HAWKINS INC - Quarter Report: 2010 June (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

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FORM 10-Q

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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2010

 

Commission file number 0-7647

 

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HAWKINS, INC.

(Exact name of registrant as specified in its charter)

 

 

3100 EAST HENNEPIN AVENUE, MINNEAPOLIS, MINNESOTA 55413

(Address of principal executive offices, including zip code)

 

(612) 331-6910

(Registrant’s telephone number, including area code)

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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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES o    NO o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

 

Large Accelerated Filer o     Accelerated Filer  x     Non-Accelerated Filer o     Smaller Reporting Company  o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o    NO x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

 

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HAWKINS, INC.
INDEX TO FORM 10-Q

 

 

 

 

 

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PART I. FINANCIAL INFORMATION

 

ITEM 1.        FINANCIAL STATEMENTS

 

HAWKINS, INC.

CONDENSED BALANCE SHEETS (UNAUDITED)

 

(In thousands, except share data)

 

See accompanying notes to financial statements.

 

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HAWKINS, INC.

CONDENSED STATEMENTS OF INCOME (UNAUDITED)

 

See accompanying notes to financial statements.

 

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HAWKINS, INC.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

See accompanying notes to financial statements.

 

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HAWKINS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

Note 1 – Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions for Form 10-Q and, accordingly, do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These statements should be read in conjunction with the financial statements and footnotes included in our Annual Report on Form 10-K for the fiscal year ended March 28, 2010, previously filed with the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments necessary to present fairly our financial position and the results of our operations and cash flows for the periods presented. All adjustments made to the interim financial statements were of a normal recurring nature.

 

The accounting policies we follow are set forth in “Item 8. Financial Statements and Supplementary Data, Note 1 – Nature of Business and Significant Accounting Policies” to our financial statements in our Annual Report on Form 10-K for the fiscal year ended March 28, 2010 (“fiscal 2010”) filed with the SEC on June 4, 2010.

 

The results of operations for the period ended June 30, 2010 are not necessarily indicative of the results that may be expected for the full year.

 

Note 2 – Earnings per Share

 

Basic earnings per share (“EPS”) are computed by dividing net earnings by the weighted-average number of common shares outstanding. Diluted EPS includes the incremental shares assumed to be issued upon the exercise of stock options and the incremental shares assumed to be issued as performance units and restricted stock. Basic and diluted EPS were calculated using the following:

 

 

For the period ended June 30, 2010, there were no shares or stock options excluded from the calculation of weighted average common shares for diluted EPS. The period ended June 30, 2009 excludes 70,665 stock options from the calculation of weighted average common shares for diluted EPS because their effects were antidilutive.

 

Note 3 – Discontinued Operations

 

In February 2009, we agreed to sell our inventory and entered into a marketing agreement regarding the business of our Pharmaceutical segment, which provided pharmaceutical chemicals to retail pharmacies and small-scale pharmaceutical manufacturers. On May 22, 2009 the majority of the inventory was sold for cash of approximately $1.6 million which approximated its carrying value. The remaining inventory, with a carrying value of approximately $0.1 million, was sold during fiscal 2010. The agreement provides for annual payments based on a percentage of gross profit on future sales up to a maximum of approximately $3.7 million. We have no significant remaining obligations to fulfill under the agreement. We have recorded a receivable of approximately $1.7 million, equal to the carrying value of the assets that were related to this business. The first year payment under the agreement due in the second quarter will be approximately $0.7 million and we have classified this portion of the receivable as current on the Condensed Balance Sheets. Amounts received in excess of the approximately $1.7 million will be recorded as a gain on sale of discontinued operations in future periods. The results of the Pharmaceutical segment have been reported as discontinued operations for all periods presented.

 

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Note 4 – Cash and Cash Equivalents and Investments

 

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2010, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.

 

 

Our financial assets that are measured at fair value on a recurring basis are certificates of deposit (“CD’s”), with maturities ranging from three months to two years which fall within valuation technique Level 2. The CD’s are classified as investments in current assets and noncurrent assets on the Condensed Balance Sheets. As of June 30, 2010, the CD’s in current assets have a fair value of $27.3 million, and in noncurrent assets, the CD’s have a fair value of $5.2 million.

 

The carrying value of cash and cash equivalents accounts approximates fair value, as maturities are three months or less. We did not have any financial liability instruments subject to recurring fair value measurements as of June 30, 2010.

