-----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, UFgrYGT7NpogPoIHw/20on4+f/L7A/WTVNy5nWi7scGeyb4ZWd2PVzATaEeWncu6 Y0A3jihMEFigd6btrTkJag== 0000914190-96-000178.txt : 19960711 0000914190-96-000178.hdr.sgml : 19960711 ACCESSION NUMBER: 0000914190-96-000178 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960710 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST TEAM SPORTS INC CENTRAL INDEX KEY: 0000820242 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 411545748 STATE OF INCORPORATION: MN FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16442 FILM NUMBER: 96592735 BUSINESS ADDRESS: STREET 1: 1201 LUND BLVD CITY: ANOKA STATE: MN ZIP: 55303 BUSINESS PHONE: 6127804454 MAIL ADDRESS: STREET 1: 2274 WOODALE DRIVE CITY: MOUNDS VIEW STATE: MN ZIP: 55112 10-Q 1 FORM 10-Q FOR FIRST QUARTER 1997 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: Commission File No.: May 31, 1996 0-16442 FIRST TEAM SPORTS, INC. (Exact name of Registrant as specified in its charter) Minnesota 41-1545748 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1201 Lund Boulevard Anoka, Minnesota 55303 (Address of principal executive offices) Registrant's telephone number, including area code: (612) 576-3500 -------------------------------------- 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: 5,742,467 shares of Common Stock, $.01 par value per share, outstanding as of July 8, 1996. PART I FINANCIAL INFORMATION Item 1. Financial Statements FIRST TEAM SPORTS, INC. CONSOLIDATED BALANCE SHEETS May 31, 1996 and February 29, 1996 May 31, February 29, ASSETS 1996 1996 ----------- ----------- (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 1,476,281 $ 2,166,863 Receivables: Trade, less allowance for doubtful accounts of $595,000 at May 31, 1996 and $486,000 at February 29 1996 25,591,135 16,228,666 Income taxes -- 155,146 Inventory 23,810,053 22,813,850 Prepaid expenses 896,137 960,079 Deferred income taxes 827,000 827,000 ----------- ----------- Total current assets $52,600,606 $43,151,604 ----------- ----------- EQUIPMENT AND LEASEHOLD IMPROVEMENTS at cost Land $ 600,000 $ 600,000 Building 5,032,932 4,825,740 Production equipment 4,145,724 4,069,078 Office furniture and equipment 1,628,234 1,509,120 Warehouse equipment 321,159 315,509 Vehicles 46,925 46,925 ----------- ----------- $11,774,974 $11,366,372 Less accumulated depreciation 1,843,189 1,511,689 ----------- ----------- $ 9,931,785 $ 9,854,683 ----------- ----------- OTHER ASSETS License agreements, less accumulated amortization of $2,604,000 at May 31, 1996 and $2,459,000 at February 29, 1996 $ 2,500,278 $ 2,645,268 Other 310,468 306,247 ----------- ----------- $ 2,810,746 $ 2,951,515 ----------- ----------- $65,343,137 $55,957,802 =========== =========== See Notes to Consolidated Financial Statements FIRST TEAM SPORTS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) May 31, 1996 and February 29, 1996 May 31, February 29, LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1996 --------- --------- (Unaudited) CURRENT LIABILITIES Notes payable to bank $11,934,250 $ 5,268,000 Current maturities of long-term debt 928,980 943,060 Accounts payable, trade 8,584,738 9,462,883 Accrued expenses 2,091,294 2,532,676 Income taxes 1,314,156 -- ----------- ----------- Total current liabilities $24,853,418 $18,206,619 ----------- ----------- LONG-TERM DEBT, less current maturities $ 6,671,715 $ 6,880,360 ----------- ----------- DEFERRED INCOME TAXES $ 440,000 $ 440,000 ----------- ----------- DEFERRED REVENUE $ 600,000 $ 600,000 ----------- ----------- SHAREHOLDERS' EQUITY Common Stock, par value $.01 per share; authorized 10,000,000 shares; issued and outstanding 5,738,293 shares at May 31, 1996, and 5,721,000 shares at February 29, 1996 $ 57,383 $ 57,210 Additional paid-in capital 9,488,619 9,396,802 Retained earnings 23,232,002 20,376,811 $32,778,004 $29,830,823 ----------- ----------- $65,343,137 $55,957,802 =========== =========== See Notes to Consolidated Financial Statements FIRST TEAM SPORTS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For Three Months Ended May 31, 1996 and 1995 Three months ended May 31, 1996 1995 ----------- ---------- Net sales $ 30,586,799 $ 30,776,464 Cost of goods sold 21,504,002 21,257,180 ------------ ------------ Gross profit $ 9,082,797 $ 9,519,284 ------------ ------------ Operating expenses: Selling $ 2,390,553 $ 2,593,206 General and administrative 