FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 2001
[ ] Transition Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from __________ to __________
Commission File Number: 0-22994
GUNTHER INTERNATIONAL, LTD.
(Exact name of small business issuer as specified in its charter)
DELAWARE 51-0223195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE WINNENDEN ROAD, NORWICH, CONNECTICUT 06360
(Address of principal executive offices) (Zip Code)
860-823-1427
(Issuers Telephone Number)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last year)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
___ ___
The number of shares of the Registrant's Common stock outstanding as of October
31, 2001 was 4,291,769.
Transitional Small Business Disclosure Format (check one):
YES NO X
___ ___
GUNTHER INTERNATIONAL, LTD.
Index
Page
----
PART I - CONDENSED FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 2001 and March 31, 2001 3
Condensed Consolidated Statements of Operations for
the three and six months ended September 30, 2001 and 2000 4
Condensed Consolidated Statements of Cash Flows for the six
months ended September 30, 2001 and 2000 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis or Plan of Operation 8-10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
PART I. CONDENSED FINANCIAL INFORMATION
Item 1. Financial Statements
GUNTHER INTERNATIONAL, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2001 March 31, 2001
------------------ --------------
Assets
Current Assets:
Cash $ 819,651 $ 759,393
Accounts receivable, less allowance 1,127,501 2,002,398
Costs and estimated earnings in excess
of billings on uncompleted contracts 801,922 601,068
Inventories 1,781,179 1,936,538
Prepaid expenses 349,107 254,552
------------ ------------
Total current assets 4,879,360 5,553,949
------------ ------------
Property and Equipment:
Machinery and equipment 1,915,815 1,811,895
Furniture and fixtures 520,616 469,737
Leasehold improvements 129,564 128,377
------------ ------------
2,565,995 2,410,009
Accumulated depreciation and
amortization (1,275,675) (1,006,350)
------------ ------------
1,290,320 1,403,659
------------ ------------
Other Assets:
Excess of costs over fair value of net
assets acquired, net 2,551,429 2,551,429
Other 37,927 45,127
------------ ------------
2,589,356 2,596,556
------------ ------------
$ 8,759,036 $ 9,554,164
============ ============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Current maturities of long-term debt - other $ 24,462 $ 17,045
Accounts payable 2,576,432 2,440,437
Accrued expenses 1,477,064 1,507,965
Billings in excess of costs and estimated
earnings on uncompleted contracts 634,917 325,085
Deferred service contract revenue 2,389,079 1,782,466
------------ ------------
Total current liabilities 7,101,954 6,072,998
------------ ------------
Long-term debt, less current maturities:
Related parties 6,804,345 6,676,593
Other 67,993 59,400
------------ ------------
Total long-term debt 6,872,338 6,735,993
------------ ------------
Commitments and contingencies
Stockholders' Equity (Deficit):
Common stock 4,292 4,292
Additional paid-in capital 12,188,556 12,188,556
Accumulated deficit (17,408,104) (15,447,675)
------------ ------------
Total Stockholders' Equity (Deficit) (5,215,256) (3,254,827)
------------ ------------
$ 8,759,036 $ 9,554,164
============ ============
See accompanying notes.
3
Gunther International, Ltd.
Condensed Consolidated Statements of Operations
September 30,
------------------------------------------------------------------------------
For the Three Months Ended For the Six Months Ended
---------------------------------- ----------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Sales:
Systems $ 1,672,960 $ 3,224,296 $ 3,982,012 $ 6,388,521
Maintenance 2,939,387 2,513,532 5,664,091 4,936,187
------------ ------------ ------------ ------------
Total sales 4,612,347 5,737,828 9,646,103 11,324,708
------------ ------------ ------------ ------------
Cost of sales:
Systems 1,869,971 2,422,328 3,765,807 4,351,009
Maintenance 2,065,576 1,970,676 4,093,727 3,958,440
------------ ------------ ------------ ------------
Total cost of sales 3,935,547 4,393,004 7,859,534 8,309,448
------------ ------------ ------------ ------------
Gross profit 676,800 1,344,824 1,786,569 3,015,260
------------ ------------ ------------ ------------
Operating expenses:
Selling and administrative 1,432,405 1,216,640 2,693,712 2,286,465
Research and development 370,991 399,463 724,451 727,326
------------ ------------ ------------ ------------
Total operating expenses 1,803,396 1,616,103 3,418,163 3,013,791
------------ ------------ ------------ ------------
Operating income (loss) (1,126,596) (271,279) (1,631,594) 1,469
Interest expense, net (171,255) (157,542) (328,835) (320,622)
Litigation (Note 4) -- -- -- (178,500)
------------ ------------ ------------ ------------
Net loss $ (1,297,851) $ (428,821) $ (1,960,429) $ (497,653)
============ ============ ============ ============
Basic and fully diluted loss per share $ (0.30) $ (0.10) $ (0.46) $ (0.12)
============ ============ ============ ============
Weighted average number of common
shares outstanding 4,291,769 4,291,769 4,291,769 4,291,769
============ ============ ============ ============
See accompanying notes.