 

Note 5 – Inventories

 

Inventories at June 30, 2010 and March 28, 2010 consisted of the following:

 

 

The first in, first out (“FIFO”) value of inventories accounted for under the last in, first out (“LIFO”) method were $28.4 million at June 30, 2010 and $23.1 million at March 28, 2010. The remainder of the inventory was valued and accounted for under the FIFO method. We increased the LIFO reserve by $0.8 million in the three months ended June 30, 2010 and decreased the LIFO reserve by $2.8 million in the three months ended June 30, 2009 as a result of the changes in inventory costs and inventory product mix. The valuation of LIFO inventory for interim periods is based on our estimates of year-end inventory levels and costs.

 

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Note 6 – Goodwill and Intangible Assets

 

The carrying amount of goodwill as of June 30, 2010 and March 28, 2010 was $1.2 million.

 

Intangible assets consist primarily of customer lists, trade secrets and non-compete agreements classified as finite life and trademarks and trade names classified as indefinite life, related to previous business acquisitions. A summary of our intangible assets as of June 30, 2010 and March 28, 2010 were as follows:

 

 

Note 7 – Income Taxes

 

In the preparation of our financial statements, management calculates income taxes based upon the estimated effective rate applicable to operating results for the full fiscal year. This includes estimating the current tax liability as well as assessing differences resulting from different treatment of items for tax and book accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded on the balance sheet. These assets and liabilities are analyzed regularly and management assesses the likelihood that deferred tax assets will be recovered from future taxable income. We record any interest and penalties related to income taxes as income tax expense in the statements of income.

 

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

 

We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions.  The tax years beginning with 2006 remain open to examination by the Internal Revenue Service, and with few exceptions, state and local income tax jurisdictions.

 

Note 8 – Accumulated Other Comprehensive Income

 

Components of accumulated other comprehensive income were as follows:

 

 

 

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Note 9 – Stock Based Compensation

 

Stock Option Awards. Our Board of Directors approved a long-term incentive equity compensation arrangement for our executive officers during the first quarter of fiscal 2009. This long-term incentive arrangement provides for the grant of nonqualified stock options that vest at the end of a three-year period and expire no later than 10 years after the grant date. We used the Black-Scholes valuation model to estimate the fair value of the options at grant date based on the following assumptions:

 

 

Volatility was calculated using the past four years of historical stock prices of our common stock. The expected life is estimated based on expected future trends and the terms and vesting periods of the options granted. The risk-free interest rate is an interpolation of the relevant U.S. Treasury Bond Rate as of the grant date.

 

The following table represents the stock option activity for the quarter ended June 30, 2010:

 

 

Performance-Based Restricted Stock Units. Our Board of Directors approved a performance-based equity compensation arrangement for our executive officers during the first quarter of fiscal 2009. This performance-based arrangement provides for the grant of performance-based restricted stock units that represent a possible future issuance of restricted shares of our common stock based on our pre-tax income target for the applicable fiscal year. The actual number of restricted shares to be issued to each executive officer will be determined when our final financial information becomes available after the applicable fiscal year and will be between zero shares and 73,387 shares in the aggregate for the year ended April 3, 2011 (“fiscal 2011”). The restricted shares issued will fully vest two years after the last day of the fiscal year on which the performance is based. We are recording the compensation expense for the outstanding performance share units and then-converted restricted stock over the life of the awards.

 

On June 2, 2010 and June 10, 2009, we awarded performance-based restricted stock units to our executive officers under this arrangement. The following table represents the restricted stock activity for the quarter ended June 30, 2010:

 

 

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Restricted Stock Awards. As part of their retainer, each non-employee Director receives restricted stock for their Board services. The restricted stock awards are expensed over the requisite vesting period, which begins on the date of issuance and ends on the date of the next Annual Meeting of Shareholders, based on the market value on the date of grant. The following table represents the Board’s restricted stock activity for the quarter ended June 30, 2010:

 

 

Note 10 – Commitments and Contingencies

 

Litigation —We are a party from time to time in various legal proceedings arising in the ordinary course of our business.  None of the pending proceedings are expected to have a material effect on us.

 

Note 11 – Segment Information

 

We have two reportable segments: Industrial and Water Treatment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Product costs and expenses for each segment are based on actual costs incurred along with cost allocation of shared and centralized functions. We evaluate performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses. Reportable segments are defined by product and type of customer. Segments are responsible for the sales, marketing and development of their products and services. The segments do not have separate accounting, administration, customer service or purchasing functions. There are no intersegment sales and no operating segments have been aggregated. Given our nature, it is not practical to disclose revenues from external customers for each product or each group of similar products. No single customer represents 10 percent or more of our revenue. Sales are primarily within the United States and all assets are located within the United States.

