-----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, UIuogC76em6z0cQaES6svsBHnmzHQHvXaQElKSEaAaDZlIAYj1nKq+isZ4Hj+6pH 7lUJHA0N3eHcAt4cATJRiA== 0001047469-98-027374.txt : 19980716 0001047469-98-027374.hdr.sgml : 19980716 ACCESSION NUMBER: 0001047469-98-027374 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980531 FILED AS OF DATE: 19980715 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA 100 INC CENTRAL INDEX KEY: 0000713138 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 042532613 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14779 FILM NUMBER: 98666517 BUSINESS ADDRESS: STREET 1: 100 LOCKE DRIVE CITY: MARLBOROUGH STATE: MA ZIP: 01752-1192 BUSINESS PHONE: 5084813700 MAIL ADDRESS: STREET 2: 100 LOCKE DRIVE CITY: MARLBORO STATE: MA ZIP: 01752-1192 FORMER COMPANY: FORMER CONFORMED NAME: DATA TRANSLATION INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended: May 31, 1998 ------------ [ ] 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: 0-14779 ------- MEDIA 100 INC. ------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 04-2532613 - ---------------------------------- --------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification Number) of organization or incorporation) 290 DONALD LYNCH BOULEVARD MARLBOROUGH, MASSACHUSETTS --------------------------------------------------------------------- (Address of principal executive offices) 01752-4748 --------------------------------------------------------------------- (Zip code) (508) 460-1600 --------------------------------------------------------------------- (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 ---- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $.01 per share 8,274,115 shares - -------------------------------------- --------------------------------- Class Outstanding at June 30, 1998 MEDIA 100 INC. AND SUBSIDIARIES INDEX ------- PAGE PART I - FINANCIAL INFORMATION NUMBER ------ ITEM 1 Consolidated Financial Statements: Consolidated Balance Sheets as of May 31, 1998 and November 30, 1997 3 Consolidated Statements of Operations for the three and six months ended May 31, 1998 and May 31, 1997 4 Consolidated Statements of Cash Flows for the six months ended May 31, 1998 and May 31, 1997 5 Notes to Consolidated Financial Statements 6 - 8 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 11 PART II - OTHER INFORMATION ITEM 1 Legal Proceedings 12 ITEM 4 Submission of Matters to a Vote of Security Holders 12 ITEM 6 Exhibits and Reports on Form 8-K 12 SIGNATURES 13 EXHIBIT INDEX 14 2 PART I - FINANCIAL INFORMATION MEDIA 100 INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
May 31, November 30, 1998 1997 (in thousands) -------------- --------------- ASSETS (unaudited) Current assets: Cash and cash equivalents $ 2,984 $ 4,042 Marketable securities 30,918 28,892 Accounts receivable, net of reserves of $397 in 1998 and $411 in 1997 5,847 7,689 Inventories 661 696 Prepaid expenses 655 743 -------------- ---------------- Total current assets 41,065 42,062 Property and equipment, net 8,694 8,104 Other assets, net 593 593 -------------- ---------------- Total assets $ 50,352 $ 50,759 -------------- ---------------- -------------- ---------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,659 $ 1,953 Accrued expenses 9,334 6,958 Deferred revenue 5,265 4,005 -------------- ---------------- Total current liabilities 16,258 12,916 Commitments and contingencies (Note 6) - - Stockholders' equity: Preferred stock - - Common stock 83 82 Capital in excess of par value 40,744 40,477 Retained deficit (6,649) (2,547) Cumulative translation adjustment (128) (87) Unrealized holding gain (loss) on available for sale securities, net 44 (82) -------------- ---------------- Total stockholders' equity 34,094 37,843 -------------- ---------------- Total liabilities and stockholders' equity $ 50,352 $ 50,759 -------------- ---------------- -------------- ----------------
The accompanying notes are an integral part of these consolidated financial statements. 3 MEDIA 100 INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended May 31, Six Months Ended May 31, (in thousands, except per share data) 1998 1997 1998 1997 ---------- -------------- -------------- -------------- Net sales $ 9,637 $ 12,102 $ 20,158 $ 23,626 Cost of sales 3,759 4,730 7,852 9,091 ---------- --------------- --------------- -------------- Gross profit 5,878 7,372 12,306 14,535 ---------- --------------- --------------- -------------- Operating expenses: Research and development 4,774 2,161 7,765 4,156 Selling and marketing 3,740 4,134 7,402 8,363 General and administrative 968 1,014 1,966 1,947 ---------- --------------- --------------- -------------- Total operating expenses 9,482 7,309 17,133 14,466 ---------- -------------- --------------- -------------- Income (loss) from (3,604) 63 (4,827) 69 operations Interest income 416 432 841 894 Other expense, net (162) (76) (104) (324) ---------- --------------- --------------- -------------- Income (loss) before tax provision (3,350) 419 (4,090) 639 Tax provision 0 83 12 138 ---------- --------------- --------------- -------------- Net income (loss) $ (3,350) $ 336 $ (4,102) $ 501 ---------- --------------- --------------- -------------- ---------- --------------- --------------- -------------- Earnings (loss) per share: Basic $ (.41) $ $ (.50) $ 0.06 0.04 ---------- --------------- --------------- -------------- ---------- --------------- --------------- -------------- Diluted $ (.41) $ 0.04 $ (.50) $ 0.06 ---------- --------------- --------------- -------------- ---------- --------------- --------------- -------------- Weighted average common shares outstanding Basic 8,258 8,127 8,245 8,119 ---------- --------------- --------------- -------------- ---------- --------------- --------------- -------------- Diluted 8,258 8,209 8,245 8,246 ---------- --------------- --------------- -------------- ---------- --------------- --------------- --------------