4
Gunther International, Ltd.
Condensed Consolidated Statements of Cash Flows
Six Months Ended September 30,
2001 2000
----------- -----------
Operating activities:
Net loss $(1,960,429) $ (497,653)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 289,795 333,319
Provision for doubtful accounts 23,000 19,519
Interest accrued on related party note payable 127,752 121,020
Loss on disposal of equipment 30,287 --
Changes in operating assets and liabilities:
Accounts receivable 851,896 1,021,040
Inventories 155,359 (378,151)
Prepaid expenses (94,555) (26,457)
Accounts payable 135,995 (26,785)
Accrued expenses (30,901) (129,692)
Deferred service contract revenue 606,613 115,996
Billings, costs and estimated earnings on
uncompleted contracts - net 108,979 537,520
----------- -----------
Net cash provided by operating activities 243,791 1,089,676
----------- -----------
Investing activities:
Acquisitions of equipment and leasehold improvements (173,742) (380,301)
----------- -----------
Net cash used for investing activities (173,742) (380,301)
----------- -----------
Financing activities:
Repayment of notes payable and long-term debt (9,791) (162,933)
Proceeds from notes payable and long-term debt -- 800,000
----------- -----------
Net cash provided by (used for) financing activities (9,791) 637,067
----------- -----------
Net increase in cash 60,258 1,346,442
Cash, beginning of period 759,393 87,136
----------- -----------
Cash, end of period $ 819,651 $ 1,433,578
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 104,891 $ 211,677
Cash paid for income taxes 20,713 1,118
Supplemental Disclosure of Non-Cash Investing Activities:
Equipment acquired for notes payable and capitalized leases $ 25,801 $ 70,740
See accompanying notes.
5
GUNTHER INTERNATIONAL, LTD.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation:
In the opinion of management, the accompanying unaudited interim
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and contain
all adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial position and the results of operations and cash
flows for the interim periods presented. These financial statements should be
read in conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
March 31, 2001. The results of operations for the interim periods are not
necessarily indicative of results to be expected for the full year. The
condensed consolidated balance sheet as of March 31, 2001 was derived from the
audited financial statements at that date.
2. New Accounting Policy:
In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, "Business Combinations"
and No. 142, "Goodwill and Other Intangible Assets" ("FAS 142"). Under the new
rules, goodwill will no longer be amortized but will be subject to annual
impairment tests in accordance with FAS 142. Other intangible assets will
continue to be amortized over their useful lives.
The Company has adopted the new rules on accounting for goodwill and
other intangible assets effective April 1, 2001. Application of FAS 142 is
expected to result in an annual increase in net income of $224,000 ($0.05 per
share). Had the provisions of FAS 142 been applied to the three and six months
ended September 30, 2000, the net loss for the Company would have been
$(373,000), or ($0.09) per share, and $(386,000), or ($0.09) per share,
respectively.
3. Liquidity and Recapitalization Agreement:
The Company's primary need for liquidity is to fund operations while it
endeavors to increase sales and achieve consistent profitability. Historically,
the Company has derived liquidity through systems and maintenance sales
(including customer deposits), financing arrangements with banks and other third
parties and, from time to time, sales of its equity securities.
For fiscal 2000 and 2001 and for the six months ended September 30,
2001, the Company incurred net losses of $(759,000), $(284,000), and $(2.0)
million, respectively. For fiscal 2001 and the six months ended September 30,
2001, cash of $744,000 and $244,000, respectively, was provided by operations
while in fiscal 2000, cash used for operations was $1.1 million. At September
30, 2001, the Company has a deficiency in working capital of $2.2 million and a
stockholders' deficit of $5.2 million. At March 31, 2001 and September 30, 2001,
backlog for high-speed assembly system and upgrade orders, consisting of total
contract price less revenue recognized to date for all signed orders on hand,
was $1.3 million and $2.5 million, respectively, as compared to $4.2 million and
$5.6 million at March 31, 2000 and September 30, 2000, respectively.
