-----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, TbGOvzEPV4+Epe4Jm2t/IPpbbhXn0SHlb/RQrAAiR6pWjWqeN0ovWUujy0LFqfNg SIYtpmAkSf9gjRHvAftjWQ== 0000950144-99-006099.txt : 19990517 0000950144-99-006099.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950144-99-006099 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELLETT BROTHERS INC CENTRAL INDEX KEY: 0000902055 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [5090] IRS NUMBER: 570957069 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21632 FILM NUMBER: 99624530 BUSINESS ADDRESS: STREET 1: 267 COLUMBIA AVE CITY: CHAPIN STATE: SC ZIP: 29036 BUSINESS PHONE: 8033453751 MAIL ADDRESS: STREET 1: P O BOX 128 CITY: CHAPIN STATE: SC ZIP: 29036 10-Q 1 ELLETT BROTHERS INC 1 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 March 31, 1999 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 0-21632 ELLETT BROTHERS, INC. (Exact name of Registrant as specified in its charter) South Carolina 57-0957069 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 267 Columbia Avenue, Chapin, South Carolina 29036 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (803) 345-3751 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 periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of April 30, 1999, 4,316,518 shares of no par value common stock of the registrant were outstanding. Page 1 of 14 2 ELLETT BROTHERS, INC. AND SUBSIDIARIES MARCH 31, 1999 INDEX Part I. Financial Information Page Item 1. Financial Statements Condensed consolidated balance sheets as of March 31, 1999 and December 31, 1998 3 Condensed consolidated statements of income for the three months ended March 31, 1999 and 1998 4 Condensed consolidated statements of cash flows for the three months ended March 31, 1999 and 1998 5 Notes to condensed consolidated financial statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 Part II. Other Information Page Item 6. Exhibits and Reports on Form 8-K 13 3 Form 10-Q Page 3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ELLETT BROTHERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
March 31, Dec. 31, 1999 1998 ----------- ---------- ASSETS (unaudited) (see note) Current assets: Cash and cash equivalents $ 232 $ 183 Accounts receivable, less allowance for doubtful accounts of $680 and $605 at March 31, 1999 and December 31, 1998, respectively 22,320 20,066 Other accounts receivable 61 1,716 Inventories 36,928 32,140 Prepaid expenses 1,142 948 Deferred income tax asset 477 440 -------- -------- Total current assets 61,160 55,493 -------- -------- Property, plant and equipment, at cost, less accumulated depreciation 7,902 7,567 Other assets: Intangible assets, at cost, less accumulated amortization 1,624 1,682 Other assets 27 27 -------- -------- Total other assets 1,651 1,709 -------- -------- $ 70,713 $ 64,769 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable, trade $ 14,834 $ 7,149 Accrued expenses 1,163 1,239 Current portion of long-term debt 567 567 -------- -------- Total current liabilities 16,564 8,955 Revolving credit facility 24,719 26,461 Long-term debt 5,699 5,836 Deferred income tax liability 275 585 Shareholders' equity: Preferred stock, no par value (5,000 shares authorized, no shares issued or outstanding) -- -- Common stock, no par value (20,000 shares authorized, 4,317 and 4,297 shares issued and outstanding as of March 31, 1999 and December 31, 1998, respectively) 9,652 9,559 Common stock subscribed -- 93 Unearned compensation (45) (55) Subscription receivable (423) (423) Retained earnings 14,230 13,716 Accumulated other comprehensive income 42 42 -------- -------- Total shareholders' equity 23,456 22,932 -------- -------- $ 70,713 $ 64,769 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. Note: The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See note 5 entitled Comprehensive Income on page 7. 4 Form 10-Q Page 4 ELLETT BROTHERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data)
Three Months Ended March 31, ------------------------- 1999 1998 -------- -------- Sales $ 38,946 $ 34,032 Cost of goods sold 32,198 28,126 -------- -------- Gross profit 6,748 5,906 Selling, general and administrative expenses 5,292 4,795 -------- -------- Income from operations 1,456 1,111 Other income (expenses): Interest income 131 123 Interest expense (517) (526) Other income 1 (3) -------- -------- Income before income taxes 1,071 705 Income tax expense 392 254 -------- -------- Net income $ 679 $ 451 ======== ======== Basic and diluted earnings per common share $ 0.16 $ 0.09 ======== ======== Weighted average shares outstanding 4,301 5,121 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Form 10-Q Page 5 ELLETT BROTHERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
Three Months Ended March 31, ------------------------- 1999 1998 -------- -------- Cash flows from operating activities: Net income $ 679 $ 451 Adjustments to reconcile net income to net cash provided by operating activities: Non-cash charges to income 234 296 Changes in assets and liabilities: Accounts receivable (895) 740 Inventories (4,788) (3,490) Prepaid expenses (194) (982) Accounts payable, trade 7,685 8,060 Accrued expenses (76) (237) -------- -------- Net cash provided by operating activities 2,645 4,838 -------- -------- Net cash used in investing activities (553) (245) -------- -------- Cash flows from financing activities: Gross borrowings on revolving credit facility 35,570 30,190 Gross repayments on revolving credit facility (37,311) (34,805) Principal payments on capital lease obligations -- (8) Principal payments on long-term debt (138) (123) Dividends to shareholders (164) (103) -------- -------- Net cash used in financing activities (2,043) (4,849) -------- -------- Net increase (decrease) in cash and cash equivalents 49 (256) Cash and cash equivalents : Beginning of period 183 395 -------- -------- End of period $ 232 $ 139 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Form 10-Q Page 6 ELLETT BROTHERS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1999 (in thousands, except per share data) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements, which include the accounts of Ellett Brothers, Inc. and subsidiaries (the "Company"), have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1999 are not necessarily indicative of the results that may be expected for the full year ending December 31, 1999. For further information, refer to the financial statements and footnotes thereto included in Ellett Brothers, Inc.'s annual report on Form 10-K for the year ended December 31, 1998. 2. INVENTORIES Inventories consisted of the following: March 31, December 31, 1999 1998 ----------- ------------ Finished goods $ 35,671 $ 31,112 Raw materials 980 881 Work in process 277 147 ----------- --------- $ 36,928 $ 32,140 =========== ========= 3. COMMON AND PREFERRED STOCK In January 1997, the Company issued 112 shares of common stock for total consideration of $475 ($452 in promissory notes and $23 of cash) to two executives of the Company in exchange for the cancellation of 112 fully vested and outstanding options of the officers with an exercise price of $7.00 per share. The promissory notes bear interest at 5.6%, payable semi-annually, and become due on a pro-rata basis as the shares are sold by the executives. The shares carry restrictions over their transferability which have been lifted over a two-year period ended January 1999. The market value of the common stock at the date of the transaction was $559. The difference between the market value and the price at which the shares were sold to the executives is reflected as unearned compensation and is being amortized over the two-year period. In June of 1998, the Company reacquired 34 shares from one of the former executives and recorded it using the cost method of accounting. During 1998, the Company awarded 20 shares to an executive officer when the market value of these shares was $93. Compensation expense was recognized at the time of the award and shareholders' equity reflects the stock subscribed. During 1996, the Company awarded 58 shares of restricted common stock to two executives of the Company. The restrictions are scheduled to be released pro-rata over a three to four year period, based on certain criteria. The stock awards were valued at the market price per share at the time of each award, and unearned compensation was recorded in equity. Compensation expense is recognized as the awards vest over the three to four year period. 7 Form 10-Q Page 7 The Company reacquired 46 and 10 shares of its common stock in June and December of 1997, respectively; and reacquired 142, 448, and 200 shares of its common stock in September, October, and December of 1998, respectively. The Company recorded these acquisitions using the cost method of accounting. The Company is authorized to issue 20,000 shares of no-par-value common stock. Additionally, the Board of Directors of the Company is authorized to issue, at its discretion, up to 5,000 shares of preferred stock in one or more series with the number of shares, designation, relative rights and preferences, and limitations to be determined by resolution of the Board of Directors. However, no share of stock of any class shall be subject to preemptive rights or have cumulative voting provisions. 4. EARNINGS PER COMMON SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 is designed to improve the earnings per share information provided in financial statements by simplifying the prior computational guidelines, revising the disclosure requirements, and increasing comparability of earnings per share data on an international basis. This pronouncement, which became effective for periods ending after December 15, 1997, requires the restatement of earnings per share data for all periods presented in the form of basic earnings per share and diluted earnings per share. Although the Company had options outstanding during portions of the three years ended December 31, 1998, they have an antidilutive effect on earnings per share for each year. As such, the earnings per share calculations previously reported by the Company equal basic and diluted earnings per share calculated under the provisions of SFAS No. 128. Basic and diluted earnings per share for the quarter ended March 31, 1999 and for the year ended December 31, 1998 is earnings divided by the weighted average shares outstanding. 5. COMPREHENSIVE INCOME On January 1, 1998 the Company adopted SFAS No. 130 "Reporting Comprehensive Income." As required by the SFAS No. 130, prior year information has been modified to conform with the new presentation. Comprehensive income includes net income and all other changes to the Company's equity, with the exception of transactions with shareholders ("other comprehensive income"). The Company's only components of other comprehensive income relate to unrealized gains and losses on available for sale securities. The Company's total comprehensive income for the three month periods ended March 31, 1999 and 1998 was $679 and $464, respectively. Information concerning the Company's other comprehensive income for the three month periods ended March 31, 1999 and 1998 is as follows: 1999 1998 ---- ---- Net unrealized gains on available for sale securities $ - $ 21 Income tax expense relating to unrealized gains on available for sale securities - (8) ------- ------- Other comprehensive income $ - $ 13 ======= ====== 6. BUSINESS SEGMENT INFORMATION In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" ("SFAS No. 131") was issued effective for fiscal years beginning after December 15, 1997. SFAS No. 131 requires the Company to report information about its operating segments. In 1998, Ellett Brothers adopted SFAS No. 131. The adoption of SFAS No. 131 did not affect results of operations or financial position. The Company's reportable segments are business units that offer different products and have separate management teams and infrastructures. The business units have been aggregated into two reportable segments. These segments are: Hunting, Shooting, Camping, Archery & Outdoor Products ("HS&A") and Marine Products. The "Other" segment includes the Company's subsidiaries. 8 Form 10-Q Page 8 The accounting policies of the segments are the same as those described in the Company's annual report on Form 10-K for the year ended December 31, 1998. The Company evaluates performance based upon operating income of the business units. The following table presents information about reported segments for the quarters ended March 31, 1999 and 1998 (in millions):