The accompanying notes are an integral part of these consolidated financial statements. 4 MEDIA 100 INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended May 31, (in thousands) 1998 1997 --------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (4,102) $ 501 Adjustments to reconcile net income to net cash provided by (used in) operating activities Depreciation and amortization 1,333 681 (Gain) loss on sale of marketable securities (11) 2 Changes in assets and liabilities Accounts receivable 1,842 3,417 Inventories 35 735 Prepaid expenses 88 (6) Accounts payable (294) (1,305) Accrued expenses 2,376 (80) Deferred revenue 1,260 1,026 --------------- ---------------- Net cash provided by operating activities $ 2,527 $ 4,971 --------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of equipment (1,923) (4,774) Increase in other assets - 24 Purchases of marketable securities (60,319) (20,583) Proceeds from sales of marketable securities 58,430 20,043 --------------- ---------------- Net cash used in investing activities $ (3,812) $ (5,290) --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock plans 268 233 --------------- ---------------- Net cash provided by financing activities $ 268 $ 233 --------------- --------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (41) (45) --------------- ---------------- NET DECREASE IN CASH AND CASH EQUIVALENTS $ (1,058) $ (131) CASH AND CASH EQUIVALENTS, beginning of period 4,042 2,733 --------------- ---------------- CASH AND CASH EQUIVALENTS, end of period $ 2,984 $ 2,602 --------------- ---------------- --------------- ---------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for income taxes $ 62 $ 90 --------------- ---------------- --------------- ---------------- OTHER TRANSACTIONS NOT PROVIDING (USING) CASH: Acquisition of equipment under capital lease obligations $ - $ (221) --------------- ---------------- --------------- ---------------- Increase in value of marketable securities $ 126 $ 172 --------------- ---------------- --------------- ----------------
The accompanying notes are an integral part of these consolidated financial statements. 5 MEDIA 100 INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED, EXCEPT FOR NOVEMBER 30, 1997 AMOUNTS) 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of Media 100 Inc. ("the Company") and its wholly-owned subsidiaries. The interim financial statements are unaudited. However, in the opinion of management, the consolidated financial statements and disclosures reflect all adjustments necessary for fair presentation. Interim results are not necessarily indicative of results expected for a full year or for any other interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest audited financial statements, which are incorporated by reference in the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 1997, filed with the Securities and Exchange Commission. The Company's preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Cash Equivalents and Marketable Securities Cash equivalents are carried at cost, which approximates market value, and have original maturities of less than three months. Cash equivalents include money market accounts. The Company accounts for marketable securities in accordance with Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. Under this standard, the Company is required to classify all investments in debt and equity securities into one or more of the following three categories: held-to-maturity, available-for-sale or trading. Available-for-sale securities are recorded at fair market value with unrealized gains and losses excluded from earnings and reported to stockholders' equity. All of the Company's marketable securities are classified as available-for-sale. Marketable securities held as of May 31, 1998, consist of the following (in thousands):
Investments available for sale: Maturity Market Value -------- ------------ U.S. Treasury Notes less than 1 year $ 1,013 U.S. Treasury Notes 1 - 5 years 6,624 ---------------- Total U.S. Treasury Notes 7,637 Municipal Bonds less than 1 year 3,337 Municipal Bonds 1 - 3 years 1,563 ---------------- Total Municipal Bonds 4,900 U.S. Agency Bonds less than 1 year 2,031 U.S. Agency Bonds more than 1 year 4,556 ---------------- Total U.S. Agency Bonds 6,587 Money Market Instruments none 6,543
6 2. Cash Equivalents and Marketable Securities (continued)
Investments available for sale: Maturity Market Value ---------------- --------------------- Corporate Obligations less than 1 year 1,388 Corporate Obligations 1 - 3 years 3,863 ------------------ Total Corporate Obligations 5,251 ------------------ Total investments available for sale $ 30,918 ------------------ ------------------
Marketable securities had a cost of $30,874 and $28,974 at May 31, 1998 and November 30, 1997, respectively, and a market value of $30,918 and $28,892, respectively. To adjust the carrying amount of the May 31, 1998 and November 30, 1997 marketable securities portfolio to market value, a valuation allowance has been reflected as a separate component of stockholders' equity pursuant to the provisions of SFAS No. 115. 3. Inventories Inventories are stated at the lower of first-in, first-out (FIFO) cost or market and consist of the following (in thousands):
