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 August 4, 1996
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 0-23420
QUALITY DINING, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1804902
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3820 Edison Lakes Parkway, Mishawaka, Indiana 46545
(Address of principal executive offices and zip code)
(219) 271-4600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes __X____ No ________
The number of shares of the registrant's common stock outstanding as of
September 1, 1996 was 16,827,142.
QUALITY DINING, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED AUGUST 4, 1996
INDEX
Page
PART I. - Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Statements of Operations..... ..............3
Consolidated Balance Sheets..............................4
Consolidated Statements of Cash Flows....................5
Notes to Consolidated Financial Statements...............6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...........10
Part II - Other Information
Item 2. Changes in Securities...................................14
Item 6. Exhibits and Reports on Form 8-K........................14
Signatures........................................................15
QUALITY DINING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Twelve Weeks Ended Forty Weeks Ended
August 4, August 6, August 4, August 6,
1996 1995 1996 1995
-------- -------- -------- --------
Revenues:
Restaurant sales:
Burger King $ 17,941 $ 13,861 $ 53,529 $ 41,822
Grady's American Grill 22,761 - 64,440 -
Chili's Grill & Bar 9,805 9,063 30,891 29,292
Spageddies Italian Kitchen 1,720 1,352 6,093 3,272
Bruegger's Bagel Bakery 8,638 1,357 14,959 3,501
------- ------- ------- -------
Total restaurant sales 60,865 25,633 169,912 77,887
Franchise related revenue 2,723 - 2,723 -
------- ------- ------- -------
Total revenues 63,588 25,633 172,635 77,887
------- ------- ------- -------
Operating expenses:
Restaurant operating expenses:
Food and beverage 18,543 7,606 52,799 23,149
Payroll and benefits 17,499 6,597 48,149 20,149
Depreciation and amortization 3,061 1,194 8,121 3,632
Other operating expenses 14,253 5,561 38,397 17,708
------- ------- ------- -------
Total restaurant
operating expenses 53,356 20,958 147,466 64,638
General and administrative
expenses 3,905 1,274 8,993 4,556
Amortization of intangibles 817 140 1,386 468
Restructuring and
integration costs 8,000 - 9,938 -
------- ------- ------- -------
Total operating expenses 66,078 22,372 167,783 69,662
------- ------- ------- -------
Operating income (loss) (2,490) 3,261 4,852 8,225
------- ------- ------- -------
Other income (expense):
Interest expense (1,871) (738) (4,996) (2,107)
Gain on sale of property
and equipment - 376 3 372
Interest income 47 36 158 94
Other income (expense), net 25 (13) 63 (42)
------- ------- ------- -------
Total other expense, net (1,799) (339) (4,772) (1,683)
------- ------- ------- -------
Income (loss) before income taxes (4,289) 2,922 80 6,542
Income taxes (credit) (1,365) 1,081 230 2,421
------- ------- ------- -------
Net income (loss) $ (2,924) $ 1,841 $ (150) $ 4,121
======= ======= ======= =======
Net income (loss) per share $ (0.23) $ 0.27 $ (0.01) $ 0.61
======= ======= ======= =======
Weighted average number of shares
of common stock outstanding 12,825 6,759 10,034 6,748
======= ======= ======= =======
See Notes to Consolidated Financial Statements.
QUALITY DINING, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
August4, October 29,
1996 1995
-------- ----------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 5,803 $ 5,639
Accounts receivable 1,716 599
Note receivable 3,770 -
Inventories 2,802 824
Other current assets 4,441 1,352
Deferred income taxes 23 23
------- -------
Total current assets 18,555 8,437
------- -------
Property and equipment, net 168,316 63,209
------- -------
Other assets:
Franchise fees and development costs, net 10,533 10,698
Goodwill, net 152,275 10,216
Trademarks, net 13,195 100
Preopening costs and non-competition
agreements, net 2,329 1,709
Liquor licenses 2,735 2,131
Investment in redeemable preferred stock - 2,625
Other 816 121
------- -------
Total other assets 181,883 27,600
------- -------
Total assets $ 368,754 $ 99,246
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capitalized lease and
non-competition obligations $ 360 $ 360
Current portion of redeemable preferred
stock subscription payable - 375
Accounts payable 7,823 4,111
Accounts payable, related parties 59 1,076
Accrued liabilities 25,801 3,631
Income taxes payable - 711
------- -------
Total current liabilities 34,043 10,264
Long-term debt 60,892 7,413
Capitalized lease and non-competition
obligations, principally to related
parties, less current portion 6,767 6,884
Redeemable preferred stock subscription
payable, less current portion - 875
Deferred income taxes 2,409 2,409
------- -------
Total liabilities 104,111 27,845
------- -------
Stockholders' equity:
Preferred stock, without par value:
4,858,550 shares authorized; none issued
Common stock, without par value: 50,000,000
shares authorized; 16,847,142 and 8,856,520
shares issued, respectively 28 28
Additional paid-in capital 256,582 63,190
Retained earnings 8,283 8,433
------- -------
264,893 71,651
Less treasury stock, at cost, 20,000 shares 250 250
------- -------
Total stockholders' equity 264,643 71,401
Total liabilities and ------- -------
stockholders' equity $ 368,754 $ 99,246
======= =======
See Notes to Consolidated Financial Statements.
QUALITY DINING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Forty Weeks Ended
August 4, August 6,
1996 1995
-------- --------
Cash flows from operating activities:
Net income (loss) $ (150) $ 4,121
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization of
property and equipment 6,820 2,588
Amortization of franchise fees and
development costs 414 207
Amortization of preopening costs
and intangibles 2,749 1,261
Gain on sale of property and equipment (3) (372)
Net increase in current assets (2,934) (867)
Net increase in current liabilities 8,787 1,590
Other 46 -
Net cash provided by ------- -------
operating activities 15,729 8,528
------- -------
Cash flows from investing activities:
Acquisitions of business, net of cash
acquired (73,568) (18,874)
Increase in note receivable (3,770) -
Proceeds from sales of property and
equipment 3 598
Purchase of redeemable preferred stock - (375)
Increase in other assets (1,388) (166)
Purchase of property and equipment (30,177) (15,842)
Payment of franchise fees and
development costs (272) (358)
Payment of preopening costs (1,884) (834)
Advance to SHONCO - (1,450)
Net cash (used in) investing ------- -------
activities (111,056) (37,301)
------- -------
Cash flows from financing activities:
Proceeds from exercise of stock options 482 -
Proceeds from issuance of common stock 59,749 12
Proceeds from issuance of long-term debt 113,479 26,822
Repayment of long-term debt (76,135) -
Repayment of capitalized lease obligations (163) (153)
Redemption of preferred stock (1,665) -
Payment of redeemable preferred stock
subscription payable (250) (125)
Other (6) 1
Net cash provided by financing ------- -------
activities 95,491 26,557
------- -------
Net increase (decrease) in cash and
cash equivalents 164 (2,216)
Cash and cash equivalents, beginning
of period 5,639 4,453
------- -------
Cash and cash equivalents, end of period $ 5,803 $ 2,237
======= =======
Noncash investing and financing activities:
Acquisition of redeemable preferred stock - 500
Common stock issued in acquisitions 123,051 3,350
Long-term debt assumed in acquisition
of business 16,135 -
Conversion of preferred stock to
common stock 10,115 -
Treasury stock acquired in disposition
of restaurants - 250
See Notes to Consolidated Financial Statements.