- --------------------------------------------------------------------------------------- 1999 HS&A Marine Other Total - --------------------------------------------------------------------------------------- Sales $ 32.0 $ 6.5 $ .4 $ 38.9 Operating income (loss) 1.3 .4 (.2) 1.5 Identifiable segment assets 46.6 10.7 2.0 59.3 Capital expenditures .5 .0 .0 .5 Depreciation .2 .0 .0 .2 - ---------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------- 1998 HS&A Marine Other Total - --------------------------------------------------------------------------------------- Sales $ 28.1 $ 5.5 $ .4 $ 34.0 Operating income (loss) 1.0 .3 (.2) 1.1 Identifiable segment assets 42.8 9.3 2.0 54.1 Capital expenditures .2 .0 .0 .2 Depreciation .1 .0 .0 .1 - ---------------------------------------------------------------------------------------
A reconciliation of total segment operating income to total consolidated income before taxes for the quarter ended March 31 (in millions) is as follows: - ------------------------------------------------------------------------------ 1999 1998 - ------------------------------------------------------------------------------ Operating income $ 1.5 $ 1.1 Interest income and other income, net .1 .1 Interest expense (.5) (.5) - ------------------------------------------------------------------------------ Income before taxes $ 1.1 $ .7 - ------------------------------------------------------------------------------ A reconciliation of identifiable segment assets to total assets for the quarter ended March 31 (in millions) is as follows: - ------------------------------------------------------------------------------ 1999 1998 - ------------------------------------------------------------------------------ Identifiable segment assets $ 59.3 $ 54.1 Other corporate assets 11.4 10.7 - ------------------------------------------------------------------------------ Total assets $ 70.7 $ 64.8 - ------------------------------------------------------------------------------ 9 Form 10-Q Page 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of the operations and financial condition of Ellett Brothers, Inc. and its subsidiaries (the "Company"). This discussion and analysis should be read in conjunction with the financial statements and related notes presented in the Company's annual report on Form 10-K for the year ended December 31, 1998, and the consolidated financial statements and related notes included in this Form 10-Q. Sales for the three months ended March 31, 1999 were $38.9 million, as compared to $34.0 million for the same period in 1998, an increase of $4.9 million, or 14.4%. Included in these amounts were sales from the subsidiaries of $414,000 and $421,000 for the three months ended March 31, 1999 and 1998, respectively. During the first quarter of 1999, sales for the distribution business increased $4.9 million, or 14.6%. Sales in the hunting and shooting sports product group had an increase of $2.7 million, or 12.9%. Marine accessories showed continued growth with an increase of $1.1 million, or 20.5%, while camping, archery and outdoor accessories sales increased by $1.1 million, or 15.4%. Gross profit was $6.7 million (17.3% of sales) for the three months ended March 31, 1999, as compared to $5.9 million (17.3% of sales) for the same period in 1998, an increase of $842,000, or 14.2%. In the distribution business, gross margin as a percentage of sales was essentially flat. Gross margin as a percentage of sales for the hunting and shooting sports products increased 5 basis points, while marine accessories increased 7 basis points and camping, archery and outdoor accessories decreased 60 basis points. Selling and general and administrative expenses for the three months ended March 31, 1999 were $5.3 million (13.6% of sales), as compared to $4.8 million (14.1% of sales) for the same period in 1998, an increase of $497,000, or 10.4%. The increase in the first quarter of 1999 over 1998 was primarily in the variable expenses as a result of the increase in sales in 1999 over 1998. Interest expense was $517,000 (1.3% of sales) for the three months ended March 31, 1999, as compared to $526,000 (1.5% of sales) for the same period in 1998, a decrease of $9,000, or 1.7%. Income tax expense was $392,000 for the three months ended March 31, 1999, as compared to $254,000 for the same period in 1998, an increase of $138,000, or 54.3%. The effective tax rate for the three months ended March 31, 1999 was 36.6%, as compared to 36.0% for the same period in 1998. Net income for the three months ended March 31, 1999 was $679,000 ($0.16 per basic and diluted share) as compared to $451,000 ($0.09 per basic and diluted share) for the three months ended March 31, 1998. SEASONALITY AND QUARTERLY INFORMATION Historically the Company's business has been seasonal. The sales of hunting and shooting sports products, as well as camping, archery and outdoor accessories, usually increase in the third quarter of each year, and peak early in the fourth quarter. Sales of marine accessories usually increase in the first quarter of each year, then peak midway through the second quarter and continue at similar levels through the first half of the third quarter. Operations of the subsidiaries have been seasonal, producing significantly higher sales and gross profit during the third and fourth quarters, with losses in the first and second quarters. The Company's quarterly operating results may also be affected by a wide variety of factors, such as legislative and regulatory changes, competitive pressures, and general economic conditions. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of liquidity have been results of operations and borrowings under its revolving credit facility. Pursuant to its operating strategy, the Company maintains minimal cash balances and is substantially dependent on, among other things, the availability of adequate working capital financing to support inventories and accounts receivable. Net cash provided by operating activities was $2.6 million for the three months ended March 31, 1999 as compared to net cash provided by operating activities of $4.8 million for the same period in 1998. The decrease in cash provided by operating activities was primarily due to a larger increase in inventories in the first quarter of 1999 versus the first quarter of 1998. 10 Form 10-Q Page 10 Net cash used in investing activities was $553,000 for the three months ended March 31, 1999 as compared to $245,000 for the same period in 1998. The net cash used was primarily for computer equipment and information systems upgrades. Net cash used in financing activities was $2.0 million for the three months ended March 31, 1999 as compared to $4.8 million for the same period in 1998. During the quarter ended March 31, 1999, the Company used cash collections in excess of the current borrowings to reduce its revolving credit facility by $1.7 million as well as to make principal payments on long-term debt and to pay dividends. Working capital requirements for the Company's distribution business have historically been somewhat seasonal in nature. Accounts receivable have generally increased in the first quarter primarily because of the customary industry practice during the first quarter of each year to offer customers extended payment terms for purchases of certain products, thereby extending the payment due dates for a portion of its sales into the third and fourth quarters of the year. Accounts receivable have generally increased further early in the third quarter as additional 60 to 90 day extended terms have been offered to stimulate sales in advance of the Company's highest volume quarters. Accounts receivable usually decrease in the fourth quarter as payments are received on prior quarters' sales and a larger percentage of current sales are made with shorter payment terms. Inventory generally builds during the first two quarters and peaks in the third quarter to support the higher sales volumes of the third and fourth quarters. Working capital requirements have been seasonal for the subsidiaries. Inventories have generally increased during the first half of the year to accommodate the sales in the third and fourth quarters. Accounts receivable generally decline to their lowest point in the second quarter just before the sales increase in the second half of the year. Principal maturities on the Company's industrial revenue bonds for the remainder of 1999 will be $429,167, and maturities for 2000 and 2001 will be $616,667 and $666,667, respectively. The annual interest charges on the Company's industrial revenue bonds, at a fixed rate of 7.5%, will be $422,188 for the remainder of 1999, and $525,000 and $478,750 for 2000 and 2001, respectively. Management believes that cash generated from operations, and available under the Company's revolving credit facility, will be sufficient to finance its operations, expected working capital needs, capital expenditures, and debt service requirements for the remainder of 1999 and for the foreseeable future. YEAR 2000 The Company is devoting resources throughout its business operations to minimize the risk of potential disruption from the Year 2000 ("Y2K") problem. This problem is a result of computer programs having been written using two digits (rather than four) to define the applicable year. Any information technology ("IT") systems that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000, which could result in miscalculations and system failures. The problem also extends to many "Non-IT" systems; that is, operating and control systems that rely on embedded chip systems. In addition, like every other business enterprise, the Company is at risk from Y2K failures on the part of its major business counterparts, including suppliers and customers, as well as potential failures in public and private infrastructure services. System failures resulting from the Y2K problem could adversely affect operations and financial results of the Company. Y2K failures on the part of our major vendors would limit our available inventory for resale. Failures at our customer level would result in lower revenue. Public infrastructure failures could adversely affect power and communications. In late 1996, the Company determined that its operating system would not be Y2K compliant and made a decision to purchase new operating software (purchasing, distribution, and financial) to run its business. In connection with this decision, new hardware was purchased that moved the Company from a mainframe to a client/server environment. System modifications and testing have been ongoing with installation of the new system anticipated to begin in the second quarter of 1999 with completion in the third quarter of 1999. In the second half of 1998, the Company put together a project team headed up by an executive of the Company with the assistance of the department heads. A plan was put together to assess all internal Non-IT systems as well as key suppliers and customers. 