May 31, November 30, 1998 1997 -------------- ---------------- Raw materials $ 364 $ 305 Work-in-process 195 252 Finished goods 102 139 -------------- ---------------- $ 661 $ 696 -------------- ---------------- -------------- ----------------
Work-in-process and finished goods inventories include material, labor and manufacturing overhead. Management performs periodic reviews of inventory and disposes of items not required by their manufacturing plan. 4. Property and equipment, net Property and equipment, net is stated at cost, less accumulated depreciation and amortization, and consists of the following (in thousands):
May 31, November 30, 1998 1997 ---------------- ----------------- Machinery and equipment $ 10,994 $ 10,428 Furniture and fixtures 1,307 1,288 Vehicles 11 12 --------------- ----------------- $ 12,312 $ 11,728 Less accumulated depreciation and amortization 3,618 3,624 --------------- ----------------- $ 8,694 $ 8,104 --------------- ----------------- --------------- -----------------
5. Net Income (Loss) Per Common Share In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE (SFAS No. 128). The new standard simplifies the computation of earnings per share and increases comparability to international standards. Under SFAS No. 128, primary earnings per share is replaced by "Basic" earnings per share, which excludes potentially dilutive equity instruments and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. "Diluted" earnings per share, which is computed similarly to fully diluted earnings per share, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. 7 6. Contingencies (i) On June 7, 1995, a lawsuit was filed against the Company by Avid Technology, Inc. ("Avid"), in the United States District Court for the District of Massachusetts. The complaint generally alleges patent infringement by the Company arising from the manufacture, sale, and use of the Company's Media 100 products. The complaint includes requests for injunctive relief, treble damages, interest, costs and fees. In July, 1995 the Company filed an Answer and Counterclaim denying any infringement and asserting that the Avid patent in question is invalid. The Company intends to vigorously defend the lawsuit. In addition, Avid is seeking reissue of the patent, including claims that it asserts are broader than in the existing patent, and these reissue proceedings remain pending before the U.S. Patent and Trademark Office. On January 16, 1998, the court dismissed the lawsuit without prejudice to either party moving to restore it to the docket upon completion of all matters pending before the U.S. Patent and Trademark Office. There can be no assurance that the Company will prevail in the lawsuit asserted by Avid or that the expense or other effects of the lawsuit, whether or not the Company prevails, will not have a material adverse effect on the Company's business, operating results and financial condition. (ii) From time to time the Company is involved in other disputes and/or litigation encountered in its normal course of business. The Company does not believe that the ultimate impact of the resolution of such other outstanding matters will have a material effect on the Company's business, operating results or financial condition. 7. Capitalized Software Development Costs The Company capitalizes certain computer software development costs. Capitalization of costs commences upon establishing technological feasibility. Capitalized costs, net of accumulated amortization, were approximately $89,000 as of May 31, 1998 and November 30, 1997, and are included in other assets. These costs are amortized on a straight-line basis over two years, which approximates the economic life of the product. Amortization expense, included in cost of sales in the accompanying consolidated statements of operations, was approximately $30,000 and $80,000 for the six months ended May 31, 1998 and twelve months ended November 30, 1997, respectively. 8. Income Taxes Due to the net loss for the three and six months ended May 31, 1998 and the Company's current expectation that it will not be profitable for the full year ended November 30, 1998, the Company anticipates its tax liabilities for fiscal 1998 will not be significant. 9. Accrued Expenses Accrued expenses at May 31, 1998 and November 30, 1997 consist of the following (in thousands):
May 31, November 30, 1998 1997 ------- ------------ Accrued commissions $ 203 $ 213 Payroll and related taxes 2,136 1,552 Accrued marketing, legal and other expense 6,491 4,689 Accrued taxes 504 504 ------- ------------ $ 9,334 $ 6,958 ------- ------------ ------- ------------
8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements based on current expectations, and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those expressed in such forward-looking statements. The risks and uncertainties associated with such statements have been described under the heading "Certain Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 1997. Media 100 Inc. is a technology and market leader in the market for personal computer-based digital video systems. The Media 100 family of products are analog and digital conversion systems that enable users to capture video and audio into a personal computer, perform random-access ("nonlinear") video editing and audio mixing, and directly produce a finished program with broadcast-quality picture and compact disc-quality sound, all without the use of traditional video tape equipment. Results of Operations The following table shows certain consolidated statements of operations data as a percentage of net sales.
