 3.1 Bylaws of the Company, as amended as of September 22, 2000 27 Financial Data Schedule Reports on Form 8-K None 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. C-COR.net Corp. (Registrant) Date: November 6, 2000 /s/ William T. Hanelly ---------------------------------- Vice President-Finance, Secretary & Treasurer (Principal Financial Officer) Date: November 6, 2000 /s/ Joseph E. Zavacky ---------------------------------- Controller & Assistant Secretary (Principal Accounting Officer) EX-3.1 2 0002.txt BYLAWS AS AMENDED THROUGH 9-22-2000 BYLAWS C-COR.net Corp. Adopted by the Board of Directors January 13, 1981, as amended thereafter through September 22, 2000 ARTICLE I - OFFICES Section 1-1. Registered Office. The registered office of the Corporation shall be located within the Commonwealth of Pennsylvania, at such place as the Board of Directors shall, from time to time, determine. Section 1-2. Other Offices. The Corporation may also have offices at such other places within or without the Commonwealth of Pennsylvania, as the Board of Directors may, from time to time, determine. ARTICLE II - SHAREHOLDERS' MEETINGS. Section 2-1. Place of Shareholders' Meetings. Meetings of shareholders shall be held at such places within or without the Commonwealth of Pennsylvania as may be fixed by the Board of Directors, from time to time. If no such place is fixed by the Board of Directors, meetings of the shareholders shall be held at the registered office of the Corporation. Section 2-2. Annual Meeting. A meeting of the shareholders of the Corporation shall be held in each calendar year, in the month of October or on such date at such time as the Board of Directors may determine. At such annual meeting, there shall be held an election of Directors. Unless the Board of Directors shall deem it advisable, financial reports of the Corporation's business need not be sent to the shareholders and need not be presented at the annual meeting. If any report is deemed advisable by the Board of Directors, such report may contain such information as the Board of Directors shall determine and need not be certified by a Certified Public Accountant unless the Board of Directors shall so direct. Section 2-3. Special Meetings. Special meetings of the shareholders may be called at any time: (a) By the President of the Corporation; or (b) By a majority of the Board of Directors; or (c) By shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast at the meeting. Upon the written request of any person or persons entitled to call a special meeting, which request shall set forth the purpose for which the meeting is desired, it shall be the duty of the Secretary to fix the date of such meeting to be held at such time, not less than five nor more that sixty days after the receipt of such request, as the Secretary may determine, and to give due notice thereof. If the Secretary shall neglect or refuse to fix the date of such meeting and to give notice thereof within five days after receipt of such request, the person or persons calling the meeting may do so. Section 2-4. Notices of Shareholders' Meetings. Written notice stating the date, place and hour and, if required by law or these Bylaws, the purpose, of any meeting of the shareholders, shall be given to each shareholder of record entitled to vote at the meeting at least five days prior to the day named for the meeting, unless otherwise required by law. Such notices may be given at the discretion of, or in the name of, the Board of Directors, President, Vice President, Secretary or Assistant Secretary. When a meeting is adjourned, it shall not be necessary to give any notice of the adjourned meeting or of the business to be transacted at an adjourned meeting, other than by announcement at the meeting at which such adjournment is taken. Section 2-5. Quorum of and Action by Shareholders. Unless otherwise provided in the Articles of Incorporation, or in a Bylaw adopted by the Board of Directors, the presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast on the particular matter shall constitute a quorum for the purpose of considering such matter, and, unless otherwise specifically provided by law, the acts, at a duly organized meeting, of the shareholders present, in person or by proxy, entitled to cast at least a majority of the votes which all shareholders present are entitled to cast, shall be the acts of the shareholders. The shareholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. If a meeting cannot be organized because of quorum has not attended, those present may, except as otherwise provided by law, adjourn the meeting to such time and place as they may determine, but in the case of any meeting called for the election of Directors, those shareholders who attend the second of such adjourned meetings, although less than a quorum as fixed in this Section, or in the Articles of Incorporation, shall nevertheless constitute a quorum for the purpose of electing Directors. Section 2-6. Voting. At least five days before any meeting of shareholders, the officer or agent having charge of the transfer books of the Corporation shall make a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order with the address of and the number of shares held by each, which list shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. At all shareholders' meetings, shareholders entitled to vote may attend and vote either in person or by proxy. Every proxy shall be executed in writing by the shareholder or by a duly