1,936,794 2,044,912 ------------ ------------ $ 4,327,347 $ 4,638,118 Operating income $ 4,755,450 $ 4,881,166 Other income (expense): Interest income -- -- Interest expense (323,260) (263,959) Other -- -- Income before income taxes $ 4,432,190 $ 4,617,207 Income taxes 1,577,000 1,735,000 ------------ ------------ Net income for the period $ 2,855,190 $ 2,882,207 ============ ============ Net income per common share $ 0.48 0.48 ============ ============ Weighted average number of common shares outstanding including Common Share equivalents 5,989,214 6,038,944 ============ ============ See Notes to Consolidated Financial Statements FIRST TEAM SPORTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For Three Months Ended May 31, 1996 and 1995 (Unaudited)
May 31, May 31, 1996 1995 ----------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 2,855,190 2,882,207 Adjustments required to reconcile net income to net cash provided by (used in) operating activities: Depreciation 331,500 153,000 Amortization 144,990 175,679 Loss on retirement of equipment -- -- Deferred income taxes -- (150,000) Change in assets and liabilities: Receivables (9,362,469) (1,679,879) Inventories (996,203) 3,067,661 Prepaid expense 63,942 4,541 Accounts payable (878,145) (358,519) Accrued expenses (441,382) 445,779 Income taxes 1,469,303 1,695,854 ----------- ----------- Net cash provided by (used in) operating activities ($6,813,274) $ 6,236,323 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment ($ 408,602) ($ 488,807) Other (4,221) (34,747) ----------- ----------- Net cash used in investing activities ($ 412,823) ($ 523,554) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds (payments) on line of credit note $ 6,666,250 ($4,633,000) Principal payments on long-term borrowings (222,725) (320,115) Net proceeds from issuance's of common stock: 1996, 17,250 shares; 1995, 74,595 shares 91,990 402,527 ----------- ----------- Net cash provided by (used in) financing activities $ 6,535,515 ($4,550,588) ----------- ----------- Increase (decrease) in cash and cash equivalents ($ 690,582) $ 1,162,181 Cash and cash equivalents: Beginning $ 2,166,863 $ 601,394 ----------- ----------- Ending $ 1,476,281 $ 1,763,575 =========== ===========
See Notes to Consolidated Financial Statements FIRST TEAM SPORTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1. The consolidated condensed balance sheet as of May 31, 1996, and the consolidated statements of operations for the three-month periods ended May 31, 1996 and May 31, 1995 have been prepared by the Company without audit. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated financial position, results of operations and cash flows at May 31, 1996 and May 31, 1995 and for all periods presented have been made. The operating results for the period ended May 31, 1996 are not necessarily indicative of the operating results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with generally accepted accounting principles have been condensed or omitted. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Net Sales. Net sales were $30.6 million in the first quarter of fiscal 1997 compared to $30.8 million in the first quarter of fiscal 1996. In-line roller skate sales decreased 1%, accessories and parts decreased 3% and roller hockey products decreased 37% from the first quarter of fiscal 1996 to fiscal 1997. Sales of in-line skates accounted for approximately 86% of total sales in the first quarter of fiscal 1997 compared to 85% in the first quarter of fiscal 1996. Sales of accessories and parts accounted for approximately 12% of total sales in the first quarter of fiscal 1997 and 1996. Street hockey equipment accounted for approximately 2% of total sales in the first quarter of fiscal 1997 compared to 3% in the first quarter of fiscal 1996. Sales to the Company's ten largest customers accounted for 55% of the Company's total sales in the first quarter of fiscal 1997 compared to 58% of the Company's sales in the first quarter of fiscal 1996. The worldwide markets for the Company's products continue to grow and expand. As a result, the Company was able to substantially increase its foreign sales in the first quarter of fiscal 1997. Domestic sales were 64% of total net sales in the first quarter of fiscal 1997 compared to 74% in the first quarter of fiscal 1996, while export sales were 36% in the first quarter of fiscal 1997 