Three Months Ended May 31, Six Months Ended May 31, 1998 1997 1998 1997 -------------- ----------- ----------- ------------ Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales 39.0 39.1 38.9 38.5 -------------- ----------- ----------- ------------ Gross profit 61.0 60.9 61.1 61.5 Operating expenses: Research and development 49.5 17.9 38.5 17.6 Selling and marketing 38.8 34.1 36.7 35.4 General and administrative 10.1 8.4 9.8 8.2 -------------- ----------- ----------- ------------ Total operating expenses 98.4 60.4 85.0 61.2 Income (loss) from operations (37.4) .5 (23.9) .3 Interest income and other, net 2.6 3.0 3.6 2.4 -------------- ----------- ----------- ------------ Income (loss) before tax provision (34.8) 3.5 (20.3) 2.7 Tax provision - .7 - .6 -------------- ----------- ----------- ------------ Net income (loss) (34.8) % 2.8 % (20.3) % 2.1 % -------------- ----------- ----------- ------------ -------------- ----------- ----------- ------------
Comparison of Second Fiscal Quarter of 1998 to Second Fiscal Quarter of 1997 Net sales for the fiscal quarter ended May 31, 1998 were $9,637,000, a decrease of $2,465,000, or 20.4%, from the same period a year ago. Net sales decreased for the quarter ended May 31, 1998 primarily due to a decrease in overall units sold and lower average selling prices for the Company's Media 100 products. The Company's product line includes hardware and software products priced from $1,995 to $19,995, hardware and software upgrades for these products and technical support services for all of the Company's products. The decline in net sales and lower average selling prices was partially offset by higher net sales of hardware and software upgrades and technical support services. Gross profit for the fiscal quarter ended May 31, 1998 was 61.0%, compared to 60.9% in the comparable quarter a year ago. Reductions in the cost of key component parts used in the manufacture of the Media 100 hardware offset the lower average selling prices allowing the Company's gross profit to remain consistent with the year ago level. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Comparison of Second Fiscal Quarter of 1998 to Second Fiscal Quarter of 1997 (continued) The Company sustained an operating loss for the second fiscal quarter of 1998 of $3,604,000 compared to income from operations of $63,000 for the same period a year ago. Operating income was lower in the quarter ended May 31, 1998 due to lower net sales and higher operating expenses. Operating expenses for the second fiscal quarter of 1998 were $9,482,000, an increase of $2,173,000, or 29.7%, from the same period a year ago. In the first quarter of fiscal 1998, the Company announced its intentions to significantly increase research and development expenditures in fiscal 1998 over fiscal 1997 to support the development of products running on the Windows NT platform. Research and development expenses for the second quarter of fiscal 1998 were $4,774,000, an increase of $ 2,613,000, or 120.9%, from the same period a year ago. Selling and marketing expenses for the second fiscal quarter of 1998 were $3,740,000, a decrease of $394,000, or 9.5%, from the same period a year ago. The Company expects that selling and marketing expenses will increase from their current levels in connection with introduction of new products based on the Windows NT platform; the Company expects to begin such shipments in the latter half of fiscal 1998. General and administrative expenses for the second fiscal quarter of 1998 were $968,000, a decrease of $46,000, or 4.5%, from the same period a year ago. Interest income for the fiscal quarter ended May 31, 1998 was $416,000, or 4.3% of net sales, compared to $432,000, or 3.6% of net sales, in the comparable quarter a year ago. Other expense, net of other income, for the second fiscal quarter of 1998 was $162,000 an increase of $86,000 over the same period a year ago, reflecting the impact of foreign currency translations arising out of the Company's subsidiaries. The Company currently estimates its tax liabilities for the full year of 1998 will not be material due to an anticipated loss for fiscal 1998 and therefore the Company has not provided for income taxes. This compares to a tax provision of $83,000 for the fiscal quarter ended May 31, 1997. The net loss for the second fiscal quarter ended May 31, 1998 was $ 3,350,000 or $0.41 per share, compared to net income of $336,000, or $0.04 per share, for the same period a year ago. Comparison of First Six Months of 1998 to the First Six Months of 1997 Net sales for the first six months of 1998 were $20,158,000, a decrease of $3,468,000, or 14.7%, from the same period a year ago. The decrease in net sales for the six months ended May 31, 1998 is primarily attributable to lower unit sales and lower average selling prices for the Company's Media 100 products. The Company's product line includes hardware and software products priced from $1,995 to $19,995, hardware and software upgrades for these products and technical support services for all of the Company's products. The decline in net sales and lower average selling prices was partially offset by higher net sales of hardware and software upgrades and technical support services. Gross margin for the first six months of 1998 was 61.1%, compared to 61.5% in the comparable period a year ago. This decrease in gross profit was primarily the result of lower average selling prices partially offset by reductions in the cost of key component parts used in the manufacture of the Media 100 hardware. The Company sustained an operating loss for the first six months of 1998 of $4,827,000 compared to income from operations of $69,000 for the same period a year ago. Operating income was lower for the six month period ended May 31, 1998 due to a decrease in sales and an expected increase in operating expenses. Operating expenses for the first six months of 1998 were $17,133,000, an increase of $2,667,000, or 18.4%, from the same period a year ago. In the first quarter of fiscal 1998, the Company announced its intentions to significantly increase research and development expenditures in fiscal 1998 over fiscal 1997 to support the development of products running on the Windows NT platform. Research and development expenses for the first six months of fiscal 1998 were $7,765000, an increase of $ 3,609,000, or 86.8%, from the same period a year ago. Selling and marketing expenses for the first six months of fiscal 1998 were $7,402,000, a decrease of $961,000, or 