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 4, 1996
(Unaudited)
Note 1: Description of Business.
As of August 4, 1996, Quality Dining, Inc. (the "Company") operated and
franchised a total of 490 quick service and casual theme dining
restaurants located throughout the country. The Company owns the
Bruegger's Bagel Bakery, Grady's American Grill and Spageddies Italian
Kitchen concepts and operates Burger King restaurants and Chili's Grill
& Bar restaurants as a franchisee. As of August 4, 1996, the Company
operated 80 Bruegger's Bagel Bakeries and franchised 279 units. In
addition, the Company operated 42 Grady's American Grill restaurants,
five Spageddies Italian Kitchen restaurants, 63 Burger King restaurants
and 21 Chili's Grill & Bar restaurants.
Note 2: Basis of Presentation.
The accompanying consolidated financial statements include the accounts
of Quality Dining, Inc. and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X promulgated by the
Securities and Exchange Commission. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for annual financial statement reporting purposes.
In the opinion of management, all adjustments, consisting only of normal
recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the forty- week period ended
August 4, 1996 are not necessarily indicative of the results that may be
expected for the 52-week year ending October 27, 1996.
These financial statements should be read in conjunction with the
Company's audited financial statements for the fiscal year ended October
29, 1995 included in the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission.
Note 3: Acquisitions.
On June 7, 1996, the Company acquired all of the issued and outstanding
shares of common stock of Bruegger's Corporation, the nation's largest
chain of bagel bakeries. Pursuant to the terms of the acquisition and
related merger agreement, Bruegger's Corporation became a wholly owned
subsidiary of Quality Dining, Inc. The purchase price of Bruegger's
Corporation consisted of the issuance of 5,127,121 shares of the
Company's common stock, valued at approximately $123.1 million. The
Company also issued 117,800 shares of its Series A Convertible
Cumulative Preferred Stock, without par value (the "Quality Dining
Preferred Stock") in exchange for a like number of issued and
outstanding shares (exclusive of those shares held by the Company, which
were canceled) of Bruegger's Corporation Class A Cumulative Convertible
Preferred Stock, $100 par value per share. Subsequent to the acquisition
and through August 4, 1996, 16,650 shares of the Quality Dining
Preferred Stock were redeemed for cash at $100 per share and 101,150
shares of the Quality Dining Preferred Stock were converted into an
aggregate of 285,531 shares of the Company's common stock. In connection
with the merger, the Company had a special pre-tax charge of $8.0
million during the quarter ended August 4, 1996 associated with
restructuring and integration costs related to the merger.
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 4, 1996
(Unaudited)
The acquisition was accounted for using the purchase method and the
operating results of Bruegger's Corporation have been included in the
Company's consolidated financial statements since the acquisition date.
The excess of the purchase price over the acquired tangible and
intangible net assets of approximately $143.0 million has been allocated
to goodwill and is being amortized on a straight-line basis over 40
years.
On December 21, 1995, the Company acquired 42 Grady's American Grill
restaurants and all rights to the Grady's American Grill concept from
Brinker International, Inc. The Grady's American Grill restaurants are
located in 16 states throughout the United States. The purchase price
aggregated $75.4 million consisting of $74.4 million in cash and the
incurrence of $1 million of liabilities and direct acquisition costs.
The cash portion of the purchase price was funded through borrowings
under the Company's revolving credit facility.
The acquisition was accounted for using the purchase method and the
operating results of the Grady's American Grill restaurants have been
included in the Company's consolidated financial statements since the
acquisition date. The excess of the purchase price over the acquired
tangible and intangible net assets of approximately $13.4 million has
been allocated to trademarks and is being amortized on a straight-line
basis over 40 years.
In conjunction with the acquisitions of the Grady's American Grill
restaurants and the rights to the Spageddies restaurant concept in the
United States, which was finalized on October 28, 1995, the Company
recorded a pre-tax charge of $1.9 million during the sixteen-week period
ended February 18, 1996 for restructuring and integration costs.
On August 14, 1995, the Company through its wholly owned subsidiary,
BRAVOKILO, Inc., acquired all of the issued and outstanding common stock
of SHONCO, Inc. and three affiliated companies, certain operating assets
of three other affiliated companies and four target reservation
agreements from four additional affiliated companies. SHONCO, Inc. and
its affiliated companies are referred to collectively as "SHONCO".
William R. Schonsheck ("Schonsheck") owned all of the capital stock of
all of the SHONCO affiliated group of companies except for two
affiliates in which he owned at least a majority of the capital stock,
with the balance being owned by five other individuals. SHONCO owned
and operated eight Burger King restaurants in the Detroit, Michigan
metropolitan area, and had the right to develop four additional Burger
King restaurants in the Detroit, Michigan metropolitan area under the
target reservation agreements acquired by the Company. In addition, the
Company entered into a four-year non-competition agreement with
Schonsheck, whereby the Company is obligated to pay Schonsheck $200,000
per year during the four-year term of the agreement. The purchase price
of SHONCO, including the non-competition agreement, aggregated
$9,561,000 and consisted of $5,051,000 in cash, the issuance of 316,832
shares of the Company's common stock, valued at $4,000,000, and the
incurrence of a $510,000 liability under the non-competition agreement
(discounted at 8.5%). The cash portion of the purchase price was funded
through borrowings under the Company's revolving credit facility. The
acquisition was accounted for using the purchase method and the
operating results of SHONCO have been included in the Company's
consolidated financial statements since the date of acquisition. The
excess of the purchase price over the acquired tangible and intangible
net assets of approximately
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
August 4, 1996
(Unaudited)
$7.7 million has been allocated to franchise rights and is being
amortized on a straight-line basis over 20 years.
The following unaudited pro forma results for the forty weeks ended
August 4, 1996 were developed assuming Bruegger's and Grady's American
Grill restaurants had been acquired on October 30, 1995. SHONCO is
included in the Company's fiscal 1996 results for the entire forty
weeks. The unaudited pro forma results for the forty weeks ended August
6, 1995 were developed assuming Bruegger's, Grady's American Grill
restaurants and SHONCO had been acquired on October 31, 1994. For both
periods, the unaudited pro forma results are after giving effect to
certain adjustments, including interest expense, depreciation of
property and equipment and amortization of acquired intangible assets:
Pro forma Pro forma
40 weeks ended 40 weeks ended
August 4, 1996 August 6, 1995
-------------- -------------
(in thousands, except per share data)
Total revenues $200,821 $178,001
Net income (loss) (8,022) 673
Net income (loss) per share (.57) .06
The unaudited pro forma results shown above are not necessarily
indicative of the consolidated results that would have occurred had the
acquisitions taken place at the beginning of the respective periods nor
are they necessarily indicative of the results that may occur in the
future.