Following the close of the quarter ended September 30, 2001, the
Company experienced a liquidity short-fall which necessitated the borrowing of
additional funds from Gunther Partners and one of its members. On October 30,
the Company borrowed $50,000 from Robert Spiegel, a director and a member of
Gunther Partners. This borrowing was subsequently repaid in full, together with
interest at 8.5% per annum, on November 2, 2001. The Company borrowed an
additional $100,000 from Gunther Partners on November 7, 2001, and depending on
the cash-flow needs of the Company, additional borrowings may become necessary
prior to the consummation of the Rights Offering discussed below. The Company
expects that any such borrowings will be repaid in full, together with interest
at the rate of 8% per annum, from the cash generated by ongoing operations or
the proceeds of the Rights Offering.
Under the Company's normal sales pricing policy, approximately 50% of
the sales price of each system is received by the Company within 30 days from
the time an order is placed by a customer; approximately 40% is received at the
time the system is shipped to the customer and the remaining 10% is received
approximately 30 days after delivery of the system. As a result, the Company
receives a significant cash flow benefit from the receipt of new orders.
In June 2001, the Company entered into a recapitalization agreement
with certain creditors and stockholders (the "Recapitalization Agreement"). The
Recapitalization Agreement provides that the Company will effectuate a
registered public offering ("Rights Offering") of up to 16,000,000 shares of its
Common Stock (the "Offered Shares") to its existing stockholders by subscription
right on a pro-rata basis at a subscription price of $0.50 per share. The net
proceeds of the Rights Offering (a minimum of $7 million less offering
expenses), will be used to repay in full the notes payable to Gunther Partners
LLC ($4.5 million) and to a stockholder and director ($500,000), to purchase all
notes payable to the Estate of Harold S. Geneen (the "Estate") for a total of
$500,000 (carrying value of $1.9 million at September 30, 2001) and to
repurchase 919,568 shares of the Company's Common Stock held by the Estate for
$137,935 (or $0.15 per share). The balance of the net proceeds from the Rights
Offering will be used to pay past due accounts payable to our trade creditors
and for general working capital and capital expenditure purposes. This will
eliminate principal payments of $2.5 million and interest payments of $400,000
that would have been due in the next twelve months on the
6
Company's existing debt. The Rights Offering commenced on October 24, 2001 and
is expected to remain open until November 21, 2001. The proceeds of the offering
are expected to be available to the Company within two weeks after the offering
period ends.
In connection with the Recapitalization Agreement, the Company will
recognize an extraordinary gain of $1.4 million on the purchase of the notes
payable to the Estate. If the transaction contemplated by the Recapitalization
Agreement were fully implemented at September 30, 2001, and the minimum proceeds
of $6.8 million, net of expenses, were received, the pro forma capitalization of
the Company would be as follows:
Recapitalization
As Reported Adjustments Pro Forma
------------ ---------------- ------------
Long-term debt,
including current maturities $ 6,896,800 $ (6,804,345) $ 92,455
------------ ------------ ------------
Stockholders' equity (deficit):
Common Stock 4,292 14,000 18,292
Treasury Stock -- (137,935) (137,935)
Additional
paid-in capital 12,188,556 6,666,482 18,855,038
Accumulated deficit (17,408,104) 1,423,863 (15,984,421)
------------ ------------ ------------
(5,215,256) 7,966,410 2,751,154
------------ ------------ ------------
Total capitalization $ 1,681,544 $ 1,162,065 $ 2,843,609
============ ============ ============
4. Commitments and Contingencies:
In fiscal 1999, two purported class action lawsuits were filed against
the Company, its then-current chief executive officer and its then-current chief
financial officer asserting claims under the federal securities laws. The
Company reached an out-of-court settlement and contributed $215,000 to the
settlement in May 2001. The Company had previously accrued the $215,000. Of this
amount, $178,500 was expensed during the first quarter of fiscal 2001 and
$36,500 was expensed in the fourth fiscal quarter of 2000. Legal fees associated
with the claim were expensed as incurred, net of insurance proceeds. No
additional expenses are anticipated with respect to this matter.
7
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Systems sales include sales of high-speed assembly systems, upgrades to
previously sold systems and inc.jet imager systems and ancillary products.