11.5%, from the same period a year 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Comparison of First Six Months of 1998 to the First Six Months of 1997 (continued) ago. The decrease in selling and marketing expenses reflects primarily reductions in headcount and advertising expenses related to the Company's existing products. However, the Company expects that selling and marketing expenses will increase from their current levels in connection with introduction of new products based on the Windows NT platform; the Company expects to begin such shipments in the latter half of fiscal 1998. General and administrative expenses for the first six months of fiscal 1998 were $1,966,000, an increase of $19,000, or .1%, from the same period a year ago. Interest income for the first six months of 1998 was $841,000, or 4.2% of net sales, compared to $894,000, or 3.8% of net sales, in the comparable period a year ago. Other expense, net of other income, for the six month period ended May 31, 1998 was $104,000, a decrease of $220,00 over the same period a year ago, reflecting the impact of foreign currency translations arising out of the Company's subsidiaries. The Company currently estimates its tax liabilities for the full year of 1998 will not be material due to an anticipated loss for fiscal 1998 and therefore a $12,000 tax provision has been established. This compares to a tax provision of $138,000 for the first six months of fiscal 1997. The net loss for the six month period ended May 31, 1998 was $4,102,000 or $0.50 per share, compared to net income of $501,000, or $0.06 per share, for the same period a year ago. Liquidity and Capital Resources The Company has funded its operations to date primarily from public offerings of equity securities and cash flows from operations. As of May 31, 1998 the Company's principal sources of liquidity included cash and cash equivalents and marketable securities totaling approximately $33,902,000. In the first six months of 1998, cash provided by operating activities was approximately $2,527,000 compared to approximately $4,971,000 for the same period a year ago. Cash was generated during the six months ended May 31, 1998 from an increase in accrued expenses of $2,376,000 and deferred revenue of $1,260,000 and a reduction in accounts receivable of $1,842,000. This increase in cash was partially offset by a reduction in accounts payable of $294,000. Net cash used in investing activities was approximately $3,812,000 during the first six months of 1998 compared to approximately $5,290,000 for the same period a year ago. Cash used in investing activities during the six month period ended May 31, 1998 was primarily for purchases of equipment of approximately $1,923,000 and net purchases of marketable securities of approximately $1,889,000. Cash provided by financing activities during the first six months of 1998 was approximately $268,000 compared to $233,000 for the same period a year ago. All of the cash provided by financing activities in the first six months of 1998 came from proceeds from the Company's stock plans. The Company believes its existing cash balance, including cash equivalents and marketable securities, will be sufficient to meet the Company's cash requirements for at least the next twelve months. 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings i) On June 7, 1995, a lawsuit was filed against the Company by Avid Technology, Inc. ("Avid"), in the United States District Court for the District of Massachusetts. The complaint generally alleges patent infringement by the Company arising from the manufacture, sale, and use of the Company's Media 100 product. The complaint includes requests for injunctive relief, treble damages, interest, costs and fees. In July, 1995 the Company filed an Answer and Counterclaim denying any infringement and asserting that the Avid patent in question is invalid. The Company intends to vigorously defend the lawsuit. In addition, Avid is seeking reissue of the patent, including claims that it asserts are broader than in the existing patent, and these reissue proceedings remain pending before the U.S. Patent and Trademark Office. On January 16, 1998, the court dismissed the lawsuit without prejudice to either party moving to restore it to the docket upon completion of all matters pending before the U.S. Patent and Trademark Office. There can be no assurance that the Company will prevail in the lawsuit asserted by Avid or that the expense or other effects of the lawsuit, whether or not the Company prevails, will not have a material adverse effect on the Company's business, operating results and financial condition. Item 4. Submission of Matters to a Vote of Security Holders The Company held an annual meeting of stockholders on April 15, 1998, at which the stockholders approved the following proposals by the number of shares of Common Stock voted as noted below: Proposal
(1) Election of Directors Number of Shares ---------------- Voted For Withheld --------- -------- John A. Molinari 7,107,324 201,846 Roger Redmond 7,119,824 189,346 Maurice L. Castonguay 7,119,274 189,896 Bruce I. Sachs 7,118,774 190,396 Paul J. Severino 7,118,290 190,880
(2)
Number of Shares Voted For Voted Against Abstained --------- ---------------- --------- Increase by 200,000 the number of shares of the Company's common stock, $.01 par value per share available for issuance under the 1986 Employee Stock Purchase Plan for a total of 800,000 shares available under such plan: 7,028,030 268,666 12,474
Item 6. Exhibits and Reports on Form 8-K a) Exhibits Exhibits required as part of this Quarterly Report on Form 10-Q are listed in the exhibit index on page 14. b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. 12 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. Media 100 Inc. Date: July 14, 1998 By: /s/ Steven D. Shea -------------------------- Steven D. Shea Corporate Controller (Principal Financial Officer and Principal Accounting Officer) 13 EXHIBIT INDEX
Number Description ------ ----------- 3.2 By-laws of Media 100, Inc., as amended 27 Financial Data Schedule