authorized attorney-in-fact of the shareholder and filed with the Secretary of the Corporation. A telegram, telex, cablegram, datagram or similar transmission from a shareholder or attorney-in-fact or a facsimile or similar reproduction of a writing executed by a shareholder or attorney-in-fact: (1) May be treated as properly executed for purposes of this subsection; and (2) Shall be so treated if it sets forth a confidential and unique identification number or other mark furnished by the Corporation to the shareholders for the purpose of a particular meeting or transaction. A proxy, unless coupled with an interest, shall be revocable at will, notwithstanding any other agreement or any provision in the proxy to the contrary, but the revocation of a proxy shall not be effective until the notice thereof has been given to the Secretary of the Corporation. No unrevoked proxy shall be valid after eleven months from the date of execution, unless a longer time is expressly provided therein; but in no event shall a proxy, unless coupled with an interest, be voted on after three years from the date of its execution. Except as otherwise specifically provided by law, all matters coming before the meeting shall be determined by a vote of shares. Such vote shall be taken by voice unless a shareholder demands before the election begins that it be taken by ballot, and the Judge or Judges of Election or, if none, the Secretary of the Meeting, shall tabulate and certify the results of such vote. Section 2-7. Participation in Meetings by Conference Telephone. Any shareholder who is otherwise entitled to participate in any meeting of the shareholders may attend, be counted for the purposes of determining a quorum and exercise all rights and privileges to which he may be entitled were he personally in attendance, including the right to vote, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. ARTICLE III - BOARD OF DIRECTORS Section 3-1. Number and Term. The Board of Directors shall consist of such number of directors not less than six nor more than 15 as shall be determined from time to time by the Board of Directors. Except as otherwise provided by law, the Articles of the Corporation or these Bylaws, Directors shall be elected at the annual meeting of shareholders to serve until the end of the term to which they are elected and until their successors are elected and qualify. The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of Directors constituting the whole Board permits, it not being required that each class have the same number of members if such is mathematically impossible, with the term of office of one class expiring each year. At the annual meeting of shareholders in 1987, Directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, Directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and Directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. Thereafter, at each annual meeting of shareholders the successors to the class of Directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting after such election. In the event of any increase in the number of Directors of the Corporation, the additional Director or Directors shall be so classified that all classes of Directors shall be as nearly equal as may be possible. In the event of any decrease in the number of Directors of the Corporation, all classes of Directors shall be decreased as nearly equally as may be possible. A person who is age seventy (70) or more shall not be elected or appointed to the Board of Directors, except that a Director elected at the annual shareholder's meeting of October 20, 1981, may be elected or appointed until age seventy-two (72). Section 3-2. Place of Meeting. Meetings of the Board of Directors may be held at such place within the Commonwealth of Pennsylvania or elsewhere as a majority of the Directors may from time to time appoint or as may be designated in the notice. Section 3-3. Regular Meetings. A regular meeting of the Board of Directors shall be held annually, immediately following the annual meeting of shareholders at the place where such meeting of the shareholders is held or at such other place, date and hour as a majority of the newly elected Directors may designate. At such meeting the Board of Directors shall elect officers of the Corporation. In addition to such regular meeting, the Board of Directors shall have the power to fix by resolution the place, date and hour of other regular meetings of the Board. Section 3-4. Special Meetings. Special meetings of the Board of Directors shall be held whenever ordered by the President, by a majority of the Executive Committee, if any, or by a majority of the Directors in office. Section 3-5. Participation in Meetings by Conference Telephone. Any director may participate in any meeting of the Board of Directors or of any committee (provided he is otherwise entitled to participate), be counted for the purpose of determining a quorum thereof and exercise all rights and privileges to which he might be entitled were he personally in attendance, including the right to vote, by means of conference telephone or other similar communications equipment by means of which all persons on the meeting can hear each other. Section 3-6. Notices of Meeting of Board of Directors. (a) Regular Meetings. No notice shall be required to be given of any regular meeting, unless the same is held at other than the time or place for holding such meetings as fixed in accordance with Section 3-3 of these Bylaws, in which