Systems sales for the three and six months ended September 30, 2001 were $1.7
million and $4.0 million, respectively, a decrease of 48% and 38%, respectively,
over the comparable periods of the prior year. The greatest factor in this
decrease was the reduction in the sales of high speed assembly systems from $5.4
million in the six months of fiscal 2000 to $2.7 million in 2001. The decrease
in sales is attributable to a slowdown in orders during the previous two fiscal
quarters. As shown in the table below, orders for high-speed assembly systems
and upgrades to previously sold systems for the three months ended September 30,
2001 were more than the total orders for the previous three quarters combined. A
summary of orders, sales and backlog for the each of the last four fiscal
quarters for the high speed assembly systems and upgrades is as follows:
(in millions)
-----------------------------------------------------------------------------
September 30, 2001 June 30, 2001 March 31, 2001 December 31, 2000
------------------ ------------- -------------- -----------------
Backlog, beginning of period $ .3 $1.3 $3.7 $5.6
Orders 3.2 .7 1.3 .9
Sales (1.0) (1.7) (3.7) (2.8)
---- ---- ---- -----
Backlog, end of period $2.5 $ .3 $1.3 $3.7
==== ==== ==== =====
Backlog consists of total contract price less revenue recognized to date for all
signed orders on hand. The backlog has improved over the last two quarters but
remains well below the level of a year ago. Without giving effect to any
additional orders that may be received after September 30, 2001, the backlog at
September 30, 2001 is expected to generate system sales of approximately $2.0
during the quarter ending December 31, 2001 and an additional $0.5 during the
quarter ending March 31, 2002.
Inc.jet sales for the three and six months ended September 30, 2001 were $0.7
million and $1.3 million, respectively, an increase of 22% and 29%,
respectively, over the comparable periods of the prior year. The increase in
sales is primarily due to an increased market acceptance for the imager and an
increase in ink sales to end users.
Maintenance sales for the three and six months ended September 30, 2001 were
$2.9 million and $5.7 million, respectively, an increase of 17% and 15% over the
comparable periods of the prior year. The increase is primarily attributable to
a larger number of systems under service contract from shipments during the year
and an increase in service coverage for several clients.
Gross profit for the three and six months ended September 30, 2001 was $0.7
million and $1.8 million, respectively, a decrease of 50% and 41% over the
comparable periods of the prior year. The gross margin as a percentage of system
sales decreased to (12)% for the quarter ended September 30, 2001 from 25% for
the quarter ended September 30, 2000. The gross margin as a percentage of system
sales decreased to 5% for the six months ended September 30, 2001 from 32% for
the six months ended September 30, 2000. This was primarily due to a decrease in
volume of high-speed assembly systems in production during the period. Overhead
costs during the period remained relatively stable while the number of systems
in production decreased. In an effort not to jeopardize future production
levels, certain overhead expenses were not reduced in response to the low volume
of production. The gross margin on maintenance sales increased to 30% and 28%
for the three and six months ended September 30, 2001, respectively, from 22%
and 20% for the comparable periods of the prior year. The increase in gross
margin on maintenance sales is attributable to the increase in revenues
described above while costs rose only 5%. Direct labor on service contracts
remained relatively stable even though revenues increased.
Selling and administrative expenses for the three and six months ended September
30, 2001 were $1.4 million and $2.7 million, respectively, an increase of 18%
over the comparable periods of the prior year. Selling and administrative
expenses, as a percentage of total revenues, for the three and six months ended
September 30, 2001 were 31% and 28%, respectively, as compared to 21% and 20%
for the comparable periods of the prior year. Effective April 1,
8
2001, the Company adopted new rules on accounting for goodwill and other
intangible assets promulgated by the Financial Accounting Standards Board (see
Footnote 2 to the Condensed Consolidated Financial Statements). Had these new
rules been applied to the three and six months ended September 30, 2000, selling
and administrative expenses for fiscal 2001 would have increased 23% and 24%,
respectively. These increases are primarily attributable to an increase in
marketing expenses related to the inc.jet product line, personnel costs related
to inc.jet sales, other increases in personnel costs related to administration
and professional fees relating to the upgrade of the Company's business
information systems. Also, during the six months ended September 30, 2000, the
Company recorded reimbursements and adjustments for legal fees associated with
litigation and costs associated with the building lease totaling approximately
$125,000, thereby reducing expenses in that period.
Research and development expenses for the three and six months ended September
30, 2001 were $0.4 million and $0.7 million, respectively, remaining relatively
stable as compared to the same periods of the prior year. Research and
development expenses, as a percentage of total revenues, for the three and six
months ended September 30, 2001 were 8% as compared to 7% and 6% for the
comparable periods of the prior year. Research and development expenses for the
three and six months ended September 30, 2000 were primarily attributable to the
development of the new Series W system introduced at the industry trade show in
October 2000. Primary research and development efforts in the current year are
the completion of certain features on the Series W, documentation for the
production of the Series W and development of the next line of inc.jet imagers.