14 EX-3.2 2 EXHIBIT 3.2 BY-LAWS OF MEDIA 100 INC. (as amended through June 17, 1998) Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS 1.1. These by-laws are subject to the certificate of incorporation of the corporation. In these by-laws, references to law, the certificate of incorporation and by-laws mean the law, the provisions of the certificate of incorporation and the by-laws as from time to time in effect. Section 2. STOCKHOLDERS 2.1. Annual Meeting. The annual meeting of stockholders shall be held at 10:00 a.m. on the third Wednesday in April in each year (or if that day is a legal holiday at the place where the meeting is to be held, then at the same hour on the next succeeding day that is not a legal holiday), or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect a board of directors and transact such other business as may be required by law or these by-laws or as may properly come before the meeting. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting as (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder by the stockholder's giving timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be received at the principal executive offices of the corporation: (1) not less than 60 days in advance of such meeting if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous year's annual meeting or 90 days in advance of such meeting if such meeting is to be held on or after the anniversary of the previous year's annual meeting; and (2) with respect to any other annual meeting of stockholders, on or before the close of business on the 15th day following the earliest date of public disclosure of the date of such meeting. For purposes of this section, the date of public disclosure of a meeting shall include, but not be limited to, the date on which disclosure of the date of the meeting is made in a press release reported by the Dow Jones News Services, Associated Press or a comparable national news service, or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) (or the rules and regulations thereunder) of the Securities Exchange Act of 1934, as amended. 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 brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name, age and business and residential address, as they appear on the corporation's records, of the stockholder proposing such business, (c) the class and number of shares of the corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Notwithstanding anything in the by-laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth herein. The chairman of the annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions hereof and if the chairman should so determine, the chairman shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 2.2. Special Meetings. All meetings of the stockholders may be called at any time by the chief executive officer or the board of directors. A special meeting of the stockholders shall be called by the secretary, or, in the case of the death, absence, incapacity or refusal of the secretary, by an assistant secretary, or some other officer, upon application of a majority of the directors. Any such application shall state the purpose or purposes of the proposed meeting. Any such call shall state the place, date, hour, and purposes of the meeting. 2.3. Place of Meetings. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such place within or without the State of Delaware as may be determined from time to time by the chief executive officer or the board of directors. Any adjourned session of any meeting of the stockholders shall be held at the place designated in the vote of adjournment. 2.2. Notice of Meetings. Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, day and hour thereof and, in the case of a special meeting, the purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice, by leaving such notice with him or at his residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the secretary, or by an officer or person designated by the board of directors, or in the case of a special meeting by the officer calling the meeting. As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than thirty days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described. No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice, executed before or after the meeting or such adjourned session by such stockholder, is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the 2 beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in any written waiver of notice. 2.3. Quorum of Stockholders. At any meeting of the stockholders a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except where a larger quorum is required by law, by the certificate of incorporation or by these by-laws. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. 2.4. Action by Vote. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the certificate of incorporation or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. 2.5. Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. The authorization of a proxy may but need not be limited to specified action, provided, however, that, if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. 2.6. Inspectors. The directors or the person presiding at the meeting may, and shall if required by applicable law, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, 3 before entering upon the discharge of his 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, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, and the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. 2.7. List of Stockholders. The secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. The stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting. Section 3. BOARD OF DIRECTORS 3.1. Number. The corporation shall have one or more directors, the number of directors to be determined from time to time by vote of a majority of the directors then in office. Except in connection with the election of directors at the annual meeting of stockholders, the number of directors may be decreased only to eliminate vacancies by reason of death, resignation or removal of one or more directors. No director need be a stockholder. 3.2. Tenure. Each director shall hold office until the next annual meeting and until his successor is elected and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. 3.3. Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors who shall have and may exercise all the powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders. 3.4. Vacancies. Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by vote of the holders of the particular class or series of stock entitled to elect such director at a meeting called for the purpose, or by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, in each case elected by the particular class or series of stock entitled to elect such directors. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who 4 have resigned, who were elected by the particular class or series of stock entitled to elect such resigning director or directors shall have power to fill such vacancy or vacancies, the vote or action by writing thereon to take effect when such resignation or resignations shall become effective. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions. 3.5. Committees. The board of directors may, by vote of a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it and the power and authority to declare dividends or to authorize the issuance of stock; excepting, however, such powers which by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating. In the absence or disqualification of any member of such committee and his alternate, if any, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request. 3.6. Regular Meetings. Regular meetings of the board of directors may be held without call or notice at such places within or without the State of Delaware and at such times as the board may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders. 3.7. Special Meetings. Special meetings of the board of directors may be held at any time and at any place within or without the State of Delaware designated in the notice of the meeting, when called by the chief executive officer, the president, or by one-third or more in number of the directors, reasonable notice thereof being given to each director by the secretary, the chief executive officer, the president or any one of the directors calling the meeting. 5 3.7. Notice. It shall be reasonable and sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the meeting. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. 3.8. Quorum. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors constituting the whole board. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.9. Action by Vote. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors. 3.10. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the records of the meetings of the board or of such committee. Such consent shall be treated for all purposes as the act of the board or of such committee, as the case may be. 3.11. Participation in Meetings by Conference Telephone. Members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting. 3.12. Compensation. In the discretion of the board of directors, each director may be paid such fees for his services as director and be reimbursed for his reasonable expenses incurred in the performance of his duties as director as the board of directors from time to time may determine. Nothing contained in this section shall be construed to preclude any director from serving the corporation in any other capacity and receiving reasonable compensation therefor. 6 3.13. Interested Directors and Officers. (a) No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the corporation's directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. (b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. Section 4. OFFICERS AND AGENTS 4.1. Enumeration; Qualification. The officers of the corporation shall be a chief executive officer, a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board (who must be a director), one or more vice presidents and a controller. The corporation may also have such agents, if any, as the board of directors from time to time may in its discretion choose. Any officer need not be a stockholder of the corporation nor, except in the case of the chairman of the board, need any such officer be a director of the corporation. Any two or more offices may be held by the same person, unless otherwise prohibited by law, the certificate of incorporation or these by-laws. Any officer may be required by the board of directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine. 7 4.14. Powers. Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such additional duties and powers as the board of directors may from time to time designate. 4.15. Election. The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time. At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents. 4.16. Tenure. Each officer shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until his respective successor is chosen and qualified unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the directors, or the officer by whom he was appointed or by the officer who then holds agent appointive power. 4.5. Chairman of the Board of Directors, Chief Executive Officer, President and Vice President. The chairman of the board, if any, shall preside at all meetings of the directors and of the stockholders and shall have such additional duties and powers as shall be designated from time to time by the board of directors. The chief executive officer, subject to the control of the directors, shall have general charge and supervision of the business of the corporation. In the absence or disability of the chairman of the board, or if there be none, the chief executive officer shall preside at all meetings of the directors and of the stockholders. In the absence or disability of the chief executive officer, the president shall perform his duties and have his powers. The president shall have full responsibility for the day-to-day business operations of the corporation and shall have such additional duties and powers as shall be designated from time to time by the board of directors. Any vice presidents shall have such duties and powers as shall be set forth in these by-laws or as shall be designated from time to time by the board of directors or by the chief executive officer or the president. 4.6. Treasurer and Assistant Treasurers. Unless the board of directors otherwise specifies, the treasurer shall be the chief financial officer of the corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and powers as may be designated from time to time by the board of directors or by the chief executive officer or the president. If no controller is elected, the treasurer shall, unless the board of directors otherwise specifies, also have the duties and powers of the controller. 8 Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the board of directors, the chief executive officer, the president or the treasurer. 4.7. Controller and Assistant Controllers. If a controller is elected, he shall, unless the board of directors otherwise specifies, be the chief accounting officer of the corporation and be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the board of directors, the chief executive officer, the president or the treasurer. Any assistant controller shall have such duties and powers as shall be designated from time to time by the board of directors, the chief executive officer, the president, the treasurer or the controller. 