 

 

 

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ITEM 2.        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following is a discussion and analysis of our financial condition and results of operations for the three months ended June 30, 2010 as compared to June 30, 2009. This discussion should be read in conjunction with the Condensed Financial Statements and Notes to Condensed Financial Statements included in this Form 10-Q and Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 28, 2010 (“fiscal 2010”).

 

Overview

 

We derive substantially all of our revenues from the sale of bulk and specialty chemicals to our customers in a wide variety of industries. We began our operations primarily as a distributor of bulk chemicals with a strong customer focus. Over the years we have maintained our strong customer focus and have expanded our business by increasing our sales of value-added specialty chemical products, including repackaging, blending and manufacturing certain products. In recent years, we significantly expanded the sales of our higher-margin blended and manufactured products. We expect this specialty chemical portion of our business to continue to grow.

 

We have continued to invest in growing our business. In fiscal 2010, we invested in two new facilities, which expanded our ability to service our customers and facilitate growth within our Industrial Group. Our new facility in Centralia, Illinois began operations in July 2009 and primarily serves our food-grade products business. Additionally, our new facility in Minneapolis, Minnesota, built to handle bulk chemicals sold to pharmaceutical manufacturers, became operational in June 2009. We opened one branch for our Water Treatment Group in the first quarters of each of fiscal 2010 and 2011 and expect to continue to invest in new branches to expand our geographic coverage. The cost of these new branches is not expected to be material.

 

In February 2009, we agreed to sell our inventory and entered into a marketing agreement regarding the business of our Pharmaceutical segment, which provided pharmaceutical chemicals to retail pharmacies and small-scale pharmaceutical manufacturers. The transaction closed in May 2009 and we have no significant obligations to fulfill under the agreement. The results of the Pharmaceutical Segment have been reported as discontinued operations in our Condensed Financial Statements and Notes to Condensed Financial Statements for all periods presented in this Report on Form 10-Q.

 

We seek to maintain relatively constant gross profit dollars on each of our products as the cost of our raw materials increase or decrease. Since we expect that we will continue to experience fluctuations in our raw material costs and resulting prices in the future, we believe that gross profit dollars is the best measure of our profitability from the sale of our products. If we maintain relatively stable profit dollars on each of our products, our reported gross profit percentage will decrease when the cost of the product increases and will increase when the cost of the product decreases.  

 

We use the last in, first out (“LIFO”) method of valuing inventory, which causes the most recent product costs to be recognized in our income statement. The valuation of LIFO inventory for interim periods is based on our estimates of fiscal year-end inventory levels and costs. The LIFO inventory valuation method and the resulting cost of sales are consistent with our business practices of pricing to current commodity chemical raw material prices. Our raw material costs declined significantly in the first quarter of fiscal 2010, negatively impacting the results for that period due to selling higher cost inventory on hand at lower market prices.  Our use of LIFO partially offsets the impact of the rapidly changing prices, and our LIFO reserve decreased significantly in fiscal 2010 due to declining costs. This decrease in the reserve increased our reported gross profit in the first quarter of fiscal 2010 by $2.8 million. Recent raw material costs have been more stable, although we expect some increases in commodity costs in fiscal 2011 compared to the levels we experienced at the end of fiscal 2010.  As a result of the projected higher costs, we have recorded a $0.8 million increase in our LIFO reserve, reducing our reported gross profit by that amount in the first quarter of fiscal 2011.  We anticipate that stabilizing raw material costs and a slower economic growth environment will heighten competitive pricing pressure, which may have a negative effect on our margins in the remainder of fiscal 2011.

 

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Results of Operations

 

The following table sets forth the percentage relationship of certain items to sales for the period indicated:

 

 

Sales

 

Sales increased $1.1 million, or 1.5%, to $74.7 million in the three months ended June 30, 2010 as compared to $73.6 million in the same period a year ago. Sales of bulk chemicals, including caustic soda, were approximately 19% of sales during the first quarter of each of fiscal 2011 and 2010.  We experienced increased sales across most product lines in the first quarter of fiscal 2011 compared to the same period in fiscal 2010, which was partially offset by lower selling prices due to lower raw material costs.