compared to 26% in the first quarter of fiscal 1996. Sales in Canada and outside North America were 11% and 15% of total net sales in the first quarter of fiscal 1997, respectively, compared to 14% and 12% in the first quarter of fiscal 1996, respectively. Several factors contributed to the Company's sales performance in the first quarter of fiscal 1997. The lower percentage of domestic and Canadian sales is a result of continued strong competition with our mass merchant accounts and inclement weather this spring, which dampened the demand for skates. The increased percentage of sales outside of North America is the result of the Company's ability to capitalize on continued industry growth in the foreign markets. The Company's products continue to be endorsed by major sports figures and celebrities including; Wayne Gretzky, NHL's all time leading scorer, Janet Jones Gretzky and Brett Hull, one of NHL's prolific goal scorers. Gross Margin. The Company's gross margin decreased $436,487 (or 5%) between the first quarter of fiscal 1997 and the first quarter of fiscal 1996. Gross margin as a percentage of net sales was 30% in the first quarter of fiscal 1997 compared to 31% in the first quarter of fiscal 1996. The decrease in the gross margin percentage is primarily due to reduced gross margins on sales of the Company's mass merchant products, which is a result of the strong competition at the mass merchant level and the increase in the Company `s foreign sales, which typically carry a slightly lower margin. The Company's UltraWheels in-line skate sales and non-UltraWheels in-line skate sales accounted for approximately 53% and 47% of total in-line skate sales in the first quarter of fiscal 1997, respectively, compared to 46% and 54% of total in-line skate sales in the first quarter of fiscal 1996. Operating Expenses. The Company's operating expenses, (consisting of selling expenses and general and administrative expenses) were $4,327,347, or 14% of net sales, in the first quarter of fiscal 1997, compared to $4,638,118 or 15% of net sales in the first quarter of fiscal 1996. Selling expenses decreased $202,653 (or 8%) between the first quarters of fiscal 1997 and 1996, and were approximately 8% of net sales in both the first quarter of fiscal 1997 and 1996. The decrease in selling expensed in the first quarter of fiscal 1997 can be attributed to reduced endorsement royalties and advertising costs associated with the product sales mix and the continue efforts of management to control expenditures. General and Administrative expenses decreased $108,118 (or 5%) between the first quarters of fiscal 1997 and 1996, and were approximately 6% and 7% of net sales in the first quarter of fiscal 1997 and 1996, respectively. The decrease in general and administrative in the first quarter of fiscal 1997 was the primarily the result of savings associated to the Company's new office and warehouse facility and the continued efforts by management to control spending and expenses. Other Income and Expense. Interest expense in the first quarter of fiscal 1997 was $323,260, or 1% of net sales, compared to $263,959, or 1% of net sales, in the first quarter of fiscal 1996. The increase in interest expense in the first quarter of fiscal 1997 was due to an increase in the use of the Company's bank line of credit and the addition of the mortgage note associated with the Company's new office and warehouse facility. Net Income. Net income decreased $27,017 (or 1%) between the first quarter of fiscal 1997 and 1996, and earning per share was $ .48 in both the first quarter of fiscal 1997 and 1996. The consistent results between the first quarter of fiscal 1997 and the first quarter of fiscal 1996 can be attributed to the items discussed above. LIQUIDITY AND CAPITAL RESOURCES The Company's cash and cash equivalents were $1,476,281 as of May 31, 1996, compared to $2,166,863 as of February 29, 1996. The decrease in cash and cash equivalents is a result of $6,813,274 of cash used in operating activities and $412,823 of cash used in investing activities being partially offset by $6,535,515 of cash provided by financing activities. The net cash used in operating activities was primarily from the increase in receivables and inventory, the decrease in payables, and the net income for the quarter. The net cash used in investing activities was primarily for the purchase of capital assets. The