event one day's notice shall be given of the time and place of such meeting. (b) Special Meetings. Written notice stating the date, place and hour of any special meeting of the Board of Directors shall be given at least one day prior to the date named for the meeting. (c) Waiver of Notice. Attendance at any meeting of the Board of Directors or committee thereof constitutes a waiver of notice of such meeting. Waiver of notice of any such meeting may be made in writing at any time before or after such meeting. Section 3-7. Quorum. A majority of the Directors in Office shall be necessary to constitute a quorum for the transaction of business. A majority of the members of any committee of the Board of Directors shall constitute a quorum of such committee. The acts of a majority of the Directors present at a meeting of the Board of Directors (or committee thereof) at which a quorum is present shall be considered as the acts of the Board of Directors (or of such committee). If there is no quorum present at a duly convened meeting of the Board of Directors (or committee thereof) , the majority of those present may adjourn the meeting from time to time and place to place. Section 3-8. Informal Action by the Board of Directors. Any action which may be taken at a meeting of the Directors, or of the members of any committee of the Board of Directors, may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by all of the Directors, or members of the committee, as the case may be, and shall be filed with the Secretary of the Corporation. Insertion in the minute book of the Corporation shall be deemed filing with the Secretary regardless of whether the Secretary or some other authorized person has actual possession of the minute book. Written consents by all of the Directors or the members of any committee of the Board of Directors executed pursuant to this Section 3-8 may be executed in any number of counter parts and shall be deemed effective as of the date set forth therein. Section 3-9. Powers. (a) General Powers. The Board of Directors shall have all the power and authority granted by law to the Board, including all powers necessary or appropriate to the management of the business and affairs of the Corporation. (b) Specific Powers. Without limiting the general powers conferred by the last preceding clause and the powers conferred by the Articles and these Bylaws of the Corporation, it is hereby expressly declared that the Board of directors shall have the following powers: (1) To confer upon any officer or officers of the Corporation the power to choose, remove or suspend assistant officers, agents or servants. (2) To appoint any person, firm or corporation to accept and hold in trust for the Corporation any property belonging to the Corporation or in which it is interested, and to authorize any such person, firm or corporation execute any documents and perform any duties that may be requisite in relation to any such trust. (3) To appoint a person or persons to vote shares of another corporation held and owned by the Corporation. (4) By resolution adopted by a majority of the whole Board of Directors, to designate one or more committees, each committee to consist of two or more of the Directors of the Corporation. To the extent provided in any such resolution and to the extent permitted by law, a committee so designated shall have the right to exercise the authority of the Board of Directors in the management of the business and affairs of the Corporation. The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. If specifically granted this power by the Board in its resolution establishing the committee, in the absence or disqualification of any member and all designated alternates of such committee or committees or if the whole Board of Directors has failed to designate alternate members, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another Director to act at the meeting in the place of any such absent or disqualified member. (5) To fix the place, time and purpose of meetings of shareholders. (6) To fix the compensation of Directors and officers for their services. Section 3-10. Removal of Directors by Shareholders. The entire Board of Directors or a class of the Board of Directors, where the Board of Directors is classified with respect to the power to elect Directors, or any individual Director may be removed from office, for cause by the vote of shareholders entitled to cast at least two-thirds of the votes which all shareholders would be entitled to cast at any annual election of Directors or such class of Directors. In case the Board of Directors or such class of the Board of Directors or any one or more Directors is so removed, new Directors may be elected at the same time. If the shareholders are entitled to vote cumulatively for the Board of Directors or a class of the Board of Directors, no individual Director shall be removed unless the entire Board of Directors or class of the Board of Directors is removed in case the votes of a sufficient number of shares are cast against the resolution for his removal which, if cumulatively voted at an annual election of Directors would be sufficient to elect one or more Directors to the Board of Directors or to the class. Directors may not be removed from office without cause. Section 3-11. Vacancies. Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of Directors, may be filled by a majority of the remaining members of the Board of Directors though less than a quorum, and each person so elected shall be a Director until his successor is duly elected by the shareholders, who may make such election at the next annual meeting of the shareholders or at any special meeting duly called for that purpose and held prior thereto, or until his earlier resignation or removal. Section 3-12. Liability of Directors. A Director of the Corporation shall not be personally liable for monetary damages for any action taken, or any failure to take any action, on or after January 27, 1987 unless he has breached or failed to perform the duties of his office as provided for under Section 8363 of the Pennsylvania Directors' Liability Act and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. Any repeal, amendment, or modification of this Section shall be prospective only and shall not increase, but may decrease, the liability of a Director with respect to actions or failures to act occurring prior to such change. Section 3-13. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations of persons for election to the Board of Directors at the Annual Meeting may be made at a meeting of shareholders, by or at the direction of the Board of Directors, by the Nominating Committee of the Board of Directors, or by any shareholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures provided herein. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation, addressed to the attention of the Secretary of the Corporation, not less than 50 days nor more than 75 days prior to the meeting; provided, however, that in the event that less than 65 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such shareholder's notice to the Secretary shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the Corporation that are beneficially owned by the person, and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; and (b) as to the shareholder giving the notice, (i) the name and record address of the shareholder and (ii) the class, series and number of shares of capital stock of the Corporation that are beneficially owned by the shareholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably by required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if the chairman should so determine, the chairman shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE IV - OFFICERS Section 4-1. Election and office. The Corporation shall have a President, a Secretary and a Treasurer who shall be elected by the Board of Directors. The Board of Directors may elect as additional officers a Chairman of the Board of Directors, one or more Vice Presidents, and one or more other officers or assistant officers. Any number of offices may be held by the same person. Section 4-2. Term. The officers and assistant officers shall each serve at the pleasure of the Board of Directors and until the annual meeting of the Board of Directors following the next annual meeting of shareholders unless removed from office by the Board of Directors during their respective tenures. Section 4-3. Powers and Duties of the President. Unless otherwise determined by the Board of Directors, the President shall have the usual duties of an executive officer with general supervision over and direction of the affairs of the Corporation. In the exercise of these duties and subject to the limitations of the laws of the Commonwealth of Pennsylvania, these Bylaws, and the actions of the Board of Directors, he may appoint, suspend, and discharge employees, agents and assistant officers, fix the compensation of all officers and assistant officers shall preside at all meetings of the shareholders at which he shall be present, and, unless there is a Chairman of the Board of Directors, shall preside at all meetings of the Board of Directors. He shall also do and perform such other duties as from time to time may be assigned to him by the Board of Directors. Unless otherwise determined by the Board of Directors, the President shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the shareholders of any corporation in which the Corporation may hold stock, and, at any such meeting, shall possess and may exercise any and all the rights and powers incident to the ownership of such stock and which, as the owner thereof, the Corporation might have possessed and exercised. Section 4-4. Powers and Duties of the Secretary. Unless otherwise determined by the Board of Directors, the Secretary shall be responsible for the keeping of the minutes of all meetings of the Board of Directors, shareholders and all committees, in books provided for that purpose, and for the giving and serving of all notices for the Corporation. He shall have charge of the corporate seal, the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct. He shall perform all other duties ordinarily incident to the office of Secretary and shall have such other powers and perform such other duties as may be assigned to him by the Board of Directors. Section 4-5. Powers and Duties of the Treasurer. Unless otherwise determined by the Board of Directors, the Treasurer shall have charge of all the funds and securities of the Corporation which may come into his hands. When necessary or proper, unless otherwise determined by the Board of Directors, he shall endorse for collection on behalf of the Corporation checks, notes, and other obligations, and shall deposit the same to the credit of the Corporation in such banks or depositories as the Board of Directors may designate and shall sign all receipts and vouchers for payments made to the Corporation. He shall sign