 

Industrial Segment.  Industrial segment sales increased $0.1 million, or 0.2%, to $49.8 million for the three months ended June 30, 2010 as compared to the same period of the prior year.  Reduced selling prices in response to lower raw material costs offset the impact of increased sales across most product lines.

 

Water Treatment Segment.  Water Treatment segment sales increased $1.0 million, or 4.2%, to $24.9 million for the three months ended June 30, 2010 as compared to the same period of the prior year. The sales increase was primarily due to increased sales of manufactured and specialty chemical products, partially offset by lower selling prices due to lower raw material costs.

 

Gross Profit

 

Gross profit was $18.4 million, or 24.7% of sales, for the three months ended June 30, 2010, as compared to $15.9 million, or 21.5% of sales, for the three months ended June 30, 2009. Due to projected increases in certain raw material costs, the LIFO method of valuing inventory negatively impacted gross profit by $0.8 million for the three months ended June 30, 2010, whereas LIFO positively impacted gross profit by $2.8 million for the three months ended June 30, 2009 due to significant decreases in raw material costs experienced in the first quarter of fiscal 2010.

 

Industrial Segment.  Gross profit for the Industrial segment was $10.3 million, or 20.8% of sales, for the three months ended June 30, 2010, as compared to $8.4 million, or 17.0% of sales, for the three months ended June 30, 2009.   The increase in profit for this segment in the first quarter of fiscal 2011 was attributable to increased sales across most product lines and higher per unit profits realized for certain products.  Rapidly declining raw material costs in the first quarter of the prior year negatively impacted the per unit profits realized in that period.  The LIFO method of valuing inventory negatively impacted gross profit in this segment by $0.6 million for the three months ended June 30, 2010 while it positively impacted gross profit by $2.2 million for the three months ended June 30, 2009.

 

Water Treatment Segment.  Gross profit for the Water Treatment segment was $8.1 million, or 32.6% of sales, for the three months ended June 30, 2010, as compared to $7.4 million, or 31.1% of sales, for the three months ended June 30, 2009. The increase in gross profit was primarily due to increased sales of manufactured and specialty chemical products, which was partially offset by increased overhead costs as we have invested in new facilities and personnel within existing and new markets to support growth in this segment. The LIFO method of valuing inventory negatively impacted gross profit in this segment by $0.2 million for the three months ended June 30, 2010 while it positively impacted gross profit by $0.6 million for the three months ended June 30, 2009.

 

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Selling, General and Administrative Expenses

 

Selling, general and administrative expenses were $6.7 million, or 8.9% of sales, for the three months ended June 30, 2010 as compared to $6.4 million, or 8.6% of sales, for the three months ended June 30, 2009. The increase was primarily a result of higher equity incentive plan and variable pay plan costs.

 

Operating Income

 

Operating income was $11.8 million for the three months ended June 30, 2010, an increase of $2.3 million from the same period in the prior year. The Industrial segment accounted for $1.9 million of the increase while the Water Treatment segment accounted for the remaining $0.4 million. The increase in operating income was driven by increased sales and higher per unit profits on certain products in fiscal 2011 when compared to the prior year, partially offset by higher infrastructure costs in the Water Treatment segment.

 

Investment Income

 

Investment income was $0.1 million for the three months ended June 30, 2010; the amount for the same period in fiscal 2009 was not material. The increase was due to higher average investment balances and yields for the period ended  June 30, 2010 as compared to the same period in the prior year.

 

Provision for Income Taxes

 

Our effective income tax rate was 38.3% for the three months ended June 30, 2010, compared to 37.5% for the three months ended June 30, 2009. The higher effective tax rate for the three months ended June 30, 2010 was primarily due to an increase in projected taxable income subject to higher marginal income tax rates compared to the three months ended June 30, 2009 and the reduced impact of permanent items applied to the increased tax base.

 

Liquidity and Capital Resources

 

Cash provided by operations for the three months ended June 30, 2010 was $4.6 million compared to $11.7 million for the three months ended June 30, 2009. The decrease in cash provided by operating activities was due primarily to an increase in working capital balances, including the timing of inventory purchases and the related vendor payments and an increase in trade receivables associated with the timing of customer payments, offset by the increase in net income. The higher levels of cash generated from working capital in the first quarter of fiscal 2010 was driven by the rapidly declining material costs and selling prices experienced in that period.  Due to the nature of our operations, which includes purchases of large quantities of bulk chemicals, timing of purchases can result in significant changes in working capital investment and the resulting operating cash flow. Historically, our cash requirements increase during the period from April through September as caustic soda inventory levels increase as the majority of barges are received during this period. Additionally, due to the seasonality of the water treatment business, our accounts receivable balance generally increases during the same period.