Note 4: Commitments.
As of August 4, 1996, the Company had commitments aggregating
approximately $3.8 million for the acquisition and construction of new
restaurants.
Note 5: Long-Term Debt.
On April 26, 1996, the Company amended its revolving credit agreement
with Texas Commerce Bank, as agent for a group of seven banks, providing
for borrowings of up to $150 million with interest payable monthly at
the adjusted LIBOR rate plus 1.5%. The revolving credit agreement
expires on April 26, 1999 and is unsecured.
The revolving credit agreement contains, among other provisions, certain
restrictive covenants including maintenance of minimum levels of
tangible net worth, as defined, limitations on the incurrence of
additional indebtedness and annual limitations on the payment of cash
dividends on, or the purchase or redemption of, any shares of the
Company's capital stock in aggregate amounts exceeding 40% of the
Company's net income for the immediately preceeding fiscal year.
QUALITY DINING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Concluded
August 4, 1996
(Unaudited)
Note 6: Contingencies.
On November 10, 1994, the Company acquired all of the outstanding stock
of Grayling Corporation, Grayling Management Corporation, Chili's of Mt.
Laurel, Inc., and Chili's of Christiana, Inc. (collectively,
"Grayling"). Prior to entering into negotiations with the Company,
Grayling and its principal shareholder, T. Garrick Steele ("Steele"),
had entered into an agreement (the "Asset Agreement") to sell
substantially all of Grayling's assets to a third party, KK&G
Enterprises, Inc. ("KK&G"). The Asset Agreement was terminated by
Grayling and was not consummated. On September 27, 1994, KK&G filed
suit in the Court of Common Pleas, Philadelphia County, Pennsylvania,
against Grayling and Steele seeking damages and specific performance of
the Asset Agreement. Steele is obligated to continue to defend the
lawsuit and indemnify the Company and Grayling against any loss or
damages resulting from the lawsuit. Management does not expect that the
lawsuit will have a material adverse effect on the Company's financial
position or results of operations. In making such assessment,
management considered the financial ability of Steele to defend the
lawsuit and indemnify the Company against any loss or damages resulting
from the lawsuit.
Item 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company has a 52/53-week fiscal year ending on the last Sunday in
October of each year. The first quarter of the Company's fiscal year
consists of 16 weeks with all subsequent quarters being 12 weeks in
duration. The current fiscal year ends October 27, 1996.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentages which certain items of revenue and expense bear to total
revenues, except where otherwise noted. Percentages may not add due to
rounding.
Twelve Weeks Ended Forty Weeks Ended
August 4, August6, August 4, August 6,
1996 1995 1996 1995
-------- ------- -------- --------
Revenues:
Restaurant sales 95.7% 100.0% 98.4% 100.0%
Franchise related revenue 4.3 - 1.6 -
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----
Operating expenses:
Restaurant operating expenses (as % of restaurant sales)
Food and beverage 30.5 29.7 31.1 29.7
Payroll and benefits 28.8 25.7 28.3 25.9
Depreciation and amortization 5.0 4.7 4.8 4.7
Other operating expenses 23.4 21.7 22.6 22.7
----- ----- ----- -----
Total restaurant
operating expenses 87.7 81.8 86.8 83.0
General and administrative
expenses 6.1 5.0 5.2 5.8
Amortization of intangibles 1.3 .5 .8 .6
Restructuring and integration
costs 12.6 - 5.8 -
----- ----- ----- -----
Total operating expenses 103.9 87.3 97.2 89.4
----- ----- ----- -----
Operating income (loss) (3.9) 12.7 2.8 10.6
----- ----- ----- -----
Other income (expense):
Interest expense (2.9) (2.9) (2.9) (2.7)
Gain on sale of property
and equipment - 1.5 - .05
Interest income .1 .1 .1 .1
Other expense, net - - - (.1)
----- ----- ----- -----
Total other expense, net (2.8) (1.3) (2.8) (2.2)
----- ----- ----- -----
Income (loss) before
income taxes (6.7) 11.4 - 8.4
Income taxes (credit) (2.1) 4.2 .1 3.1
----- ----- ----- -----
Net income (loss) (4.6)% 7.2% (.1)% 5.3%
===== ===== ===== =====
Restaurant sales for the third quarter of fiscal 1996 were $60.9
million, an increase of 137.4% over restaurant sales of $25.6 million
for the comparable period in fiscal 1995. The increase was primarily
attributable to sales generated by Company restaurants operating in the
third quarter of fiscal 1996 that were not operating during the third
quarter of fiscal 1995. During the third quarter of fiscal 1996, the
Company's Grady's American Grill and Bruegger's Bagel Bakery restaurants
contributed $30.0 million in increased sales, or 85.2% of the total
sales increase of $35.2 million. Comparable restaurant sales (measured
by comparing company-owned units open for the entire current period and
the entire corresponding period in the prior year) were positive 2.4%
for Bruegger's Bagel Bakeries, positive 2.3% for Burger King, positive
6.8% for Spageddies Italian Kitchen and negative 6.1% for Chili's Grill
& Bar.
Total revenues for the Company were $63.6 million for the third quarter
of the 1996 fiscal year, an increase of 148.1% over $25.6 million for
the comparable period in fiscal 1995. Total revenues for the Company
includes franchise related revenues from Bruegger's Corporation.
Franchise related revenues include royalties on franchised restaurant
sales, franchise and development fees and other miscellaneous fees from
franchised operations.
Restaurant sales for the first forty weeks of the 1996 fiscal year
increased 118.2% to $169.9 million versus $77.9 million for the same
period in fiscal 1995. The increase was primarily due to sales generated
by Company restaurants operating during the first forty weeks of fiscal
1996 that were not operating during the corresponding period of fiscal
1995. Comparable restaurant sales for the period were positive .9% for
the Bruegger's Bagel Bakeries, positive .5% for Burger King and negative
1.1% for Chili's Grill & Bar.
Total revenues for the Company were $172.6 million for the first forty
weeks of the 1996 fiscal year, an increase of 121.6% from the comparable
period in fiscal 1995.
As a percentage of restaurant sales, total restaurant operating expenses
increased to 87.7% in the third quarter of fiscal 1996 from 81.8% in the
third quarter of fiscal 1995. For the forty weeks ended August 4, 1996,
total restaurant operating expenses, as a percentage of restaurant
sales, increased to 86.8% from 83.0% in the same period of fiscal 1995.
Contributing to the increase in restaurant operating expenses for the
quarter and the forty weeks were higher food and beverage costs and
higher payroll and benefits expense. These increases were primarily the
result of the higher costs associated with the Grady's American Grill
units which were acquired in the first quarter of fiscal 1996.