11 Form 10-Q Page 11 An inventory was taken of all internal Non-IT systems. From this inventory, 39% of the systems were identified as critical to business operations. Of the critical systems, 87% have been identified as Y2K compliant or unaffected by computer dates. Of the remaining ones, 7% will be addressed by the new operating system and the other 6% are still being investigated. All critical vendors have been surveyed as well as all major customers as to their Y2K readiness. The Company is currently evaluating the responses to determine what action is necessary, if any. The Company will be developing contingency plans as a precautionary measure for all systems that are not expected to be Y2K compliant. This planning will begin in the second quarter of 1999 and will be completed by the third quarter of 1999. The cost of the system upgrades, which includes hardware and software, since inception through completion, is expected to be approximately $3.8 million. As of March 31, 1999, the Company had spent $3.4 million. This amount was funded out of working capital and the Company's revolving credit line. Amounts incurred to-date and expected to be incurred in the future do not include amounts for internal manpower or additional amounts determined as a result of the contingency programs to be developed, if any. Based upon its efforts to-date, the Company believes that the vast majority of both its IT and its Non-IT systems, including all critical and important systems, will remain up and running after January 1, 2000. Accordingly, the Company does not currently anticipate that internal systems failures will result in any material adverse effect to its operations or financial condition. The nature and focus of the Company's efforts to address the Y2K problem may be revised periodically as interim goals are achieved or new issues are identified. In addition, it is important to note that the description of the Company's efforts necessarily involves estimates and projections with respect to activities required in the future. These estimates and projections are subject to change as work continues, and such changes may be substantial. ADVISORY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain of the statements contained in Item 2 (Management's Discussion and Analysis of Financial Condition and Results of Operations) that are not historical facts are forward-looking statements subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. The Company cautions readers of this report on Form 10-Q that such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Although the Company's management believes that their expectations of future performance are based on reasonable assumptions within the bounds of their knowledge of their business and operations, there can be no assurance that actual results will not differ materially from their expectations. Factors which could cause actual results to differ from expectations include, among other things, reductions in, or lack of growth of, firearm sales; potential negative effects of existing and future gun control legislation on consumer demand for firearms; the potential negative impact on gross margins from shifts in the Company's product mix toward lower margin products; seasonal fluctuations in the Company's business; competition from national, regional and local distributors and various manufacturers who sell products directly to the Company's customer base; competition from sporting goods mass merchandisers or "superstores" which sell in competition with the Company's primary customer base; exposure to product liability lawsuits; the challenges and uncertainties in the implementation of the Company's expansion and development strategies; the Company's dependence on key personnel; the Company's ability to detect and correct the potential Year 2000 sensitive problem; and other factors described in this report and in other reports filed by the Company with the Securities and Exchange Commission. 12 Form 10-Q Page 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's exposure to market risk for a change in interest rates relates solely to its debt under its revolving credit facility ($24.7 million at March 31, 1999 and $26.5 million at December 31, 1998). The Company does not currently use derivative financial instruments. Approximately $6.3 million of the Company's debt at March 31, 1999 and $6.4 million at December 31, 1998 was subject to fixed interest rates and principal payments. This debt is comprised of the Company's long-term debt under its industrial revenue refunding bonds which carry an interest rate of 7.5%. The Company is exposed to changes in interest rates primarily as a result of its debt in a revolving credit facility ("Facility") used to maintain liquidity and fund the Company's business operations. Pursuant to the Company's operating strategies, it maintains minimal cash balances and is substantially dependent on, among other things, the availability of adequate working capital financing to support inventories and accounts receivables. The Facility provides the Company with a revolving line of credit and letters of credit. The maximum amount that can be outstanding at anytime is $40.0 million. The term of the Facility expires on September 30, 2001. Borrowings under the Facility bear interest at a rate equal to, at the Company's option, prime rate plus 0.375% or 2.25% above the 30 or 90 day LIBOR rate. Combinations of these rates can be used for the various loans that comprise the total outstanding balance under the Facility. The interest rates of the Facility are subject to change based on changes in the Company's leverage ratio and net income. At March 31, 1999, the interest rate was 7.21%. The definitive extent of the Company's interest rate risk under the Facility is not quantifiable or predictable because of the variability of future interest rates and business financing requirements. The Company's long-term debt has a fair value, based upon current interest rates, of approximately $31.0 million at March 31, 1999 and $33.9 million at December 31, 1998. Fair value will vary as interest rates change. The following table presents the aggregate maturities and historical cost amounts of the fixed debt principal and interest rates by maturity dates at March 31, 1999: Maturity Date Fixed Rate Debt Interest Rate ------------------------------------------------------------------ 1999 $ 429,000 7.5% 2000 617,000 7.5% 2001 667,000 7.5% 2002 716,000 7.5% 2003 767,000 7.5% Thereafter 3,069,000 7.5% ------------------------------------------------------------------ $ 6,265,000 7.5% 13 Form 10-Q Page 13 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3(b) Amended and Restated Bylaws 27 Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the three months ended March 31, 1999. 14 Form 10-Q Page 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized. Ellett Brothers, Inc. Date: May 14, 1999 By: /s/ Joseph F. Murray, Jr. ----------------------------------------------- Joseph F. Murray, Jr. President, Chief Executive Officer and Director By /s/ George E. Loney ----------------------------------------------- George E. Loney Chief Financial Officer (principal financial and accounting officer) EX-3.B 2 AMENDED & RESTATED BYLAWS 1 Exhibit 3(b) to 1999 First Quarter Report on Form 10-Q AMENDED AND RESTATED BYLAWS OF ELLETT BROTHERS, INC. ARTICLE I OFFICES AND REGISTERED AGENT Section 1.01. Principal Office. The Corporation shall maintain its Principal Office in the City of Chapin, State of South Carolina, or such other place as designed from time to time by the Board of Directors for the principal executive offices of the Corporation. Section 1.02. Registered Office. The Corporation shall maintain a Registered Office as required by the South Carolina Business Corporation Act of 1988, as amended from time to time (the "Act"), at a location in the State of South Carolina designated by the Board of Directors from time to time. In the absence of a contrary designation by the Board of Directors, the Registered Office of the Corporation shall be located at its Principal Office. Section 1.03. Other Offices. The Corporation may have such other offices within and without the State of South Carolina as the business of the Corporation may require from time to time. The authority to establish or close such other offices may be delegated by the Board of Directors to one or more of the Corporation's Officers. Section 1.04. Registered Agent. The Corporation shall maintain a Registered Agent as required by the Act who shall have a business office at the Corporation's Registered Office. The Registered Agent shall be designated by the Board of Directors from time to time to serve at its pleasure. In the absence of such designation the Registered Agent shall be the Corporation's Secretary. Section 1.05. Filings. In the absence of directions from the Board of Directors to the contrary, the Secretary of the Corporation shall cause the Corporation to maintain currently all filings in respect of the Registered Office and Registered Agent with all governmental officials as required by the Act or otherwise by law. ARTICLE II SHAREHOLDERS Section 2.01. Annual Meetings. An annual meeting of the Corporation's shareholders shall be held once each calendar year for the purpose of electing Directors and for the transaction of such other business as may properly come before the meeting. The annual meeting shall be held at the time and place designated by the Chairman of the Board or the Board of Directors from time to time. In the absence of or in the event of any conflict between any such designation, the annual meeting shall be held at the Corporation's Principal Office at the hour of ten o'clock in the morning on the second Tuesday of the sixth month following the Corporation's