net cash provided by financing activities was primarily proceeds received on the Company's line of credit. The Company had net working capital of $27,747,188 as of May 31, 1996, compared to $24,944,985 as of February 29, 1996. The Company's current ratio at May 31, 1996 was 2.1 to 1 compared to 2.4 to 1 as of February 29, 1996. The improvement in the Company's net working capital was primarily attributable to an increase in the Company's receivables. The Company's debt-to-worth ratio was 1 to 1 as of May 31, 1996, compared to .9 to 1 as of February 29, 1996. The Company's long-term debt, which consist primarily of the mortgage note on the Company's office and warehouse facility and obligations under endorsement license agreements, less current maturities, was $6,671,715 as of May 31, 1996. As of May 31, 1996, the Company had a revolving line of credit established with a bank that provides for borrowings of up to $15,000,000, of which $11,934,250 was outstanding. In addition, the Company has a line of credit established with the bank providing for borrowings of up to $1,000,000 for the purchase of equipment and improvements. As of May 31, 1996, $104,621 was outstanding on the credit facility. The Company believes that its current cash position, funds available under existing bank arrangements and cash generated from profitable operations will be sufficient to finance the cash flows for operating activities at projected levels of sales through fiscal 1997. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See Exhibit Index immediately following the signature page of this Form 10-Q. (b) Reports on Form 8-K. No reports on Form 8-K were filed by the Registrant during the quarter to which this Form 10-Q relates. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. FIRST TEAM SPORTS, INC. By: /s/ John J. Egart John J. Egart President and CEO and By: /s/ Robert L. Lenius, Jr. Robert L. Lenius, Jr. Vice President and CFO Dated: July 10, 1996 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBIT INDEX TO FORM 10-Q For Quarter Ended: Commission File No.: 0-16422 May 31, 1996 FIRST TEAM SPORTS, INC. Exhibit Number Description 3.1* Restated Articles of Incorporation 3.2 Bylaws -- incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-18 Reg. No. 33-16345C 4.1 Specimen of Common Stock Certificate--incorporated by reference to 4.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended February 28, 1991 4.2 Certificate of Designations of Series A Preferred Stock (included in Restated Articles of Incorporation -- see Exhibit 3.1) 4.3 Rights Agreement dated as of March 15, 1996 between the Company and Norwest Bank Minnesota, N.A. as Rights Agent -- incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form 8-A, Reg. No. 0-16422 4.4 Form of Right Certificate -- incorporated by reference to Exhibit 2.2 to the Company's Registration Statement on Form 8-A, Reg. No. 0-16422 4.5 Summary of Rights to Purchase Share of Series A Preferred Stock - incorporated by reference to Exhibit 2.3 to the Company's Registration Statement of Form 8-A, Reg. No. 0-16422 27* Financial Data Schedule (included in electronic version only) *Filed herewith. EX-3.1 2 RESTATED ARTICLES OF INCORPORATION ARTICLES OF CORRECTION OF RESTATED ARTICLES OF INCORPORATION OF FIRST TEAM SPORTS, INC. Pursuant to the provisions of Minnesota Statutes, Section 5.16, the Restated Articles of Incorporation filed by First Team Sports, Inc. on May 22, 1996 incorrectly restated the corporation's existing Articles and all amendments thereto, which Restated Articles are hereby set forth correctly in their entirety on Exhibit A hereto. I swear that the foregoing is true and accurate and that I have the authority to sign this document on behalf of the corporation. Dated: July 8, 1996 /s/ John J. Egart John J. Egart, President EXHIBIT A RESTATED ARTICLES OF INCORPORATION OF FIRST TEAM SPORTS, INC. ARTICLE 1 - NAME 1.1) The name of the corporation shall be First Team Sports, Inc. ARTICLE 2 - REGISTERED OFFICE 2.1) The registered office of the corporation is located at 1201 Lund Boulevard, Anoka, Minnesota 55303. ARTICLE 3 - CAPITAL STOCK 3.1) Authorized Shares. The aggregate number of shares the corporation has authority to issue shall be 12,500,000 shares, which shall have a par value of $.01 per share solely for the purpose of a statute or regulation imposing a tax or fee based upon the capitalization of