General and administrative expenses, as a percentage of total revenues,
were 6.1% in the third quarter of fiscal 1996 versus 5.0% in the
comparable period of fiscal 1995. The increase was primarily due to
increased expenses in connection with the merger with Bruegger's
Corporation. For the forty weeks ended August 4, 1996, general and
administrative expenses, as a percentage of total revenues, decreased to
5.2% from 5.8% in the comparable period of fiscal 1995. The decrease
was due to the beneficial leverage derived from increased sales at the
Company's new and acquired restaurants.
Amortization of intangibles, as a percentage of total revenues,
increased to 1.3% for the third quarter of fiscal 1996 compared to 0.5%
for the same period in fiscal 1995. For the first forty weeks of fiscal
1996, amortization of intangibles, as a percentage of total revenues,
increased to 0.8% compared to 0.6% for the same period in fiscal 1995.
The increase for the quarter and the forty weeks was primarily due to
the amortization of intangible assets relating to the acquisitions of
Bruegger's Corporation and Grady's American Grill.
During the third quarter of fiscal 1996, the Company recorded a special
pre-tax charge of $8.0 million for restructuring and integration costs
related to the merger with Bruegger's Corporation. Total pre-tax
restructuring and integration costs for the forty weeks ended August 4,
1996 include the $8.0 million charge for the Bruegger's merger and $1.9
million for restructuring and integration costs related to the
acquisitions of Grady's American Grill Restaurants and Spageddies
Italian Kitchen.
Total other expenses, as a percentage of total revenues, increased to
2.8% for the third quarter of fiscal 1996 as compared to 1.3% during the
comparable period in fiscal 1995. For the first forty weeks of fiscal
1996, total other expenses increased to 2.8% of total revenues versus
2.2% for the same period in fiscal 1995. The increase for the third
quarter and the first forty weeks of fiscal 1996 was primarily due to
higher interest costs arising from borrowings under the Company's
revolving credit facility to fund acquisitions and new restaurant
openings.
For the third quarter of fiscal 1996, the Company reported a net loss of
$2.9 million compared to net income of $1.8 million for the third
quarter of fiscal 1995. For the forty weeks ended August 4, 1996, the
Company reported a net loss of $0.2 million as compared to net income of
$4.1 million for the comparable period in fiscal 1995. The decrease in
net income for the quarter and the forty weeks ended August 4, 1996 was
due to the special pre-tax charges previously discussed.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents were $5.8 million at August 4
1996, an increase of 0.2 million for the forty weeks ended August 4,
1996. Principal sources of funds consisted of: (i) those provided by
operations ($15.7 million); (ii) net proceeds from the Company's
revolving credit facility ($37.3 million) and (iii) those provided by
the issuance of common stock ($59.7 million). The primary uses of funds
consisted of: (i) expenditures associated with new restaurant
development ($30.2 million); (ii) expenditures associated with the
acquisitions of businesses ($73.6 million); (iii) increase in note
receivable ($3.8 million) and (iv) franchise, development and preopening
costs ($2.2 million).
Cash flow generated from new and existing restaurant operations provides
the Company with a significant source of liquidity. During the forty
weeks ended August 4, 1996, approximately 52.1% of the funds required to
construct new restaurants and purchase other equipment was generated by
operating activities. The remainder of the Company's capital
requirements were provided by proceeds from the issuance of common stock
and borrowings under the Company's revolving credit facility. On April
26, 1996, the Company amended its existing revolving credit facility
with Texas Commerce Bank, as agent for a group of seven banks. The
facility, as amended, provides for borrowings up to a maximum of $150
million, with interest payable at the adjusted LIBOR rate plus 1.5%.
The loan agreement expires on April 26, 1999 and is unsecured. As of
August 4, 1996, there was $60.9 million outstanding under this revolving
credit facility. The loan agreement allows for further indebtedness of
up to $5 million in addition to the $150 million currently available.
The Company's primary cash requirements for the remainder of fiscal 1996
will be to finance capital expenditures in connection with the opening
of new restaurants, improvements to the Company's management information
reporting systems and for general working capital purposes. Capital
expenditures for fiscal 1996, including the effects of the merger with
Bruegger's Corporation, are projected to be approximately $35 to $40
million, of which $30.2 million has been expended through the third
quarter of fiscal 1996. During the first forty weeks of fiscal 1996,
Quality Dining opened or acquired 68 new Bruegger's Bagel Bakeries, 42
Grady's American Grill restaurants, four new Burger King restaurants and
three new Chili's Grill & Bar restaurants.
The Company's growth plans for all of fiscal 1996, including the effects
of the merger with Bruegger's Corporation, include 55 to 60 new
Bruegger's Bagel Bakeries, four Burger King restaurants, four to five
Chili's restaurants and one Spageddies Italian Kitchen restaurant.
Except for the Bruegger's locations, the Company expects to own real
estate for the majority of these sites. The actual amount of the
Company's cash requirements for capital expenditures depends in part on
the number of new restaurants opened and the land acquisition costs
associated with such restaurants. The Company anticipates that its cash
flow from operations, together with amounts available under its amended
revolving credit agreement, will be sufficient to fund its planned
expansion and other operating cash requirements through at least fiscal
year 1997.
PART II - OTHER INFORMATION
Item 2. Changes in Securities
In connection with the June 7, 1996 merger with
Bruegger'sCorporation,the Company amended its Articles of
Incorporation to create Series A Convertible Cumulative Preferred
Stock, without par value (the "Series A Preferred Stock"), as
the first series of the Company's preferred stock. Holders of
Series A Preferred Stock were entitled to preferentialcumulative
dividends and were entitled to one vote per share (voting in
a single class with the holders of common stock) on all matters
brought before the shareholders of the Company. All of the
shares of Series A Preferred Stock issued in connection with the
merger have either been redeemed for cash or have been converted
into shares of the Company's common stock; no shares of Series
A Preferred Stock remain outstanding.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
A list of exhibits required to be filed as part of this report is
set forth in the Index to Exhibits, which immediately precedes such
exhibits, and is incorporated herein by reference.
(b) Reports on Form 8-K
1. On May 31, 1996, the Company filed a Current Report on Form 8-K,
announcing under Item 5 the approval by the Company's shareholders of
the merger with Bruegger's Corporation.
2. On June 13, 1996, the Company filed a Current Report on Form 8-K,
announcing under Item 2 the consummation of the merger with Bruegger's
Corporation and filing under Item 7 the unaudited consolidated financial
statements of Bruegger's Corporation for the quarter ended March 19,
1996.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Quality Dining, Inc.
(Registrant)
Date: September 17, 1996 By: /s/Michael G. Sosinski
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit
No. Description
------- -----------
3-B By-Laws of Registrant, as amended to date.
27 Financial Data Schedule
EXHIBIT 3-B
BY-LAWS
OF
QUALITY DINING, INC.