all checks made by the Corporation, except when the Board of Directors shall otherwise direct. He shall be responsible for the regular entry in books of the Corporation to be kept for such purpose, full and accurate account of all funds and securities received and paid by him on account of the Corporation. Whenever required by the Board of Directors, he shall render a statement of the financial condition of the Corporation. He shall have such other powers and shall perform such other duties as may be assigned to him from time to time by the Board of Directors. He shall give such bond, if any, for the faithful performance of his duties as shall be required by the Board of Directors and any such bond shall remain in the custody of the President. Section 4-6. Powers and Duties of the Chairman of the Board of Directors. Unless otherwise determined by the Board of Directors, the Chairman of the Board of Directors, if any, shall preside at all meetings of Directors. He shall have such other powers and perform such further duties as may be assigned to him by the Board of Directors. Section 4-7. Powers and Duties of Vice President and Assistant Officers. Unless otherwise determined by the Board of Directors, each Vice President and each assistant officer shall have the powers and perform the duties of his respective superior officer. Vice Presidents and assistant officers shall have such rank as may be designated by the Board of Directors. Vice Presidents may be designated as having responsibility for a specific area of the Corporation's affairs, in which event such Vice President shall be superior to the other Vice Presidents in relation to matters within his area. The President shall be the superior officer of the Vice Presidents. The Treasurer and Secretary shall be the superior officers of the Assistant Treasurers and Assistant Secretaries, respectively. Section 4-8. Delegation of Office. The Board of Directors may delegate the powers or duties of any officer of the Corporation to any other person from time to time. Section 4-9. Vacancies. The Board of Directors shall have the power to fill any vacancies in any office occurring from whatever reason. ARTICLE V - CAPITAL STOCK Section 5-1. Share Certificates. Every share certificate shall be signed by the Chairman of the Board or the President or Vice President and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary and sealed with the corporate seal, which may be a facsimile, engraved or printed, but where such certificate is signed by a transfer agent or a registrar, the signature of any corporate officer upon such certificate may be a facsimile, engraved or printed. Section 5-2. Transfer of Shares. Transfer of shares shall be made on the books of the Corporation only upon surrender of the share certificate, duly endorsed or with duly executed stock powers attached and otherwise in proper form for transfer, which certificate shall be cancelled at the time of the transfer. Section 5-3. Determination of Shareholders of Record and Closing Transfer Books. The Board of Directors may fix a time, not more than fifty days prior to the date of any meeting of shareholders, or the date fixed for the payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change or conversion or exchange of shares will be made or go into effect, as a record date for the determination of the shareholders entitled to notice of or to vote at any such meeting, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares or otherwise. In such case, only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to notice of or to vote at such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after any record date fixed as aforesaid. The Board of Directors may close the books of the Corporation against transfers of shares during the whole or any part of such period, and in such case written or printed notice thereof shall be mailed at least ten days before the closing thereof to each shareholder of record at the address appearing on the records of the Corporation or supplied by him to the Corporation for the purpose of notice. While the stock transfer books of the Corporation are closed, no transfer of shares shall be made thereon. Unless a record date is fixed by the Board of Directors for the determination of shareholders entitled to receive notice of, or vote at, a shareholders' meeting, transferees of shares which are transferred on the books of the Corporation within ten days next preceding the date of such meeting shall not be entitled to notice of or to vote at such meeting. The Corporation may treat the registered owner of each share of stock as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of the owner thereof. Section 5-4. Lost Share Certificates. Unless waived in whole or in part by the Board of Directors, any person requesting the issuance of a new certificate in lieu of an alleged lost, destroyed, mislaid or wrongfully taken certificate, shall (1) give to the Corporation his bond of indemnity with an acceptable surety; and (2) satisfy such other reasonable requirements as may be imposed by the Corporation. Thereupon a new share certificate shall be issued to the registered owner or his assigns in lieu of the alleged lost, destroyed, mislaid or wrongfully taken certificate, provided that the request therefor and issuance thereof have been made before the Corporation has notice that such shares have been acquired by a bona fide purchaser. ARTICLE VI - NOTICES; COMPUTING TIME PERIODS Section 6-1. Contents of