the corporation, and which shall consist of 10,000,000 common shares, 680,000 shares of Series A Preferred Stock, having the rights and preferences set forth on the Certificate of Designations attached hereto as Attachment A, and 1,820,000 undesignated shares. The Board of Directors of the corporation is authorized to establish from the undesignated shares, by resolution adopted and filed in the manner provided by law, one or more classes or series of shares, to designate each such class or series (which may include but is not limited to designation as additional common shares), and to fix the relative rights and preferences of each such class or series. 3.2) Issuance of Shares. The Board of Directors of the corporation is authorized from time to time to accept subscriptions for, issue, sell and deliver shares of any class or series of the corporation to such persons, at such times and upon such terms and conditions as the Board shall determine, valuing all nonmonetary consideration and establishing a price in money or other consideration, or a minimum price, or a general formula or method by which the price will be determined. 3.3) Issuance of Rights to Purchase Shares. The Board of Directors is further authorized from time to time to grant and issue rights to subscribe for, purchase, exchange securities for, or convert securities into, shares of the corporation of any class or series, and to fix the terms, provisions and conditions of such rights, including the exchange or conversion basis or the price at which such shares may be purchased or subscribed for. -1- 3.4) Issuance of Shares to Holders of Another Class or Series. The Board is further authorized to issue shares of one class or series to holders of that class or series or to holders of another class or series to effectuate share dividends or splits. ARTICLE 4 - RIGHTS OF SHAREHOLDERS 4.1) No Preemptive Rights. No shares of any class or series of the corporation shall entitle the holders to any preemptive rights to subscribe for or purchase additional shares of that class or series of any other class or series of the corporation now or hereafter authorized or issued. 4.2) No Cumulative Voting Rights. There shall be no cumulative voting by the shareholders of the corporation. ARTICLE 5 - LIMITATION OF DIRECTOR LIABILITY 5.1) To the fullest extent permitted by the Minnesota Business Corporation Act, as the same exists or may hereafter be amended, a director of this corporation shall not be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. ARTICLE 6 - MERGER, EXCHANGE, SALE OF ASSETS AND DISSOLUTION 6.1) Where approval of shareholders is required by law, the affirmative vote of the holders of at least a majority of the voting power of all shares entitled to vote shall be required to authorize the corporation (i) to merge into or with one or more other corporations, (ii) to exchange its shares for shares of one or more other corporations, (iii) to sell, lease, transfer or otherwise dispose of all or substantially all of its property and assets, including its good will, or (iv) to commence voluntary dissolution. ARTICLE 7 - AMENDMENT OF ARTICLES OF INCORPORATION 7.1) Any provision contained in these Articles of Incorporation may be amended, altered, changed or repealed by the affirmative vote of the holders of at least a majority of the voting power of all shares entitled to vote or such greater percentage as may be otherwise prescribed by the laws of the State of Minnesota. - 2 - ATTACHMENT A CERTIFICATE OF DESIGNATIONS OF SERIES A PREFERRED STOCK OF FIRST TEAM SPORTS, INC. (Pursuant to Chapter 302A of the Minnesota Business Corporation Act) First Team Sports, Inc., a corporation organized and existing under the Minnesota Business Corporation Act (hereinafter called the "Company"), hereby certifies that the following resolution was adopted by the Board of Directors of the Company as required by Section 302A.239 of the Minnesota Business Corporation Act (the "MBCA") by unanimous written action of the Board of Directors dated February 28, 1996: RESOLVED, that, pursuant to the authority granted to and vested in the Board of Directors of the Company (hereinafter called the "Board of Directors" or the "Board") in accordance with the provisions of the Restated Articles of Incorporation, as amended to date (hereinafter called the "Articles of Incorporation"), the Board of Directors hereby