(As last amended effective September 10, 1996
to amend Sections 3.4 through 3.12)
ARTICLE I
Meetings of Shareholders
Section 1.1. Annual Meetings. Annual meetings of the
shareholders of the Corporation shall be held on the first Monday of
March of each year commencing in March, 1995, at such hour and at such
place within or without the State of Indiana as shall be designated by
the Board of Directors. In the absence of designation, the meeting
shall be held at the principal office of the Corporation at 11:00 a.m.
(local time). The Board of Directors may, by resolution, change the
date or time of such annual meeting. If the day fixed for any annual
meeting of shareholders shall fall on a legal holiday, then such annual
meeting shall be held on the first following day that is not a legal
holiday.
Section 1.2. Special Meetings. Special meetings of the
shareholders of the Corporation may be called at any time by the Board
of Directors or the Chairman of the Board and shall be called by the
Board of Directors if the Secretary receives written, dated and signed
demands for a special meeting, describing in reasonable detail the
purpose or purposes for which it is to be held, from the holders of
shares representing at least twenty-five percent (25%) of all votes
entitled to be cast on any issue proposed to be considered at the
proposed special meeting; provided, however, that any such demand(s)
delivered to the Secretary at any time at which the Corporation has more
than 50 shareholders must be properly delivered by the holders of shares
representing at least 80% of all the votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting. If the
Secretary receives one (1) or more proper written demands for a special
meeting of shareholders, the Board of Directors may set a record date
for determining shareholders entitled to make such demand. The Board of
Directors or the Chairman of the Board, as the case may be, calling a
special meeting of shareholders shall set the date, time and place of
such meeting, which may be held within or without the State of Indiana.
Section 1.3. Notices. A written notice, stating the date,
time, and place of any meeting of the shareholders, and, in the case of
a special meeting, the purpose or purposes for which such meeting is
called, shall be delivered or mailed by the Secretary of the
Corporation, to each shareholder of record of the Corporation entitled
to notice of or to vote at such meeting no fewer than ten (10) nor more
than sixty (60) days before the date of the meeting. In the event of a
special meeting of shareholders required to be called as the result of a
demand therefor made by shareholders, such notice shall be given no
later than the sixtieth (60th) day after the Corporation's receipt of
the demand requiring the meeting to be called. Notice of shareholders'
meetings, if mailed, shall be mailed, postage prepaid, to each
shareholder at his address shown in the Corporation's current record of
shareholders.
Notice of a meeting of shareholders shall be given to
shareholders not entitled to vote, but only if a purpose for the meeting
is to vote on any amendment to the Corporation's Restated Articles of
Incorporation, merger, or share exchange to which the Corporation would
be a party, sale of the Corporation's assets, dissolution of the
Corporation, or consideration of voting rights to be accorded to shares
acquired or to be acquired in a "control share acquisition" (as such
term is defined in the Indiana Business Corporation Law). Except as
required by the foregoing sentence or as otherwise required by the
Indiana Business Corporation Law or the Corporation's Restated Articles
of Incorporation, notice of a meeting of shareholders is required to be
given only to shareholders entitled to vote at the meeting.
A shareholder or his proxy may at any time waive notice of a
meeting if the waiver is in writing and is delivered to the Corporation
for inclusion in the minutes or filing with the Corporation's records.
A shareholder's attendance at a meeting, whether in person or by proxy,
(a) waives objection to lack of notice or defective notice of the
meeting, unless the shareholder or his proxy at the beginning of the
meeting objects to holding the meeting or transacting business at the
meeting, and (b) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder or his proxy
objects to considering the matter when it is presented. Each
shareholder who has, in the manner above provided, waived notice or
objection to notice of a shareholders' meeting shall be conclusively
presumed to have been given due notice of such meeting, including the
purpose or purposes thereof.
If an annual or special shareholders' meeting is adjourned to
a different date, time, or place, notice need not be given of the new
date, time, or place if the new date, time, or place is announced at the
meeting before adjournment, unless a new record date is or must be
established for the adjourned meeting.
Section 1.4. Voting. Except as otherwise provided by the
Indiana Business Corporation Law or the Corporation's Restated Articles
of Incorporation, each share of the capital stock of any class of the
Corporation that is outstanding at the record date established for any
annual or special meeting of shareholders and is outstanding at the time
of and represented in person or by proxy at the annual or special
meeting, shall entitle the record holder thereof, or his proxy, to
one (1) vote on each matter voted on at the meeting.
Section 1.5. Quorum. Unless the Corporation's Restated
Articles of Incorporation or the Indiana Business Corporation Law
provide otherwise, at all meetings of shareholders, a majority of the
votes entitled to be cast on a matter, represented in person or by
proxy, constitutes a quorum for action on the matter. Action may be
taken at a shareholders' meeting only on matters with respect to which a
quorum exists; provided, however, that any meeting of shareholders,
including annual and special meetings and any adjournments thereof, may
be adjourned to a later date although less than a quorum is present.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set
for that adjourned meeting.
Section 1.6. Vote Required To Take Action. If a quorum
exists as to a matter to be considered at a meeting of shareholders,
action on such matter (other than the election of Directors) is approved
if the votes properly cast favoring the action exceed the votes properly
cast opposing the action, except as the Corporation's Restated Articles
of Incorporation or the Indiana Business Corporation Law require a
greater number of affirmative votes. Directors shall be elected by a
plurality of the votes properly cast.
Section 1.7. Record Date. Only such persons shall be
entitled to notice of or to vote, in person or by proxy, at any
shareholders' meeting as shall appear as shareholders upon the books of
the Corporation as of such record date as the Board of Directors shall
determine, which date may not be earlier than the date seventy (70) days
immediately preceding the meeting. In the absence of such
determination, the record date shall be the fiftieth (50th) day
immediately preceding the date of such meeting. Unless otherwise
provided by the Board of Directors, shareholders shall be determined as
of the close of business on the record date.
Section 1.8. Proxies. A shareholder may vote his shares
either in person or by proxy. A shareholder may appoint a proxy to vote
or otherwise act for the shareholder (including authorizing the proxy to
receive, or to waive, notice of any shareholders' meeting within the
effective period of such proxy) by signing an appointment form, either
personally or by the shareholders' attorney-in-fact. An appointment of
a proxy is effective when received by the Secretary or other officer or
agent authorized to tabulate votes and is effective for eleven (11)
months unless a longer period is expressly provided in the appointment
form. The proxy's authority may be limited to a particular meeting or
may be general and authorize the proxy to represent the shareholder at
any meeting of shareholders held within the time provided in the
appointment form. Subject to the Indiana Business Corporation Law and
to any express limitation on the proxy's authority appearing on the face
of the appointment form, the Corporation is entitled to accept the
proxy's vote or other action as that of the shareholder making the
appointment.
Section 1.9. Removal of Directors. Any or all of the members
of the Board of Directors may be removed, for good cause, only at a
meeting of the shareholders called expressly for that purpose, by a vote
of the holders of outstanding shares representing at least sixty-six and
two-thirds percent (66-2/3%) of the votes then entitled to be cast at an
election of Directors. Directors may not be removed in the absence of
good cause.