fiscal year-end; but if that day shall be a holiday Bylaws of Ellett Brothers, Inc. Page 1 2 under federal or South Carolina law, then such annual meeting shall be held on the next succeeding business day. Section 2.02. Special Meetings. Special meetings of the Corporation's shareholders may be called for any one or more lawful purposes by the Corporation's President, the Chairman of the Board, a majority of the Directors, or the holders of record of ten percent of the Corporation's outstanding shares of stock entitled to vote at such meeting. Special meetings of the shareholders shall be held at a time and location designated by the Chairman of the Board or by a majority of the Directors as reflected in the notice of the meeting provided for hereinafter; provided, however, that if the Chairman of the Board or a majority of Directors do not designate a time and location, such meetings shall be held at the Corporation's Principal Office at the hour of ten o'clock in the morning on the date designated in the notice of the meeting provided for below. In the event that the Chairman of the Board and a majority of Directors timely designate different times or locations, then the designations of the majority of the Directors shall control. Section 2.03. Notice of Meetings, Waiver or Notice. Written or printed notice of all meetings of shareholders shall be delivered not less than ten nor more than sixty days before the meeting date, either personally, by mail, or by any other method permitted under the Act, to all shareholders of record entitled to vote at such meeting. If mailed, the notice shall be deemed to be delivered when deposited with postage thereon prepaid in the United States mail, addressed to the shareholder at the shareholder's address as it appears on the Corporation's records, or if a shareholder shall have filed with the Secretary of the Corporation a written request that notices to such shareholder be mailed to some other address, then directed to such shareholder at that other address. Such notice shall state the date, time, and place of the meeting and, in the case of a special meeting, the purpose or purposes for which such meeting was called. At the written request, delivered personally or by registered or certified mail, of the person or persons calling a special meeting of shareholders, the President or Secretary of the Corporation shall fix the date and time of the meeting and provide notice thereof to the shareholders as required above; provided, however, such date shall in no event be fixed less than ten or more than sixty days from the date the request was received. If the notice of the meeting is not given within fifteen days after the request is made to the President or Secretary, the person or persons calling the meeting may fix the date and time of the meeting and give or cause to be given the notice thereof required above. Notice of a meeting of shareholders need not be given to any shareholder who attends such meeting or who, in person or by proxy, signs a waiver of notice either before or after the meeting. To be effective such waiver shall contain statements or recitals sufficient to identify beyond reasonable doubt the meeting to which it applies. Such statements or recitals may, but need not necessarily, include reference to the date and purpose of the meeting and the business transacted thereat. Statement or recital of the proper date of a meeting shall be conclusive identification of the meeting to which a waiver of notice applies unless the waiver contains additional statements or recitals creating a patent ambiguity as to its proper application. Section 2.04. Quorum. Except as may otherwise be required by the Act or the Corporation's Articles of Incorporation, at any meeting of shareholders the presence, in person or by proxy, of the holders of a majority of the outstanding shares entitled to vote thereat shall constitute a quorum for the transaction of any business properly before the meeting. Shares entitled to vote as a separate voting group on a matter may take action at a meeting on such matter only if a quorum of the shares in the separate voting group are present in person or by proxy at the meeting. Except as may otherwise be required by law or the Corporation's Articles of Incorporation, at any meeting of shareholders the presence, in person or by proxy, of the holders of a majority of the outstanding shares in a separate Bylaws of Ellett Brothers, Inc. Page 2 3 voting group entitled to vote thereat as separate voting group, if any, shall constitute a quorum of such separate voting group for purposes of such matter. In the absence of a quorum a meeting may be adjourned from time to time, in accordance with the provisions concerning adjournments contained elsewhere in these Bylaws, by the holders of a majority of the shares represented at the meeting in person or in proxy. At such adjourned meeting a quorum of Shareholders may transact such business as might have been properly transacted at the original meeting. Section 2.05. Transaction of Business. Business transacted at an annual meeting of shareholders may include all such business as may properly come before the meeting. Business transacted at a special meeting of shareholders shall be limited to the purposes stated in the notice of the meeting. Section 2.06. Shareholders of Record. For the purpose of determining shareholders entitled to vote at any meeting of shareholders, or entitled to receive dividends or other distributions, or in connection with any other proper purpose requiring a determination of shareholders, the Board of Directors shall by resolution fix a record date for such determination. The date shall be not more than fifty and not less than ten days prior to the date on which the activity requiring the determination is to occur. The shareholders of record appearing in the stock transfer books of the Corporation at the close of business on the record date so fixed shall constitute the shareholders of right in respect of the activity in question. In the absence of action by the Board of Directors to fix a record date, the record date shall be ten days prior to the date on which the activity requiring a determination of shareholders is to occur. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting to a date not later than one hundred twenty days after the date fixed for the original meeting; provided, however, that the Board of Directors may in its discretion fix a new record date for any adjourned meeting. Section 2.07. Voting. Except as may otherwise be required by the Act or the Corporation's Articles of Incorporation, and subject to the provisions concerning shareholders of record contained elsewhere in these Bylaws, a person (or his proxy) present at a meeting of shareholders shall be entitled to one vote for each share of voting stock as to which such person is the shareholder of record. In elections of Directors, those candidates receiving the greater number of votes cast (although not necessarily a majority of votes cast) at the meeting shall be elected. Any other corporate action shall be authorized by a majority of the votes cast at the meeting unless otherwise provided by the Act, the Corporation's Articles of Incorporation, or these Bylaws. Section 2.08. Voting Inspectors. For each meeting of Shareholders an odd number of persons (which may be only one person) shall be appointed to serve as voting inspectors, either by the Board of Directors prior to the meeting or by the presiding official at the meeting. The voting inspectors may include one or more representatives of the Corporation's Transfer Agent, if any. The voting inspectors shall by majority decision (if more than one inspector) resolve all disputes which may arise concerning the qualification of voters, the validity of proxies, the existence of a quorum, the voting power of shares, and the acceptance, rejection, and tabulation of votes. Each voting inspector shall take an oath (which may be in writing) to execute his duties impartially and to the best of his ability. Such oath shall be administered to each voting inspector before a voting inspector enters upon the discharge of his duties. The Corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the voting inspector(s), acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. Neither the Corporation nor the voting inspector(s) who accepts or rejects a vote, consent, waiver, or proxy Bylaws of Ellett Brothers, Inc. Page 3 4 appointment in good faith and in accordance with the standards of this section shall be liable in damages to any shareholder for the consequences of the acceptance or rejection. Corporate action based on the acceptance or rejection of a vote, consent, waiver, or proxy appointment under this Section 2.08 is valid unless a court of competent jurisdiction determines otherwise. Section 2.09. Adjournments. A majority of the voting shares held by shareholders of record present in person or by proxy at a meeting of shareholders may (whether or not constituting a quorum) adjourn a meeting from time to time to a date, time, and place fixed by notice as provided for above or, if such date is less than thirty days from the date of adjournment, to a date, time, and place fixed by the majority vote and announced at the original meeting prior to adjournment. Section 2.10. Action Without Meeting. Holders of record of voting shares may take action without meeting by written consent as to such matters and in accordance with such requirements and procedures as may be permitted by the Act. Section 2.11. Proxies. At all meetings of shareholders, a shareholder may vote in person or by proxy. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. A proxy must be filed (a) in writing executed by the shareholder or by his duly authorized attorney in fact, or (b) by a telegram or cablegram appearing to have been transmitted by the shareholder; provided, however that the Board of Directors may also establish procedures by which shareholders can file proxies with the Secretary by telecopier facsimile transmission. No proxy shall be valid after eleven months from the date of its execution unless it qualifies as an irrevocable proxy under the Act. Section 2.12. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted, either in person or by proxy, by the officer, agent, or proxy as the bylaws of that corporation may prescribe, or in the absence of such provision, as the board of directors of that corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by such trustee either in person or by proxy, but no trustee shall be entitled to vote shares held by such trustee without a transfer of the shares into such trustee's name as trustee. Shares standing in the name of a receiver may be voted, either in person or by proxy, by the receiver, and shares held by or under the control of a receiver may be voted, either in person or by proxy, by the receiver without the transfer thereof into such receiver's name if authority to do so is contained in an appropriate order of the court by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote, either in person or by proxy, the shares so transferred. Section 2.13. Action. Approval of actions by shareholders shall be in accordance with the requirements of the Act, except to the extent otherwise provided by the Articles of Incorporation. Bylaws of Ellett Brothers, Inc. Page 4 5 Section 2.14. Inspection Rights. The shareholders shall have only such rights to inspect records of this Corporation to the extent, and according to the procedures and limitations, prescribed by the Act. Section 2.15. Conduct of Meetings. The Chairman of the Board of Directors shall preside at each meeting of shareholders. In the absence of the Chairman, the meeting shall be chaired by an officer of the Corporation in accordance with the following order: Chief Executive Officer, President and Vice President. In the absence of all such officers, the meeting shall be chaired by an officer of the Corporation chosen by the vote of a majority in interest of the shareholders present in person or represented by proxy and entitled to vote thereat. The Secretary or in his or her absence an Assistant Secretary or in the absence of the Secretary and all Assistant Secretaries a person whom the chairman of the meeting shall appoint shall act as secretary of the meeting and keep a record of the proceedings thereof. The Board of Directors of the Corporation shall be entitled to make such rules or regulations for the conduct of meetings of shareholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to shareholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comment by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless, and to the extent, determined by the Board of Directors or the chairman of the meeting, meetings of shareholders shall not be required to be held in accordance with rules of parliamentary procedure ARTICLE III DIRECTORS Section 3.01. Authority. The Board of Directors shall have ultimate authority over the conduct and management of the business and affairs of the Corporation. Section 3.02. Number. The Corporation shall have an authorized range of no fewer than two and no more than seven Directors. The number of Directors within such authorized range: (a) initially shall be established at two Directors; and (b) thereafter shall be established from time to time without amendment to these Bylaws by resolution of the Board of Directors or as otherwise provided by law. The authorized range and established number of Directors may be increased or decreased from time to time by resolution of the Board of Directors; provided, however, that after election of Directors at the first annual meeting of the shareholders, the established number of Directors may be increased or decreased from time to time by resolution of the Board of Directors only by a number of Directors that is thirty percent (30%) or less of the number of Directors last elected by the shareholders, and only the shareholders may increase or decrease by more than thirty percent (30%) the established number Bylaws of Ellett Brothers, Inc. Page 5 6 of Directors last elected by the shareholders. No decrease in the authorized range or established number of Directors shall have the effect of shortening the term of any incumbent Director. Section 3.03. Tenure. Each Director shall hold office from the date of his election and qualification until his successor shall have been duly elected and qualified, or until his earlier removal, resignation, death, or incapacity. An election of all Directors by the shareholders shall be held at each annual meeting of the Corporation's shareholders. A Director need not be a shareholder. In case of any increase in the number of Directors, the additional directorships so created may be filled in the first instance in the same manner as a vacancy in the Board of Directors. Section 3.04. Removal. Any Director may be removed from office, with or without cause, by a vote of the holders of a majority of the shares of the Corporation's voting stock. Any Director may be removed from office with cause by a majority vote of the Board of Directors at a meeting at which only the removal and replacement of the Director or Directors in question shall be considered. Section 3.05. Vacancies. The Board of Directors may by majority vote of the Directors then in office, regardless of whether such Directors constitute a quorum, elect a new Director to fill a vacancy on the Board of Directors; provided, however, that no person may be elected to fill a vacancy created by his removal from office pursuant to these Bylaws. Section 3.06. Annual and Regular Meetings. An annual meeting of the Board of Directors shall be called and held for the purpose of annual organization, changes in the established number of Directors, if any, appointment of Officers and committees, and transaction of any other business. If such meeting is held promptly after and at the place specified for the annual meeting of shareholders, no notice of the annual meeting of the Board of Directors need be given. Otherwise, such annual meeting of the Board of Directors shall be held at such time (at any time prior to and not more than thirty days after the annual meeting of shareholders) and place as may be specified in the notice of the meeting. The Board of Directors may by resolution provide for the holding of additional regular meetings without notice other than such resolution; provided, however, the resolution shall fix the dates, times, and places (which may be anywhere within or without the State of the Corporation's Principal Office) for these regular meetings. Except as otherwise provided by law, any business may be transacted at any annual or regular meeting of the Board of Directors. Section 3.07. Special Meetings; Notice of Special Meeting. Special meetings of the Board of Directors may be called for any lawful purpose or purposes by any Director or the President of the Corporation. The person calling a special meeting shall give, or cause to be given, to each Director at his business address, notice of the date, time and place of the meeting by any normal means of communication not less than seventy-two hours nor more than sixty days prior thereto. The notices may, but need not, describe the purpose of the meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail addressed to the Director's business address, with postage thereon prepaid. If notice is given by telegram, the notice shall be deemed delivered when the telegram is delivered to the telegraph company and the transmission fee therefor is paid. If notice is given by telecopier facsimile transmission, the notice shall be deemed delivered when the facsimile of the notice is transmitted to a telecopier facsimile receipt number designated by the receiving Director, if any, so long as such director transmits to the sender an acknowledgment of receipt. Any time or place fixed for a special meeting must permit participation in the meeting by means of telecommunications as authorized below. Bylaws of Ellett Brothers, Inc. Page 6 7 Section 3.08. Waiver of Notice of Special Meetings. Notice of a special meeting need not be given to any Director who signs a waiver of notice either before or after the meeting. To be effective the waiver shall contain recitals sufficient to identify beyond reasonable doubt the meeting to which it applies. The recitals may, but need not necessarily, include reference to the date and purpose of the meeting and the business transacted thereat. Recital of the proper date of a meeting shall be conclusive identification of the meeting to which a waiver of notice applies unless the waiver contains additional recitals creating a patent ambiguity as to its proper application. The attendance of a Director at a special Directors meeting shall constitute a waiver of notice of that meeting, except where the Director attends the meeting for the sole and express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Section 3.9. Participation by Telecommunications. Any Director may participate in, and be regarded as present at, any meeting of the Board of Directors by means of conference telephone or any other means of communication by which all persons participating in the meeting can hear each other at the same time. Section 3.10. Quorum. A majority of Directors in office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. Section 3.11. Action. The Board of Directors shall take action pursuant to resolutions adopted by the affirmative vote of a majority of the Directors participating in a meeting at which a quorum is present, or the affirmative vote of a greater number of Directors where required by the Corporation's Articles of Incorporation or otherwise by law. Section 3.12. Action Without Meeting. Any action permitted by the Act and required or permitted to be taken by the Board of Directors at an annual, regular, or special meeting may be taken without a meeting if a consent in writing, setting forth the action taken, shall be signed by all of the Directors in accordance with the procedures authorized by the Act. Section 3.13. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting, or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward his dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. The right to dissent shall not apply to a Director who voted in favor of such action. Section 3.14. Executive Committee. The Board of Directors shall by resolution, adopted in accordance with the Act, designate and delegate authority to an Executive Committee with any or all such authority as may be permitted by the Act. The Executive Committee shall be a standing committee appointed annually. The Executive Committee shall be composed of two or more members, who shall serve at the pleasure of the Board of Directors. All voting members of the Executive Committee must be Directors of the Corporation appointed by the Board of Directors in accordance with Section 33-8-240 of the Act. The Chairman of the Executive Committee shall be elected by the Board of Directors from the Directors appointed to the Executive Committee. The Chairman of the Executive Committee shall have such duties and authority as set forth in these Bylaws. The Chairman Bylaws of Ellett Brothers, Inc. Page 7 8 of the Board shall be a member of the Executive Committee. The duties, constitution, and procedures of the Executive Committee shall be prescribed by the Board of Directors. In the absence, incapacity, inability, or refusal of the President to act, the Executive Committee shall designate an Officer or Director temporarily or indefinitely to assume the authority and perform the duties of the President, which designee shall serve in such capacity at the pleasure of the Executive Committee. Section 3.15. Other Committees. The Board of Directors may from time to time by resolution, adopted in accordance with the Act, designate and delegate authority to an Audit Committee, a Compensation Committee, and other committees, with any or all such authority as may be permitted by the Act. Any such committee may be designated as a standing committee appointed annually or as a special committee for specific circumstances or transactions with a limited duration. Each committee