Notice. Whenever any notice of a meeting is required to be given pursuant to these Bylaws or the Articles of Incorporation or otherwise, the notice shall specify the place, day and hour of the meeting and, in the case of a special meeting of shareholders or where otherwise required by law, the general nature of the business to be transacted at such meeting. Section 6-2. Method of Notice. All notices shall be given to each person entitled thereto, either personally or by sending a copy thereof through the mail or by telegraph, charges prepaid, to his address appearing on the books of the Corporation, or supplied by him to the Corporation for the purpose Of notice. if notice is sent by mail or telegraph, it shall be deemed to have been given to the person entitled thereto when deposited in the United States Mail or with the telegraph office for transmission. Section 6-3. Computing Time Periods. In computing the number of days for purposes of these Bylaws, all days shall be counted, including Saturdays, Sundays or holidays; provided, however, that if the final day of any time period falls on Saturday, Sunday or holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or holiday. In computing the number of days for the purpose of giving notice of any meeting, the date upon which the notice is given shall be counted but the day set for the meeting shall not be counted. Notice given twenty-four hours before the time set for a meeting shall be deemed one day's notice. ARTICLE VII - INDEMNIFICATION OF DIRECTORS AND OFFICERS AND OTHER PERSONS Section 7-1. Indemnification. The Corporation shall indemnify any Director or officer of the Corporation against expenses (including legal fees), judgments, fines and amounts paid in settlement, actually and reasonably incurred by him, to the fullest extent now or hereafter permitted by law in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, brought or threatened to be brought against him, including actions or suits by or-in the right of the Corporation, by reason of the fact that he is or was a Director or officer of the Corporation, its parent or any of its subsidiaries, or acted as a Director or officer or in any other capacity on behalf of the Corporation, its parent or any of its subsidiaries 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. The Board of Directors by resolution may similarly indemnify any person other than a Director or officer of the Corporation to the fullest extent now or hereafter permitted by law for liabilities incurred by him in connection with services rendered by him for or at the request of the Corporation, its parent or any of its subsidiaries. The provisions of this section shall be applicable to all actions, suits or proceedings commenced after its adoption, whether such arise out of acts or omissions which occurred prior or subsequent to such adoption and shall continue as to a person who has ceased to be a Director or officer or to render services for or at the request of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such a person. The rights of indemnification provided for herein shall not be deemed the exclusive rights to which any Director, officer, employee or agent of the Corporation may be entitled. Section 7-2. Advances. The Corporation may pay the expenses incurred by any person entitled to be indemnified by the Corporation in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking, by or on behalf of such person, to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by the Corporation as authorized by law. Section 7-3. 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 who is or was serving in any capacity in any other corporation or organization at the request of the Corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under law. ARTICLE VIII - FISCAL YEAR Section 8-1. The Board of Directors shall have the power by resolution to fix the fiscal year of the Corporation. If the Board of Directors shall fail to do so, the President shall fix the fiscal year. ARTICLE IX - AMENDMENTS Section 9-1. These Bylaws may be altered, amended or repealed by (a) the vote of shareholders entitled to cast at least a majority of the votes which all shareholders are entitled to cast thereon, at any regular or special meeting, duly convened after notice to the shareholders of such purpose, or (b) the Board of Directors, by a majority vote of those voting at any regular or special meeting duly convened after notice of such purpose, subject always to the power of the shareholders to further alter, amend or repeal these Bylaws. Notwithstanding the preceding sentence, the vote of the holders of at least 66 2/3% of the votes which all shareholders are entitled to cast thereon, at any regular or special meeting, duly convened after notice to shareholders for such purpose, shall be required to amend or repeal, or adopt any provision inconsistent with Sections 3-1, 3-10 and 3-12 of these Bylaws, or this sentence. ARTICLE X - INTERPRETATION OF BYLAWS Section 10-1. All words, terms and provisions of these Bylaws shall be interpreted and defined by and in accordance with the Pennsylvania Business Corporation Law, as amended, and as amended from time to time hereafter. EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-29-2001 SEP-29-2000 94,669 48,034 56,880 1,700 29,385 236,457 73,798 47,269 275,680 43,873 0 0 0 1,763 226,397 275,680 78,335 78,335 57,063 13,287 (1,776) 0 13 9,748 3,934 5,814 1 0 0 5,815 0.17 0.16
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