Section 1.10. Written Consents. Any action required or
permitted to be taken at a shareholders' meeting may be taken without a
meeting if the action is taken by all the shareholders entitled to vote
on the action. The action must be evidenced by one (1) or more written
consents describing the action taken, signed by all the shareholders
entitled to vote on the action, and delivered to the Corporation for
inclusion in the minutes or filing with the corporate records. Action
taken under this Section 1.10 is effective when the last shareholder
signs the consent, unless the consent specifies a different prior or
subsequent effective date, in which case the action is effective on or
as of the specified date. Such consent shall have the same effect as a
unanimous vote of all shareholders and may be described as such in any
document.
Section 1.11. Participation by Conference Telephone. The
Chairman of the Board or the Board of Directors may permit any or all
shareholders to participate in an annual or special meeting of
shareholders by, or through the use of, any means of communication, such
as conference telephone, by which all shareholders participating may
simultaneously hear each other during the meeting. A shareholder
participating in a meeting by such means shall be deemed to be present
in person at the meeting.
ARTICLE II
Directors
Section 2.1. Number and Terms. The business and affairs of
the Corporation shall be managed under the direction of a Board of
Directors consisting of eleven (11) directors.
The Directors shall be divided into three (3) groups, with
each group consisting of one-third (1/3) of the total Directors, as near
as may be, with the term of office of the first group to expire at the
annual meeting of shareholders in 1995, the term of office of the second
group to expire at the annual meeting of shareholders in 1996, and the
term of office of the third group to expire at the annual meeting of
shareholders in 1997; and at each annual meeting of shareholders, the
Directors chosen to succeed those whose terms then expire shall be
identified as being of the same group as the Directors they succeed and
shall be elected for a term expiring at the third succeeding annual
meeting of shareholders.
Despite the expiration of a Director's term, the Director
shall continue to serve until his successor is elected and qualified, or
until the earlier of his death, resignation, disqualification or
removal, or until there is a decrease in the number of Directors. Any
vacancy occurring in the Board of Directors, from whatever cause
arising, shall be filled by selection of a successor by a majority vote
of the remaining members of the Board of Directors (although less than a
quorum); provided, however, that if such vacancy or vacancies leave the
Board of Directors with no members or if the remaining members of the
Board are unable to agree upon a successor or determine not to select a
successor, such vacancy may be filled by a vote of the shareholders at a
special meeting called for that purpose or at the next annual meeting of
shareholders. The term of a Director elected or selected to fill a
vacancy shall expire at the end of the term for which such Director's
predecessor was elected, or if the vacancy arises because of an increase
in the size of Board of Directors, at the end of the term specified at
the time of election or selection.
The Directors and each of them shall have no authority to bind
the Corporation except when acting as a Board.
Section 2.2. Quorum and Vote Required To Take Action. A
majority of the whole Board of Directors shall be necessary to
constitute a quorum for the transaction of any business, except the
filling of vacancies. If a quorum is present when a vote is taken, the
affirmative vote of a majority of the Directors present shall be the act
of the Board of Directors, unless the act of a greater number is
required by the Indiana Business Corporation Law, the Corporation's
Restated Articles of Incorporation or these By-Laws.
Section 2.3. Annual and Regular Meetings. The Board of
Directors shall meet annually, without notice, immediately following the
annual meeting of the shareholders, for the purpose of transacting such
business as properly may come before the meeting. Other regular
meetings of the Board of Directors, in addition to said annual meeting,
shall be held on such dates, at such times and at such places as shall
be fixed by resolution adopted by the Board of Directors and specified
in a notice of each such regular meeting, or otherwise communicated to
the Directors. The Board of Directors may at any time alter the date
for the next regular meeting of the Board of Directors.
Section 2.4. Special Meetings. Special meetings of the Board
of Directors may be called by any member of the Board of Directors upon
not less than twenty-four (24) hours' notice given to each Director of
the date, time, and place of the meeting, which notice need not specify
the purpose or purposes of the special meeting. Such notice may be
communicated in person (either in writing or orally), by telephone,
telegraph, teletype, or other form of wire or wireless communication, or
by mail, and shall be effective at the earlier of the time of its
receipt or, if mailed, five (5) days after its mailing. Notice of any
meeting of the Board may be waived in writing at any time if the waiver
is signed by the Director entitled to the notice and is filed with the
minutes or corporate records. A Director's attendance at or
participation in a meeting waives any required notice to the Director of
the meeting, unless the Director at the beginning of the meeting (or
promptly upon the Director's arrival) objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or
assent to action taken at the meeting.
Section 2.5. Written Consents. Any action required or
permitted to be taken at any meeting of the Board of Directors may be
taken without a meeting if the action is taken by all members of the
Board. The action must be evidenced by one (1) or more written consents
describing the action taken, signed by each Director, and included in
the minutes or filed with the corporate records reflecting the action
taken. Action taken under this Section 2.5 is effective when the last
Director signs the consent, unless the consent specifies a different
prior or subsequent effective date, in which cases the action is
effective on or as of the specified date. A consent signed under this
Section 2.5 shall have the same effect as a unanimous vote of all
members of the Board and may be described as such in any document.
Section 2.6. Participation by Conference Telephone. The
Board of Directors may permit any or all Directors to participate in a
regular or special meeting by, or through the use of, any means of
communication, such as conference telephone, by which all Directors
participating may simultaneously hear each other during the meeting. A
Director participating in a meeting by such means shall be deemed to be
present in person at the meeting.
Section 2.7. Executive Committee. The Board of Directors
shall appoint up to six (6) members to an Executive Committee. The
Executive Committee shall, subject to the restrictions of Section 2.9,
be authorized to exercise the authority of the full Board of Directors
at any times other than during regular or special meetings of the Board
of Directors. All actions taken by the Executive Committee shall be
reported at the first regular meeting of the Board of Directors
following such actions. Members of the Executive Committee shall serve
at the pleasure of the Board of Directors.
Section 2.8. Other Committees. (a) The Board of Directors
may create one (1) or more committees in addition to the Executive
Committee and appoint members of the Board of Directors to serve on
them, by resolution of the Board of Directors adopted by a majority of
all the Directors in office when the resolution is adopted. The
committee may exercise the authority of the Board of Directors to the
extent specified in the resolution. Each committee may have one (1) or
more members, and all the members of such committee shall serve at the
pleasure of the Board of Directors.
Section 2.9. Limitations on Committees; Notice, Quorum and
Voting.