Interest expense for the three and six month periods ended September 30, 2001
increased 9% and 3% over the comparable periods of the prior year. The increase
was primarily attributable to new equipment loans. See Liquidity and Capital
Resources for a discussion to changes in the debt structure after September 30,
2001.
Liquidity and Capital Resources
The Company's primary need for liquidity is to fund operations while it
endeavors to increase sales and achieve consistent profitability. Historically,
the Company has derived liquidity through systems and maintenance sales
(including customer deposits), financing arrangements with banks and other third
parties and, from time to time, sales of its equity securities.
For fiscal 2000 and 2001 and the six months ended September 30, 2001, the
Company incurred net losses of $(759,000), $(284,000), and $(2.0) million,
respectively. For fiscal 2001 and the six months ended September 30, 2001, cash
of $744,000 and $244,000, respectively, was provided by operations while in
fiscal 2000, cash used for operations was $1.1 million. At September 30, 2001,
the Company has a deficiency in working capital of $2.2 million and a
stockholders' deficit of $5.2 million. At March 31, 2001 and September 30, 2001,
backlog for high-speed assembly system and upgrade orders, consisting of total
contract price less revenue recognized to date for all signed orders on hand,
was $1.3 million and $2.5 million, respectively, as compared to $4.2 million and
$5.6 million at March 31, 2000 and September 30, 2000, respectively.
Following the close of the quarter ended September 30, 2001, the Company
experienced a liquidity short-fall which necessitated the borrowing of
additional funds from Gunther Partners and one of its members. On October 30,
the Company borrowed $50,000 from Robert Spiegel, a director and a member of
Gunther Partners. This borrowing was subsequently repaid in full, together with
interest at 8.5% per annum, on November 2, 2001. The Company borrowed an
additional $100,000 from Gunther Partners on November 7, 2001, and depending on
the cash-flow needs of the Company, additional borrowings may become necessary
prior to the consummation of the Rights Offering discussed below. The Company
expects that any such borrowings will be repaid in full, together with interest
at the rate of 8% per annum, from the cash generated by ongoing operations or
the proceeds of the Rights Offering.
Under the Company's normal sales pricing policy, approximately 50% of the sales
price of each system is received by the Company within 30 days from the time an
order is placed by a customer; approximately 40% is received at the time the
system is shipped to the customer and the remaining 10% is received
approximately 30 days after delivery of the system. As a result, the Company
receives a significant cash flow benefit from the receipt of new orders.
In June 2001, the Company entered into a recapitalization agreement with certain
creditors and stockholders (the "Recapitalization Agreement"). The
Recapitalization Agreement provides that the Company will effectuate a
registered public offering ("Rights Offering") of up to 16,000,000 shares of its
Common Stock (the "Offered Shares") to its existing stockholders by subscription
right on a pro-rata basis at a subscription price of $0.50 per share. The net
proceeds of the Rights Offering (a minimum of $7 million less offering
expenses), will be used to repay in full the notes payable to Gunther Partners
LLC ($4.5 million) and to a stockholder and director ($500,000), to purchase all
notes payable to the Estate of Harold S. Geneen (the "Estate") for a total of
$500,000 (carrying value of $1.9 million at September 30, 2001) and to
repurchase 919,568 shares of the Company's Common Stock held by the Estate for
$137,935 (or $0.15 per share). The balance of the net proceeds from the Rights
Offering will be used to pay past due accounts payable to our trade creditors
and for general working capital and capital expenditure
9
purposes. This will eliminate principal payments of $2.5 million and interest
payments of $400,000 that would have been due in the next twelve months on the
Company's existing debt. The Rights Offering commenced on October 24, 2001 and
is expected to remain open until November 21, 2001. The proceeds of the offering
are expected to be available to the Company within two weeks after the offering
period ends.