 

Cash and investments available-for-sale of $52.1 million at June 30, 2010 decreased by $1.6 million as compared with the $53.7 million available as of March 28, 2010, primarily due to higher working capital balances and cash disbursed for capital expenditures and dividends during the first quarter of fiscal 2011.

 

Capital Expenditures

 

Capital expenditures were $3.3 million for the three months ended June 30, 2010 compared to $3.1 million in the same period in the prior fiscal year. The total capital expenditures in the quarter ended June 30, 2010 for new facilities projects were approximately $0.4 million compared to $2.2 million in the quarter ended June 30, 2009. Additional significant capital expenditures during the first quarter of fiscal 2011 consisted of approximately $1.0 million for business expansion and process improvement projects, $1.1 million for other facility, regulatory and safety improvements and $0.8 million for new and replacement route sales trucks for the Water Treatment segment. We expect our cash flows from operations will be sufficient to fund our planned capital expenditures in fiscal 2011.

 

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Critical Accounting Policies

 

Our significant accounting policies are set forth in Note 1 to our financial statements in our Annual Report on Form 10-K for the fiscal year ended March 28, 2010. The accounting policies used in preparing our interim fiscal 2011 financial statements are the same as those described in our Annual Report.

 

Forward-Looking Statements

 

The information presented in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts, but rather are based on our current expectations, estimates and projections, and our beliefs and assumptions. We intend words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will” and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. These factors could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Additional information concerning potential factors that could affect future financial results is included in our Annual Report on Form 10-K for the fiscal year ended March 28, 2010. We caution you not to place undue reliance on these forward-looking statements, which reflect our management’s view only as of the date of this Quarterly Report on Form 10-Q. We are not obligated to update these statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

 

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

At June 30, 2010, our investment portfolio included $32.5 million of certificates of deposit classified as fixed income securities and cash and cash equivalents of $19.6 million. The fixed income securities, like all fixed income instruments, are subject to interest rate risks and will decline in value if market interest rates increase. However, while the value of the investment may fluctuate in any given period, we intend to hold our fixed income investments until recovery. Consequently, we would not expect to recognize an adverse impact on net income or cash flows during the holding period. We adjust the carrying value of our investments if impairment occurs that is other than temporary.

 

We are subject to the risk inherent in the cyclical nature of commodity chemical prices. However, we do not currently purchase forward contracts or otherwise engage in hedging activities with respect to the purchase of commodity chemicals. We attempt to pass changes in material prices on to our customers, however, there are no assurances that we will be able to pass on cost increases in the future.

 

ITEM 4.        CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures

 

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control

 

There was no change in our internal control over financial reporting during the first quarter of fiscal 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

 

ITEM 1A.     RISK FACTORS

 

There have been no material changes to our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 28, 2010.

 

ITEM 5.07.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

(a)  On July 28, 2010, Hawkins, Inc. (the “Company”) held its 2010 Annual Meeting of Shareholders.  As of June 1, 2010, there were 10,282,458 shares of common stock entitled to vote at the Annual Meeting and a total of 8,465,123.671 shares (82.3% of all outstanding shares) were represented at the Annual Meeting.  The proposals that were voted upon at the Annual Meeting, and the number of votes cast for or against, as well as the number of abstentions, and broker non-votes, as to each such proposal where applicable, are set forth below.

 

(b)

 

Proposal One – Election of Directors

 

The Company’s common shareholders elected each of the Company’s seven nominees to serve as director for a term of one year, which term shall expire at the Company’s 2011 Annual Meeting of Shareholders, as set forth below:

 

 

Proposal Two – Approval of 2010 Omnibus Incentive Plan

 

The Company’s common shareholders approved the 2010 Omnibus Incentive Plan, as set forth below:

 

 

Proposal Three – Approval of Amended and Restated Articles of Incorporation

 

The Company’s common shareholders approved the amended and restated articles of incorporation, as set forth below:

 

 

The above proposals submitted to vote of security holders at the Annual Meeting are described in more detail in the Company’s definitive proxy statement filed with the Securities and Exchange Commission on June 16, 2010.

 

ITEM 6.        EXHIBITS

 

 

 

 

 

 

 

 

 

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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.

 

Dated: July 29, 2010

 

 

 

 

 

 

 

 

 

 

 

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