(a) Neither the Executive Committee nor any other committee
hereafter established may:
(1) authorize dividends or other distributions, except a
committee may authorize or approve a reacquisition of
shares if done according to a formula or method
prescribed by the Board of Directors;
(2) approve or propose to shareholders action that is
required to be approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of its
committees;
(4) except as permitted under Section 2.9(a)(7) below, amend
the Corporation's Restated Articles of Incorporation
under IC 23-1-38-2;
(5) adopt, amend, repeal, or waive provisions of these
By-Laws;
(6) approve a plan of merger not requiring shareholder
approval; or
(7) authorize or approve the issuance or sale or a contract
for sale of shares, or determine the designation and
relative rights, preferences, and limitations of a class
or series of shares, except the Board of Directors may
authorize a committee (or an executive officer of the
Corporation designated by the Board of Directors) to take
the action described in this Section 2.9(a)(7) within
limits prescribed by the Board of Directors.
(b) Except to the extent inconsistent with the resolutions
creating a committee, Sections 2.1 through 2.6 of these By-Laws, which
govern meetings, action without meetings, notice and waiver of notice,
quorum and voting requirements and telephone participation in meetings
of the Board of Directors, apply to each committee and its members as
well.
ARTICLE III
Officers
Section 3.1. Designation, Selection and Terms. The officers
of the Corporation shall consist of the Chairman of the Board, the
President, the Chief Financial Officer, the Treasurer and the Secretary.
The Board of Directors may also elect Vice Presidents, Assistant
Secretaries and Assistant Treasurers, and such other officers or
assistant officers as it may from time to time determine by resolution
creating the office and defining the duties thereof. In addition, the
Chairman of the Board or the President may, by a certificate of
appointment creating the office and defining the duties thereof
delivered to the Secretary for inclusion with the corporate records,
from time to time create and appoint such assistant officers as they
deem desirable. The officers of the Corporation shall be elected by the
Board of Directors (or appointed by the Chairman of the Board or the
President as provided above) and need not be selected from among the
members of the Board of Directors, except for the Chairman of the Board
and the President who shall be members of the Board of Directors. Any
two (2) or more offices may be held by the same person. All officers
shall serve at the pleasure of the Board of Directors and, with respect
to officers appointed by the Chairman of the Board or the President,
also at the pleasure of such officers. The election or appointment of
an officer does not itself create contract rights.
Section 3.2. Removal. The Board of Directors may remove any
officer at any time with or without cause. An officer appointed by the
Chairman of the Board or the President may also be removed at any time,
with or without cause, by either of such officers. Vacancies in such
offices, however occurring, may be filled by the Board of Directors at
any meeting of the Board of Directors (or by appointment by the Chairman
of the Board or the President, to the extent provided in Section 3.1 of
these By-Laws).
Section 3.3. Chairman of the Board. The Chairman of the
Board shall be the chief executive and principal policymaking officer of
the Corporation. Subject to the authority of the Board of Directors, he
shall formulate the major policies to be pursued in the administration
of the Corporation's affairs. He shall study and make reports and
recommendations to the Board of Directors with respect to major problems
and activities of the Corporation and shall see that the established
policies are placed into effect and carried out under the direction of
the President. The Chairman of the Board shall, if present, preside at
all meetings of the shareholders and of the Board of Directors.
Section 3.4. Co-Chairman of the Board. The Co-Chairman of
the Board shall not be an officer of the Corporation, but shall have
such power and perform such duties as the Board of Directors or the
Chairman of the Board may, from time to time, prescribe. In the absence
of the Chairman of the Board, or at the request of the Chairman of the
Board, the Co-Chairman of the Board shall preside at meetings of the
shareholders and of the Board of Directors.
Section 3.5. President. Subject to the provisions of
Section 3.3, the President shall be the chief operating officer of the
Corporation, shall exercise the powers and perform the duties which
ordinarily appertain to that office and shall manage and operate the
business and affairs of the Corporation in conformity with the policies
established by the Board of Directors and by the Chairman of the Board,
or as may be provided for in these By-Laws. In connection with the
performance of his duties, he shall keep the Chairman of the Board fully
informed as to all phases of the Corporation's activities. In the
absence of the Chairman of the Board, the President shall preside at
meetings of the shareholders and of the Board of Directors.
Section 3.6. Chief Financial Officer. The Chief Financial
Officer shall be the chief financial officer of the Corporation and
shall perform all of the duties customary to that office. He shall be
responsible for all of the Corporation's financial affairs, subject to
the supervision and direction of the Chairman of the Board and the
President, and shall have and perform such further powers and duties as
the Board of Directors may, from time to time, prescribe and as the
Chairman of the Board or the President may, from time to time, delegate
to him.
Section 3.7. Vice Presidents. Each Vice President shall have
such powers and perform such duties as the Board of Directors may, from
time to time, prescribe and as the Chairman of the Board or the
President may, from time to time, delegate to him.
Section 3.8. Treasurer. The Treasurer shall perform all of
the duties customary to that office, shall be the chief accounting
officer of the Corporation and shall be responsible for maintaining the
Corporation's accounting books and records and preparing its financial
statements, subject to the supervision and direction of the Chief
Financial Officer and other superior officers within the Corporation.
He shall also be responsible for causing the Corporation to furnish
financial statements to its shareholders pursuant to IC 23-1-53-1.
Section 3.9. Assistant Treasurer. In the absence or
inability of the Treasurer, the Assistant Treasurer, if any, shall
perform only such duties as are specifically assigned to him, in
writing, by the Board of Directors, the Chairman of the Board, the
President, the Chief Financial Officer, or the Treasurer.
Section 3.10. Secretary. The Secretary shall be the
custodian of the books, papers, and records of the Corporation and of
its corporate seal, if any, and shall be responsible for seeing that the
Corporation maintains the records required by IC 23-1-52-1 (other than
accounting records) and that the Corporation files with the Indiana
Secretary of State the annual report required by IC 23-1-53-3. The
Secretary shall be responsible for preparing minutes of the meetings of
the shareholders and of the Board of Directors and for authenticating
records of the Corporation, and he shall perform all of the other duties
usual in the office of Secretary of a corporation.
Section 3.11. Assistant Secretary. In the absence or
inability of the Secretary, the Assistant Secretary, if any, shall
perform only such duties as are provided herein or specifically assigned
to him, in writing, by the Board of Directors, the Chairman of the
Board, the President, or the Secretary.
Section 3.12. Salary. The Board of Directors may, at its
discretion, from time to time, fix the salary of any officer by
resolution included in the minute book of the Corporation.
ARTICLE IV
Checks
All checks, drafts, or other orders for payment of money shall
be signed in the name of the Corporation by such officers or persons as
shall be designated from time to time by resolution adopted by the Board
of Directors and included in the minute book of the Corporation; and in
the absence of such designation, such checks, drafts, or other orders
for payment shall be signed by the Chairman, the President, the Vice
President-Finance or the Treasurer.
ARTICLE V
Loans
Such of the officers of the Corporation as shall be designated
from time to time by resolution adopted by the Board of Directors and
included in the minute book of the Corporation shall have the power,
with such limitations thereon as may be fixed by the Board of Directors,
to borrow money in the Corporation's behalf, to establish credit, to
discount bills and papers, to pledge collateral, and to execute such
notes, bonds, debentures, or other evidences of indebtedness, and such
mortgages, trust indentures, and other instruments in connection
therewith, as may be authorized from time to time by such Board of
Directors.