4.8. Secretary and Assistant Secretaries. The secretary shall record all proceedings of the stockholders, of the board of directors and of committees of the board of directors in a book or series of books to be kept therefor and shall file therein all actions by written consent of stockholders or directors. In the absence of the secretary from any meeting, an assistant secretary, or, if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. Unless a transfer agent has been appointed the secretary shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the number of shares registered in the name of each stockholder. He shall have such other duties and powers as may from time to time be designated by the board of directors or by the chief executive officer or the president. Any assistant secretaries shall have such duties and powers as shall be designated from time to time by the board of directors, the chief executive officer, the president or the secretary. Section 5. RESIGNATIONS AND REMOVALS 5.1 Any director or officer may resign at any time by delivering his resignation in writing to the chief executive officer, the president, or the secretary or to a meeting of the board of directors. Such resignation shall be effective upon receipt unless specified to be effective at some other time, and without in either case the necessity of its being accepted unless the resignation shall so state. A director (including persons elected by stockholders or directors to fill vacancies in the board) may be removed from office with or without cause by the vote of the holders of a majority of the issued and outstanding shares of the particular class or series entitled to vote in the election of such director. The board of directors may at any time remove any officer either with or without cause. The board of directors may at any time terminate or modify the authority of any agent. 8 Section 6. VACANCIES 6.1 If the office of the chief executive officer or the president or the treasurer or the secretary becomes vacant, the directors may elect a successor by vote of a majority of the directors then in office. If the office of any other officer becomes vacant, any person or body empowered to elect or appoint that officer may choose a successor. Each such successor shall hold office for the unexpired term, and in the case of the chief executive officer, the president, the treasurer and the secretary until his successor is chosen and qualified or in each case until he sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a directorship shall be filled as specified in Section 3.4 of these by-laws. Section 7. CAPITAL STOCK 7.1 Stock Certificates. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors. Such certificate shall be signed by the chairman of the board or the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. Any of or all the signatures on the certificate may be a facsimile. In case an officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such 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 time of its issue. 7.17. Loss of Certificates. In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as the board of directors may prescribe. Section 8. TRANSFER OF SHARES OF STOCK 8.1. Transfer on Books. Subject to the restrictions, if any, stated or noted on the stock certificate, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may reasonably require. Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assessments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other 10 disposition of such stock until the shares have been properly transferred on the books of the corporation. It shall be the duty of each stockholder to notify the corporation of his post office address. 8.2. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no such record date is fixed by the board of directors, the record date for determining the 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. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no such 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 by the General Corporation Law of the State of Delaware, 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 Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. If no record date has been fixed by the board of directors and prior action by the board of directors is required by the General Corporation Law of the State of Delaware, 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. 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 to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such payment, exercise or 11 other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. Section 9. CORPORATE SEAL 9.1. Subject to alteration by the directors, the seal of the corporation shall consist of a flat-faced circular die with the word "Delaware" and the name of the corporation cut or engraved thereon, together with such other words, dates or images as may be approved from time to time by the directors. Section 10. EXECUTION OF PAPERS 10.1 Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the corporation shall be signed by the chief executive officer, the president, a vice president, the treasurer or the controller. Section 11. FISCAL YEAR 11.1. The fiscal year of the corporation shall end on November 30 of each year. Section 12. AMENDMENTS 12.1. These by-laws may be adopted, amended or repealed by vote of a majority of the directors then in office or by vote of a majority of the voting power of the stock outstanding and entitled to vote. Any by-law, whether adopted, amended or repealed by the stockholders or directors, may be amended or reinstated by the stockholders or the directors. 12 EX-27 3 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET ON FORM 10Q FOR THE PERIOD ENDED MAY 31, 1998 AND THE CONSOLIDATED STATEMENT OF OPERATIONS AS FILED ON FORM 10Q FOR THE THREE AND SIX MONTHS ENDED MAY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS 6-MOS NOV-30-1998 NOV-30-1998 MAR-01-1998 DEC-01-1997 MAY-31-1998 MAY-31-1998 2,984 2,984 30,918 30,918 6,244 6,244 397 397 661 661 41,065 41,065 12,312 12,312 3,618 3,618 50,352 50,352 16,258 16,258 0 0 0 0 0 0 83 83 34,011 34,011 50,352 50,352 9,637 20,158 9,637 20,158 3,759 7,852 3,759 7,852 9,482 17,133 0 0 0 0 (3,350) (4,102) 0 0 (3,350) (4,102) 0 0 0 0 0 0 (3,350) (4,102) (.41) (.50) (.41) (.50)
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