In connection with the Recapitalization Agreement the Company will recognize an
extraordinary gain of $1.4 million on the purchase of the notes payable to the
Estate. If the transactions contemplated by the Recapitalization Agreement were
fully implemented at September 30, 2001, and the minimum proceeds of $6.8
million, net of expenses, were received, the pro forma capitalization of the
Company would be as follows:
Recapitalization
As Reported Adjustments Pro Forma
----------- ---------------- ---------
Long-term debt,
including current maturities $ 6,896,800 $ (6,804,345) $ 92,455
------------ ------------ ------------
Stockholders' equity (deficit):
Common Stock 4,292 14,000 18,292
Treasury Stock -- (137,935) (137,935)
Additional
paid-in capital 12,188,556 6,666,482 18,855,038
Accumulated deficit (17,408,104) 1,423,863 (15,984,421)
------------ ------------ ------------
(5,215,256) 7,966,410 2,751,154
------------ ------------ ------------
Total capitalization $ 1,681,544 $ 1,162,065 $ 2,843,609
============ ============ ============
On a going forward basis, management believes that the working capital provided
by the Rights Offering and cash generated from operations will be sufficient to
meet the Company's cash flow needs for the next twelve months. The Company's
cash needs may be affected by a number of factors, however, many of which are
beyond the control of management. See "Forward Looking Statements," below. Thus,
there can be no assurance that the Company will not need significantly more cash
than is presently forecasted by management or that the Company's current and
expected sources of cash will be sufficient to fund the Company's ongoing
operations.
Inflation
The effect of inflation on the Company has not been significant during the last
two fiscal years.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. In general, any
statements contained in this report that are not statements of historical fact
may be deemed to be forward-looking statements within the meaning of Section
21E. Without limiting the generality of the foregoing, the words "believes,"
"anticipates," "plans," "expects," and other similar expressions are intended to
identify forward-looking statements. Investors should be aware that such
forward-looking statements are based on the current expectations of management
and are inherently subject to a number of risks and uncertainties that could
cause the actual results of the Company to differ materially from those
reflected in the forward-looking statements. Some of the important factors which
could cause actual results to differ materially from those projected include,
but are not limited to, the following: general economic conditions and growth
rates in the finishing and related industries; competitive factors and pricing
pressures; changes in the Company's product mix; technological obsolescence of
existing products and the timely development and acceptance of new products;
inventory risks due to shifts in market demands; component constraints and
shortages; the ramp-up and expansion of manufacturing capacity; the continued
availability of financing and the ability of the Company to consummate the
Rights Offering. The Company does not undertake to update any forward-looking
statement made in this report or that may from time-to-time be made by or on
behalf of the Company.
10
GUNTHER INTERNATIONAL, LTD.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
A. The 2001 Annual Meeting of Shareholders was held on September
6, 2001 at the Company's corporate office in Norwich,
Connecticut.
B. The following individuals were elected as directors at the
Annual Meeting:
Votes For Votes Withheld
1. James A. Cotter, Jr. 3,706,763 3,050
2. J. Kenneth Hickman 3,706,063 3,750
3. Steven S. Kirkpatrick 3,706,063 3,750
4. Gerald H. Newman 3,674,080 35,733
5. Marc I. Perkins 3,706,763 3,050
6. Robert Spiegel 3,706,763 3,050
7. Thomas M. Steinberg 3,706,763 3,050
C. Amendments to the Corporation's Restated Certificate of
Incorporation to (1) increase the authorized number of shares
of common stock from 16,000,000 to 32,000,000 and (2) to
delete authorization for the Company's Class B Common Stock
and Series B Common Stock and Series B Preferred Stock were
ratified by a vote of 2,397,560 for, 79,233 against and 2,681
abstentions.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits required by Item 601 of Regulation S-B:
3.1 Restated Certificate of Incorporation of the
Registrant, dated as of December 29, 1993.
3.2 Certificate of Amendment to the Registrant's Restated
Certificate of Incorporation dated as of October 22,
2001.
B. Reports on Form 8-K.
On September 26, 2001, the Registrant filed a Current Report
on Form 8-K reporting two recent events. On September 25,
2001, the Registrant received a forbearance letter from
Gunther Partners, LLC deferring payments of principal and
interest under certain debt securities. On September 25,
2001, the United States Securities and Exchange Commission
accepted an Offer of Settlement submitted by the Registrant
in connection with an informal investigation conducted by
the Division of Enforcement of the Commission with regard
to the circumstances surrounding the Registrant's
restatement of its fiscal year 1998 and 1997 financial
statements.
On October 3, 2001, the Registrant filed a Current Report on
Form 8-K reporting on estimated second quarter financial
results.
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GUNTHER INTERNATIONAL, LTD.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GUNTHER INTERNATIONAL, LTD.
(Registrant)
/s/ Michael M. Vehlies Date: November 14, 2001
-------------------------------
Michael M. Vehlies
Chief Financial Officer and Treasurer
(On behalf of the Registrant and as
Principal Financial and Accounting Officer)
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