ARTICLE VI
Execution of Documents
The Chairman of the Board, the President or any other officer
authorized by the Board of Directors may, in the Corporation's name,
sign all deeds, leases, contracts, or similar documents unless otherwise
directed by the Board of Directors or otherwise provided herein or in
the Corporation's Restated Articles of Incorporation, or as otherwise
required by law.
ARTICLE VII
Stock
Section 7.1. Execution. Certificates for shares of the
capital stock of the Corporation shall be signed by the Chairman of the
Board or the President and by the Secretary and the seal of the
Corporation (or a facsimile thereof), if any, may be thereto affixed.
Where any such certificate is also signed by a transfer agent or a
registrar, or both, the signatures of the officers of the Corporation
may be facsimiles. The Corporation may issue and deliver any such
certificate notwithstanding that any such officer who shall have signed,
or whose facsimile signature shall have been imprinted on, such
certificate shall have ceased to be such officer.
Section 7.2. Contents. Each certificate issued after the
adoption of these By-Laws shall state on its face the name of the
Corporation and that it is organized under the laws of the State of
Indiana, the name of the person to whom it is issued, and the number and
class of shares and the designation of the series, if any, the
certificate represents, and shall state conspicuously on its front or
back that the Corporation will furnish the shareholder, upon his written
request and without charge, a summary of the designations, relative
rights, preferences, and limitations applicable to each class and the
variations in rights, preferences, and limitations determined for each
series (and the authority of the Board of Directors to determine
variations for future series).
Section 7.3. Transfers. Except as otherwise provided by law
or by resolution of the Board of Directors, transfers of shares of the
capital stock of the Corporation shall be made only on the books of the
Corporation by the holder thereof, in person or by duly authorized
attorney, on payment of all taxes thereon and surrender for cancellation
of the certificate or certificates for such shares (except as
hereinafter provided in the case of loss, destruction, or mutilation of
certificates) properly endorsed by the holder thereof or accompanied by
the proper evidence of succession, assignment, or authority to transfer,
and delivered to the Secretary or an Assistant Secretary.
Section 7.4. Stock Transfer Records. There shall be entered
upon the stock records of the Corporation the number of each certificate
issued, the name and address of the registered holder of such
certificate, the number, kind, and class of shares represented by such
certificate, the date of issue, whether the shares are originally issued
or transferred, the registered holder from whom transferred, and such
other information as is commonly required to be shown by such records.
The stock records of the Corporation shall be kept at its principal
office, unless the Corporation appoints a transfer agent or registrar,
in which case the Corporation shall keep at its principal office a
complete and accurate shareholders' list giving the names and addresses
of all shareholders and the number and class of shares held by each. If
a transfer agent is appointed by the Corporation, shareholders shall
give written notice of any changes in their addresses from time to time
to the transfer agent.
Section 7.5. Transfer Agents and Registrars. The Board of
Directors may appoint one or more transfer agents and one or more
registrars and may require each stock certificate to bear the signature
of either or both.
Section 7.6. Loss, Destruction, or Mutilation of
Certificates. The holder of any of the capital stock of the Corporation
shall immediately notify the Corporation of any loss, destruction, or
mutilation of the certificate therefor, and the Board of Directors may,
in its discretion, cause to be issued to him a new certificate or
certificates of stock, upon the surrender of the mutilated certificate,
or, in the case of loss or destruction, upon satisfactory proof of such
loss or destruction. The Board of Directors may, in its discretion,
require the holder of the lost or destroyed certificate or his legal
representative to give the Corporation a bond in such sum and in such
form, and with such surety or sureties as it may direct, to indemnify
the Corporation, its transfer agents, and registrars, if any, against
any claim that may be made against them or any of them with respect to
the capital stock represented by the certificate or certificates alleged
to have been lost or destroyed, but the Board of Directors may, in its
discretion, refuse to issue a new certificate or certificates, save upon
the order of a court having jurisdiction in such matters.
Section 7.7. Form of Certificates. The form of the
certificates for shares of the capital stock of the Corporation shall
conform to the requirements of Section 7.2 of these By-Laws and be in
such printed form as shall from time to time be approved by resolution
of the Board of Directors.
ARTICLE VIII
Seal
The corporate seal of the Corporation shall, if the
Corporation elects to have one, be in the form of a disc, with the name
of the Corporation and "INDIANA" on the periphery thereof and the word
"SEAL" in the center.
ARTICLE IX
Miscellaneous
Section 9.1. Indiana Business Corporation Law. The
provisions of the Indiana Business Corporation law, as amended,
applicable to all matters relevant to, but not specifically covered by,
these By-Laws are hereby, by reference, incorporated in and made a part
of these By-Laws.
Section 9.2. Fiscal Year. The fiscal year of the Corporation
shall end on the last Sunday in October of each year.
Section 9.3. Election to be governed by Indiana Code
23-1-43. Effective upon the registration of the Corporation's common
stock under Section 12 of the Securities Exchange Act of 1934, as
amended, the Corporation shall be governed by the provisions of
IC 23-1-43 regarding business combinations.
Section 9.4. Control Share Acquisition Statute. The
provisions of IC 23-1-42 shall apply to the acquisition of shares of the
Corporation.
Section 9.5. Redemption of Shares Acquired in Control Share
Acquisitions. If and whenever the provisions of IC 23-1-42 apply to the
Corporation, any or all control shares acquired in a control share
acquisition shall be subject to redemption by the Corporation, if
either:
(a) no acquiring person statement has been filed with
the Corporation with respect to such control share acquisition
in accordance with IC 23-1-42-6, or
(b) the control shares are not accorded full voting
rights by the Corporation's shareholders as provided in
IC 23-1-42-9.
A redemption pursuant to Section 9.5(a) may be made at any time during
the period ending sixty (60) days after the last acquisition of control
shares by the acquiring person. A redemption pursuant to Section 9.5(b)
may be made at any time during the period ending two (2) years after the
shareholder vote with respect to the granting of voting rights to such
control shares. Any redemption pursuant to this Section 9.5 shall be
made at the fair value of the control shares and pursuant to such
procedures for such redemption as may be set forth in these By-Laws or
adopted by resolution of the Board of Directors.
As used in this Section 9.5, the terms "control shares,"
"control share acquisition," "acquiring person statement," and
"acquiring person" shall have the meanings ascribed to such terms in
IC 23-1-42.
Section 9.6. Amendments. These By-Laws may be rescinded,
changed, or amended, and provisions hereof may be waived, at any meeting
of the Board of Directors by the affirmative vote of a majority of the
entire number of Directors at the time, except as otherwise required by
the Corporation's Articles of Incorporation or by the Indiana Business
Corporation Law.
Section 9.7. Definition of Articles of Incorporation. The
term "Articles of Incorporation" as used in these By-Laws means the
Amended or Restated Articles of Incorporation of the Corporation as from
time to time are in effect.