shall be composed of two or more members, who shall serve at the pleasure of the Board of Directors. All voting committee members must be Directors of the Corporation appointed by the Board of Directors in accordance with Section 33-8-240 of the Act. The Chairman of the Board shall be given notice of all committee meetings and may in his discretion attend meetings of any committee to which he is not appointed as a member. The duties, constitution, and procedures of any committee shall be prescribed by the Board of Directors. The Board of Directors shall designate one member of each committee as its chairman. In the event the Corporation is listed on the NASDAQ National Merit System, and so long as the Board of Directors determines in its discretion to maintain such listing, the Board of Directors shall designate, delegate such authority to, and appoint, as a standing committee, an Audit Committee which satisfies the applicable NASDAQ/NMS criteria. Section 3.16. Committee Meetings. A majority of each committee's voting members shall constitute a quorum for the transaction of business by the committee, and each committee shall take action pursuant to resolutions adopted by a majority of the committee's voting members participating in a meeting at which a quorum of the committee is present. Each committee may also take action without a meeting if a consent in writing, setting forth the action taken, shall be signed by all of the committee's voting members in accordance with the procedures authorized by the Act. Special meetings of any committee may be called at any time by any Director who is a member of the committee or by any person entitled to call a special meeting of the full Board of Directors. Except as otherwise provided in this section, the conduct of all meetings of any committee, including notice thereof, and the taking of any action by such committee, shall be governed by Sections 3.06 through 3.13 of this Article. Section 3.17. Compensation. The Board of Directors may by resolution authorize payment to all Directors of a uniform fixed sum for attendance at each meeting or a stated salary (which need not be uniform) as a Director, or a combination thereof, in such amounts as the Board may determine from time to time. The Board of Directors may, in its discretion, authorize payments of greater amounts or different forms to the Chairman of the Board or particular Directors or committee members than are paid to other Directors. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefore. The Board of Directors may also by resolution authorize the payment or reimbursement of all expenses of each Director related to the Director's attendance at meetings or other service to the Corporation. Section 3.18. Notification of Nominations. Nominations for the election of Directors may be made by the Board of Directors or by any shareholder entitled to vote for the election of directors. Any shareholder entitled to vote for the election of directors at a meeting may nominate persons for election as Directors only if written notice of such shareholder's intent to make such nomination is Bylaws of Ellett Brothers, Inc. Page 8 9 given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of shareholders, 120 days in advance of such meeting, and (ii) with respect to any election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated, (b) a representation that such shareholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (c) a description of all arrangements or understandings between such shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such shareholder, (d) such other information regarding each nominee proposed by such shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had each nominee been nominated, or intended to be nominated, by the Board of Directors, and (e) the consent of each nominee to serve as a Director of the Corporation if elected. The chairman of a shareholder meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. Section 3.19. Order of Business. Unless otherwise determined by the Chairman of the Board, the order of business at the annual meeting, and so far as practicable at all other meetings of the Board of Directors, shall be as follows: 1. Determination of a quorum 2. Reading and disposal of all unapproved minutes 3. Reports of Officers and committees, if applicable 4. Change in established number of Directors, if applicable 5. Appointment of Officers and committees, if applicable 6. Unfinished business, if applicable 7. New business 8. Adjournment Unless, and to the extent, determined by the Board of Directors or the chairman of the meeting, or unless required by a specific rule to the contrary in these Bylaws, the Articles of Incorporation, or the Act, meetings of the Board of Directors shall not be required to be held in accordance with rules of parliamentary procedure. ARTICLE IV OFFICERS Section 4.01. In General. The Officers of the Corporation shall consist of a Chairman of the Board, a Chairman of the Executive Committee, a President, one or more Vice Presidents, a Secretary, and a Treasurer, and such additional vice presidents, assistant secretaries, assistant treasurers and other officers and agents as the Board of Directors deems advisable from time to time. All Officers shall be appointed by the Board of Directors to serve at the pleasure of the Board. Except as may otherwise be provided by Act or in the Articles of Incorporation, any Officer may be removed by the Board of Directors at any time, with or without cause. Any vacancy, however occurring, in any office Bylaws of Ellett Brothers, Inc. Page 9 10 may be filled by the Board of Directors for the unexpired term. One person may hold two or more offices. Each Officer shall exercise the authority and perform the duties as may be set forth in these Bylaws and any additional authority and duties as the Board of Directors shall determine from time to time. Section 4.02. Chairman of the Board. The Board of Directors shall elect from the Directors a Chairman of the Board to serve at the pleasure of the Board of Directors. The Chairman of the Board shall whenever possible preside at all meetings of shareholders and all meetings of the Board of Directors. Except as otherwise provided herein and as may be specifically limited by resolution of the Board of Directors or Executive Committee, the Chairman of the Board may execute on the Corporation's behalf any and all contracts, agreements, notes, bonds, deeds, mortgages, certificates, instruments, and other documents. The Chairman of the Board shall exercise such additional authority and duties as set forth in these Bylaws and as the Board of Directors shall determine from time to time. Section 4.03. Chairman of the Executive Committee. The Board of Directors shall elect from the Directors (who are appointed to the Executive Committee) a Chairman of the Executive Committee to serve at the pleasure of the Board of Directors. The Chairman of the Executive Committee shall preside at all meetings of the Executive Committee. In the absence of the Chairman of the Board, the Chairman of the Executive Committee shall preside at all meetings of the shareholders and all meetings of the Board of Directors. Except as otherwise provided herein and as may be specifically limited by resolution of the Board of Directors or Executive Committee, the Chairman of the Executive Committee may execute on the Corporation's behalf any and all contracts, agreements, notes, bonds, deeds, mortgages, certificates, instruments, and other documents. The Chairman of the Executive Committee shall exercise such additional authority and duties as set forth in these Bylaws and as the Board of Directors shall determine from time to time. Section 4.04. President. The President shall, subject to the authority of the Board of Directors and Executive Committee, manage the business and affairs of the Corporation. The President shall see that the resolutions of the Board of Directors and committees thereof are put into effect. Except as otherwise provided herein, the President may execute on the Corporation's behalf such contracts, agreements, notes, bonds, deeds, mortgages, certificates, instruments, and other documents as may be authorized by specific or general resolution of the Board of Directors. The President shall also perform such other duties and may exercise such other powers as are incident to the office of president and as are from time to time assigned to him by the Act, these Bylaws, the Board of Directors, the Chairman of the Board, or the Chairman of the Executive Committee. Section 4.05. Vice Presidents. Except as otherwise determined by the Board of Directors, each Vice President shall serve under the direction of the President. Except as otherwise provided herein, each Vice President shall perform such duties and may exercise such powers as are incident to the office of vice president and as are from time to time assigned to him by the Act, these Bylaws, the Board of Directors, the Chairman of the Board, the Chairman of the Executive Committee, or the President. Section 4.06. Secretary. Except as otherwise provided by these Bylaws or determined by the Board of Directors, the Secretary shall serve under the direction of the President. The Secretary shall whenever possible attend all meetings of the shareholders and the Board of Directors, and whenever the Secretary cannot attend such meetings, such duty shall be delegated by the presiding officer for such Bylaws of Ellett Brothers, Inc. Page 10 11 meeting to a duly authorized assistant secretary. The Secretary shall record or cause to be recorded under his general supervision the proceedings of all such meetings and any other actions taken by the shareholders or the Board of Directors (or by any committee of the Board in place of the Board) in a book or books (or similar collection) to be kept for such purpose. The Secretary shall give, or cause to be given, all notices in connection with such meetings. The Secretary shall be the custodian of the Corporate seal and affix the seal to any document requiring it, and to attest thereto by signature. The Secretary may delegate his authority to affix the Corporation's seal and attest thereto by signature to any Assistant Secretary. The Board of Directors may give general authority to any other officer or specified agent to affix the Corporation's seal and to attest thereto by signature. Unless otherwise required by law, the affixing of the Corporation's seal shall not be required to bind the Corporation under any documents duly executed by the Corporation and the use of the seal shall be precatory in the discretion of the Corporation's duly authorized signing officers. The Secretary shall properly keep and file, or cause to be properly kept and filed under his supervision, all books, reports, statements, notices, waivers, proxies, tabulations, minutes, certificates, documents, records, lists, and instruments required by the Act or these Bylaws to be kept or filed, as the case may be. The Secretary may when requested, and shall when required, authenticate any records of the Corporation. Except to