creates a series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the Company and hereby states the designation and number of shares, and fixes the relative rights, preferences, and limitations thereof as follows: Series A Preferred Stock: Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Preferred Stock" (the "Series A Preferred Stock"), and the number of shares constituting the Series A Preferred Stock shall be Six Hundred Eighty Thousand (680,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that, no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into Series A Preferred Stock. - 3 - Section 2. Dividends and Distributions. (A) Subject to the rights of the holders of any shares of any series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the Company or Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $.01 per share (the "Common Stock"), of the Company, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 100 times (as adjusted, the "Dividend Multiple") the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the Dividend Multiple shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Company shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided, that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than sixty (60) days prior to the date fixed for the payment thereof. - 4 - Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes (as adjusted, the "Vote Multiple") on all matters submitted to a vote of the stockholders of the Company. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the Vote Multiple shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided in Section 10 hereof, in any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Company having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Company. (C) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Company shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; - 5 - (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Company ranking junior (as to dividends and upon dissolution, liquidation and winding up) to the Series A Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Articles of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law. - 6 - Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Company, no distribution shall be made (A) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received the greater of (i) $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment; or (ii) subject to the provision for adjustment hereinafter set forth, 100 times (as adjusted, the "Liquidation Preference Multiple") the aggregate amount to be distributed per share to holders of shares of Common Stock, or (B) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the Liquidation Preference Multiple shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, Etc. In case the Company shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times (as adjusted, the "Exchange Multiple") the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Company shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the Exchange Multiple shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable. Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of Preferred Stock. Section 10. Amendment. If any proposed amendment to the Articles of Incorporation or this Certificate of Designation would alter or change the preferences, special rights or powers given to the Series A Preferred Stock so as to affect the Series A Preferred Stock adversely, or would authorize the issuance of a class or classes of stock having preferences or rights with respect to dividends or dissolutions or the distribution of assets that would be superior to the preferences or rights of the Series A Preferred Stock, then the holders of the Series A Preferred Stock shall be entitled to vote as a series upon such amendment, and the affirmative vote of two-thirds of the outstanding shares of Series A Preferred Stock shall be necessary to the adoption thereof, in addition to such other vote as may be required by the MBCA. - 7 - EX-27 3 ART 5 FDS FOR 1 QUARTER 10-Q
5 1 U.S. DOLLARS 3-MOS FEB-28-1997 MAR-01-1996 MAY-31-1996 1 1,476,281 0 25,591,135 595,000 23,810,053 52,600,606 11,774,974 1,843,189 65,343,137 24,853,418 6,671,715 0 0 57,383 32,720,621 65,343,137 30,586,799 30,586,799 21,504,002 21,504,002 0 0 323,260 4,432,190 1,577,000 2,855,190 0 0 0 2,855,190 .48 .48
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