the extent otherwise required by the Act, the Secretary may maintain, or cause to be maintained, such items within or without the State of South Carolina at any reasonable place. In the event the Board of Directors designates and engages a Transfer Agent, as permitted by these Bylaws, such duties of keeping such shareholder records and the like accepted by such Transfer Agent shall be deemed delegated from the Secretary to such Transfer Agent, but such Transfer Agent shall be subject to supervision of the Secretary. The Secretary shall perform such other duties and may exercise such other powers as are incident to the office of secretary and as are from time to time assigned to him by the Act, these Bylaws, the Board of Directors, the Chairman of the Board, or the President. Section 4.07. Treasurer. Except as otherwise provided by these Bylaws or determined by the Board of Directors, the Treasurer shall serve under the direction of the President. The Treasurer shall, under the direction of the President, keep safe custody of the Corporation's funds and securities, maintain and give complete and accurate books, records, and statements of account, give and receive receipts for moneys, and make deposits of the Corporation's funds, or cause the same to be done under his supervision. The Treasurer shall upon request report to the Board of Directors on the financial condition of the Corporation. The Treasurer may be required by the Board of Directors at any time and from time to time to give such bond as the Board may determine. The Treasurer shall perform such other duties and may exercise such other powers as are incident to the office of treasurer and as are from time to time assigned to him by the Act, these Bylaws, the Board of Directors, the Chairman of the Board, or the President. Section 4.08. Assistant Officers. Except as otherwise provided by these Bylaws or determined by the Board of Directors, the Assistant Secretaries and Assistant Treasurers, if any, shall serve under the immediate direction of the Secretary and the Treasurer, respectively, and under the ultimate direction of the President. The Assistant Officers shall assume the authority and perform the duties of their respective immediate superior officer as may be necessary at the direction of such immediately superior officer, or in the absence, incapacity, inability, or refusal of such immediate superior officer to act. The seniority of Assistant Officers shall be determined from their dates of appointment unless the Board of Directors shall otherwise specify. Bylaws of Ellett Brothers, Inc. Page 11 12 Section 4.09. Salaries. The salaries and other compensation of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving a salary or other compensation by reason of the fact that he is also a Director of the Corporation. ARTICLE V INDEMNIFICATION Section 5.01. Scope. Every person who was or is a party to, or is threatened to be made a party to, or is otherwise involved in, any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a Director or Officer of the Corporation or is or was serving at the request of the Corporation or for its benefit as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under and pursuant to the Act (and regardless of whether such proceeding is by or in the right of the Corporation), against all expenses, liabilities, and losses (including without limitation attorneys' fees, judgments, fines, and amounts paid or to be paid in settlement) suffered, or reasonably incurred by him in connection therewith. Such right of indemnification shall be a contract right that may be enforced in any manner desired by such person. Such right of indemnification shall not be exclusive of any other right which such Directors, Officers, or representatives may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of Shareholders, insurance, provision of law, or otherwise, as well as their rights under this Article V. The Corporation may contract in advance to provide indemnification. Section 5.02. Advances and Reimbursements. The determination that indemnification under this Article V is permissible and the evaluation as to the reasonableness of expenses in a specific case shall be made, in the case of a Director, as provided by the Act, and in the case of an Officer or other person indemnified under Section 5.03, if any, as provided in Section 5.03 of this Article; provided, however, that if a majority of the Directors of the Corporation has changed after the date of the alleged conduct giving rise to a claim for indemnification, such determination and evaluation shall, at the option of the person claiming indemnification, be made by special legal counsel agreed upon by the Board of Directors and such person. Unless a determination has been made that indemnification is not permissible, and upon receipt of such written affirmation as required by the Act from the person to be indemnified, the Corporation shall make advances and reimbursements for expenses incurred by a Director or Officer or other person indemnified under Section 5.03, if any, in a proceeding upon receipt of an undertaking from him to repay the same if it is ultimately determined that he is not entitled to indemnification. Such undertaking shall be an unlimited, unsecured general obligation of the Director or Officer and shall be accepted without reference to his ability to make repayment. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that a Director or Officer acted in such a manner as to make him ineligible for indemnification. Section 5.03. Indemnification of Other Persons. The Corporation may, to a lesser extent or to the same extent that the Corporation is required to provide indemnification to its Directors and Officers, provide indemnification and make advances and reimbursements for expenses to (a) its Bylaws of Ellett Brothers, Inc. Page 12 13 employees, agents, and advisors, (b) the directors, officers, employees, agents, and advisors of its subsidiaries and predecessor entities, and (c) any person serving any other legal entity in any capacity at the request of the Corporation; and, if authorized by general or specific action of the Board of Directors, may contract in advance to do so. The determination that indemnification under this Section is permissible, the authorization of such indemnification, and the advance or reimbursement, if any, and the evaluation as to the reasonableness of expenses in a specific case, shall be made as authorized from time to time by general or specific action of the Board of Directors, which action may be taken before or after a claim for indemnification is made, or as otherwise provided by the Act. No person's rights under Sections 5.01 or 5.02 of this Article shall be limited by the provisions of this Section 5.03. Section 5.04. Indemnification Plan. The Board of Directors may from time to time adopt an Indemnification Plan implementing the rights granted in Section 5.01. This Indemnification Plan shall set forth in detail any other mechanics for exercise of the indemnification rights granted in this Article V, and shall be binding upon all parties except to the extent it is proven to be inconsistent with these Bylaws or the Act. The absence of the adoption of such plan, however, shall not vitiate the effectiveness of the rights conferred by this Article V. Section 5.05. Insurance. The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was a Director or Officer of the Corporation, or is or was serving at the request of the Corporation as a Director or Officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise, or any other person indemnified or described as the subject of potential indemnification in this Article V, against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person. Section 5.06. Miscellaneous. Every reference in this Article V to persons who are or may be entitled to indemnification shall include all persons who formerly occupied any of the positions referred to and their respective heirs, executors, and administrators. Special legal counsel selected to make determinations under this Article V may be counsel for the Corporation. Indemnification pursuant to this Article V shall not be exclusive of any other right of indemnification to which any person may be entitled, including indemnification pursuant to valid contract, indemnification by legal entities other than the Corporation and indemnification under policies of insurance purchased and maintained by the Corporation or others. However, no person shall be entitled to indemnification by the Corporation to the extent prohibited by the Act or to the extent he is indemnified by another, including an insurer; provided, however, that the Corporation may make advances and reimbursements, subject to appropriate repayment obligations, under Section 5.02 if the effectiveness of such other indemnification will be delayed. The provisions of this Article shall not be deemed to prohibit the Corporation from entering into contracts otherwise permitted by law with any individuals or legal entities, including those named above, for the purpose of conducting the business of the Corporation. Indemnification of any person under this Article V shall be implemented only in accordance with procedures and requirements mandated by the Act and by plans, if any, adopted pursuant to Section 5.04. If any provision of this Article V or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity shall not affect other provisions or applications of this Article V, and to this end the provisions of this Article V are severable. Bylaws of Ellett Brothers, Inc. Page 13 14 ARTICLE VI TRANSACTIONS Section 6.01. Contracts. The Board of Directors may authorize any Officer or Officers, or agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 6.02. Loans. The Board of Directors may authorize any Officer or Officers, or agent or agents, to contract any indebtedness and grant evidence of indebtedness and collateral therefor in the name of an on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 6.03. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by the Officer or Officers, or agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. Section 6.04. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may select. Section 6.05. Voting of Shares in Other Corporations Owned By The Corporation. Subject always to the specific directions of the Board of Directors, any share or shares of stock issued by any other corporation and owned or controlled by the Corporation may be voted at any shareholders' meeting of the other corporation by the Chairman of the Board, the Chairman of the Executive Committee, or the President of the Corporation if any of them is present, or in their absence by any Vice-President of the Corporation who may be present. Whenever, in the judgment of the Chairman of the Board, the Chairman of the Executive Committee, or the President, or in their absence, of any Vice-President, it is desirable for the Corporation to execute a proxy or give a shareholders' consent in respect to any share or shares of stock issued by any other corporation and owned or controlled by the Corporation, the proxy or consent shall be executed in the name of the Corporation by the Chairman of the Board, the Chairman of the Executive Committee, the President, or one of the Vice-Presidents of the Corporation without necessity of any authorization by the Board of Directors. Any person or persons designated in the manner above stated as the proxy or proxies of the Corporation shall have full right, power and authority to vote such share or shares of stock issued by the other corporation. Bylaws of Ellett Brothers, Inc. Page 14 15 ARTICLE VII STOCK Section 7.01. Certificates for Shares. Certificates representing shares of capital stock of the Corporation shall state upon the face thereof the name of the person to whom issued, the number of shares, the fact that the Corporation is organized under the laws of the State of South Carolina, and such other matters as the Board of Directors may approve or as may be required by the Act. Each certificate shall be signed by (a) any one of the Chairman of the Board, the Chairman of the Executive Committee, the President, or a Vice President, and (b) by any one of the Secretary or an Assistant Secretary. Where a certificate is countersigned by (i) a Transfer Agent other than the Corporation or its employee, or (ii) a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any Officer whose facsimile signature has been placed upon a certificate shall have ceased to be such Officer before such certificate is issued it may be issued by the Corporation with the same effect as if he were such Officer at the date of issue. All certificates for shares shall be consecutively numbered. Certificates for shares of different classes, and different series within a class, to the extent authorized, if any, shall bear appropriate designations to identify the class or series as required by the Act. Section 7.02. Stock Transfer Books. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issuance, shall be entered on the stock transfer books of the Corporation. Such stock transfer books shall be maintained by the Secretary or Transfer Agent as a record of the Corporation's shareholders, in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order by class of shares showing the number and class of shares held by each shareholder. Section 7.03. Transfer of Shares. Subject to the provisions of the Act and to any transfer restrictions binding on the Corporation, transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation by the holder of record thereof or by his agent, attorney-in-fact or other legal representative, who shall furnish proper evidence of authority to transfer, upon surrender for cancellation of the certificate for such shares. Unless the Board of Directors in its discretion has by resolution established procedures, if any, by which a beneficial owner of shares held by a nominee may be recognized by the Corporation as the owner thereof, the person in whose name shares stand on the stock transfer books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. The Corporation's stock transfer books maintained by the Secretary or the Transfer Agent shall be conclusive in all such regards absent a determination by the Board of Directors of manifest error. All certificates surrendered to the Corporation for transfer shall be canceled. Section 7.04. New or Replacement Certificates. No new stock certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed, or mutilated certificate a substitute certificate may be issued therefor upon: (a) the making of an affidavit by the holder of record of the shares represented by such certificate setting forth the facts concerning the loss, theft, or mutilation thereof; (b) delivery of such bond and/or indemnity to the Corporation as the Secretary or Board of Directors may prescribe or as may be required by law; and (c) satisfaction of such other reasonable requirements (which may include without limitation advertisement of the same) as the Secretary or Board of Directors may prescribe. To the extent permitted by applicable law (including Section 36-8-405 of the South Carolina Uniform Bylaws of Ellett Brothers, Inc. Page 15 16 Commercial Code), a new certificate may be issued without requiring any bond when, in the judgment of the Board of Directors, it is not imprudent to do so; and without limiting the generality of the foregoing, the Secretary or the Board of Directors may in their discretion waive (except as prohibited by law) any bond requirement otherwise applicable where the aggregate fair market value of the shares represented by such lost, stolen, or mutilated certificate is less than five hundred dollars based upon indicia deemed reasonable by the waiving party. Section 7.05. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its stock transfer books as the owner of shares to receive dividends or other distributions, and to vote as such owner, and to hold liable for calls and assessments, if any, a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by the Act or by procedures, if any, established by resolution of the Board of Directors in its discretion by which a beneficial owner of shares held by a nominee may be recognized as the owner thereof. Such procedures, if any, shall also set forth the extent of such recognition. Section 7.06 Transfer Agent. The Board of Directors may, in its discretion, appoint an independent institutional Transfer Agent to serve as transfer agent and registrar for the Corporation's stock at the pleasure of the Board. Such Transfer Agent shall assist the Corporation's Secretary and voting inspectors in performance of their duties respecting shares of the Corporation's stock. Such Transfer Agent shall maintain the Corporation's stock transfer books and stock certificates in accordance with the Act, these Bylaws, instructions of the Board of Directors, and customary procedures consistently applied. Such Transfer Agent shall perform such other duties and shall be entitled to exercise such other powers, as may be assigned to the Transfer Agent from time to time by the Secretary or the Board of Directors. Section 7.07 Transfer Restrictions. The Secretary shall have full power and authority to place or cause to be placed on any and all stock certificates restrictive legends to the extent reasonably believed necessary or appropriate to ensure the Corporation's compliance with federal or any state's securities laws, and to issue to any Transfer Agent stop transfer orders to effect compliance with such legends. ARTICLE VIII MISCELLANEOUS Section 8.01. Fiscal Year. The fiscal year of the Corporation shall be established, and may be altered, by resolution of the Board of Directors from time to time as the Board deems advisable. Section 8.02. Dividends. The Board of Directors may from time to time at any regular or special meeting (or by any other manner of action permitted by these Bylaws and the Act) declare, and the Corporation may pay, dividends or other distributions on its outstanding shares of stock in the manner and upon the terms and conditions as the Board of Directors deems advisable and as may be permitted by the Articles of Incorporation, the Act, and any other lawful restrictions imposed upon the Bylaws of Ellett Brothers, Inc. Page 16 17 Corporation. Such dividends or other distributions, when declared and permitted, may be paid in cash, stock, property, or any other permitted means lawfully declared by the Board of Directors. Section 8.03. Seal. The seal of the Corporation shall be circular in form and shall have inscribed thereon the name of the Corporation, the year of its organization, and the words "Corporate Seal, State of South Carolina." Section 8.04. Forms of Records. When consistent with good business practices, any records of the Corporation may be maintained in other than written form if such other form is capable of reasonable preservation and conversion into written form within a reasonable time. Section 8.05. Amendments. Any or all of these Bylaws may be altered, amended, or repealed and new Bylaws may be adopted by the Board of Directors, subject to the following: (a) the right of the shareholders to alter, adopt, amend, or repeal Bylaws as provided in the Act; and (b) action of the shareholders in adopting, amending, or repealing a particular Bylaw wherein the Board of Directors is expressly prohibited by such shareholder action from amending or repealing the particular Bylaw acted upon by the shareholders. The shareholders may amend or repeal any or all of these Bylaws even though these Bylaws may also be amended or repealed by the Board of Directors. Any notice of a meeting of shareholders at which Bylaws are to be adopted, amended, or repealed shall state that the purpose, or one of the purposes, of the meeting is to consider the adoption, amendment, or repeal of Bylaws and contain or be accompanied by a copy or summary of the proposal. Section 8.06. Severability. If any provision of these Bylaws or the application thereof to any person or circumstances shall be held invalid or unenforceable to any extent by a court of competent jurisdiction, such provision shall be complied with or enforced to the greatest extent permitted by law as determined by such court, and the remainder of these Bylaws and the application of such provision to other persons or circumstances shall not be affected thereby and shall continue to be complied with and enforced to the greatest extent permitted by law. Section 8.07 Usage. In construing these Bylaws, feminine or neuter pronouns shall be substituted for masculine forms and vice versa, and plural terms shall be substituted for singular forms and vice versa, in any place in which the context so requires. The section and paragraph headings contained in these Bylaws are for reference purposes only and shall not affect in any way the meaning or interpretation of these Bylaws. Terms such as "hereof", "hereunder", "hereto", and words of similar import shall refer to these Bylaws in the entirety and all references to "Articles", "Paragraphs", "Sections", and similar cross references shall refer to specified portions of these Bylaws, unless the context clearly requires otherwise. Terms used herein which are not otherwise defined shall have the meanings ascribed to them in the Act. All references to statutory provisions shall be deemed to include corresponding sections of succeeding law. The foregoing are certified to be the true and complete Amended and Restated Bylaws of the Corporation as adopted by the incorporator and the initial Board of Directors as of June 30, 1992 and amended and restated by the Board of Directors effective April 5, 1999. /s/ E. Wayne Gibson ---------------------------------------- Secretary (Corporate Seal) Bylaws of Ellett Brothers, Inc. Page 17 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF ELLETT BROTHERS, INC. FOR THE THREE MONTHS ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 MAR-31-1999 232 0 23,061 (680) 36,928 61,160 15,531 7,629 70,713 16,564 5,699 0 0 9,652 13,804 70,713 38,946 38,946 32,198 32,198 5,292 0 (517) 1,072 392 679 0 0 0 679 0.16 0.16
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