SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended September 30, 2001 Commission File No. 0-14841
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
(Exact name of registrant as specified in its charter)
Pennsylvania 22-2476703
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Franklin Plaza, Burlington, New Jersey 08016-4907
(Address of principal executive office) (Zip Code)
Registrant's telephone number (609) 386-2500
Indicate by check mark whether 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 Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
COMMON STOCK OUTSTANDING AS OF
SEPTEMBER 30, 2001 - 7,947,882 SHARES
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
September 30, March 31,
2001 2001
------------- ----------
(Unaudited) (Audited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 2,947 $ 2,835
Accounts receivable, less allowance for doubtful accounts of $1,157 and $1,161 13,082 12,094
Preferred stock subscriptions receivable -- 3,500
Inventories 24,125 20,879
Income tax receivable 568 568
Prepaids and other assets 1,924 2,798
-------- --------
TOTAL CURRENT ASSETS 42,646 42,674
-------- --------
PROPERTY AND EQUIPMENT 7,410 7,651
-------- --------
OTHER ASSETS:
Deferred income tax asset 5,700 5,700
Trademark, less accumulated amortization of $1,943 and $1,749 13,604 13,798
Advance royalties and licenses 1,061 1,341
Software development costs 7,223 5,878
Other assets 2,731 2,986
-------- --------
TOTAL OTHER ASSETS 30,319 29,703
-------- --------
TOTAL ASSETS $ 80,375 $ 80,028
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 17,555 $ 13,647
Notes payable 10,404 2,000
Revolving credit facility 7,107 --
Current portion of long-term liabilities - Other 334 156
-------- --------
TOTAL CURRENT LIABILITIES 35,400 15,803
-------- --------
LONG-TERM LIABILITIES
Notes payable -- 8,329
Revolving credit facility -- 4,064
Other liabilities 1,929 1,554
-------- --------
TOTAL LONG-TERM LIABILITIES 1,929 13,947
-------- --------
SHAREHOLDERS' EQUITY:
Preferred stock, $2.50 par value, authorized 10,000,000 shares 3,500
issued and outstanding 3,566 --
Preferred stock subscribed -- 3,500
Common stock, no par value, authorized 50,000,000 shares, issued
and outstanding, 7,947,882 and 7,952,882 shares 49,879 49,658
Retained earnings (deficit) (9,272) (1,352)
Foreign currency translation adjustment (1,127) (1,528)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 43,046 50,278
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 80,375 $ 80,028
======== ========
See notes to consolidated financial statements.
Page 2
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except for per share data)
(unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
2001 2000 2001 2000
-------- -------- -------- --------
SALES $ 18,714 $ 20,510 $ 34,723 $ 37,561
COST OF SALES 11,977 11,699 21,339 21,291
WRITE-DOWN ON EBOOKMAN INVENTORY 2,898 -- 2,898 --
-------- -------- -------- --------
TOTAL COST OF SALES 14,875 11,699 24,237 21,291
-------- -------- -------- --------
GROSS MARGIN 3,839 8,811 10,486 16,270
-------- -------- -------- --------
EXPENSES:
Sales and marketing 5,675 4,215 10,528 7,545
Research and development 1,043 1,226 2,013 1,993
General and administrative 2,271 2,447 4,552 4,771
-------- -------- -------- --------
Total operating expenses 8,989 7,888 17,093 14,309
-------- -------- -------- --------
OPERATING INCOME (LOSS) (5,150) 923 (6,607) 1,961
Interest expense (441) (410) (815) (814)
Interest and investment income (197) 54 (160) 142
Other, net (87) (359) (250) (648)
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (5,875) 208 (7,832) 641
INCOME TAX PROVISION (BENEFIT) -- -- -- --
-------- -------- -------- --------
NET INCOME (LOSS) (5,875) 208 (7,832) 641
-------- -------- -------- --------
PREFERRED STOCK DIVIDEND 88 -- 88 --
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK $ (5,963) $ 208 $ (7,920) $ 641
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE:
Basic $ (0.75) $ 0.03 $ (1.00) $ 0.08
======== ======== ======== ========
Diluted $ (0.75) $ 0.02 $ (1.00) $ 0.08
======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES:
Basic 7,948 7,916 7,951 7,915
======== ======== ======== ========
Diluted 7,948 8,541 7,951 8,352
======== ======== ======== ========
See notes to consolidated financial statements.
Page 3
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands, except for share data)
Accumulated
Other Total
Common Stock Preferred Stock Compre- Share-
--------------------- ----------------- Retained hensive holders'
Shares Amount Shares Amount Earnings Income* Equity
--------- ------- ------ ------ -------- -------- -------
BALANCE - MARCH 31, 2001 7,952,882 $49,658 3,500 $3,500 $(1,352) $(1,528) $50,278
Issuance of shares and amortization of deferred
compensation expense are issued for services
(unearned portion $11) (5,000) (2) - - - - (2)
Value of stock options granted - 223 223
Preferred stock dividend 88 88 (88) -
Costs incurred in issuance of preferred stock (22) (22)
Loss for the period - - - - (7,832) - (7,832)
Foreign currency translation adjustment - - - - - 401 401
--------- ------- ----- ------ ------- ------- ---------
BALANCE - SEPTEMBER 30, 2001 (unaudited) 7,947,882 $49,879 3,588 $3,566 $(9,272) $(1,127) $43,046
========= ======= ===== ====== ======= ======= =======
* Comprehensive income, i.e., net income (loss), plus, or less, other
comprehensive income, totaled ($7,431) for the six months ended
September 30, 2001.
See notes to consolidated financial statements.
Page 4
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
September 30,
----------------------------
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $(7,832) $ 641
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization 3,020 2,474
Provision for losses on accounts receivable 59 203
Loss (gain) on disposal of property and equipment (75) 10
Provisions for eBookMan inventory, assets and price protection 4,201 --
Stock issued for services 223 17
Source (use) of cash from change in operating assets and liabilities:
Accounts receivable (1,047) (4,416)
Inventories (6,594) (4,782)
Prepaids and other assets 212 (614)
Accounts payable and accrued expenses 3,970 3,704
Other, net (15) 50
--------- --------
NET CASH USED IN OPERATING ACTIVITIES (3,878) (2,713)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (590) (564)
Proceeds from sale of property and equipment 254 --
Software development costs (2,806) (1,404)
Change in other assets (164) (321)
--------- --------
NET CASH USED IN INVESTING ACTIVITIES (3,306) (2,289)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility 3,042 1,330
Proceeds from issuance of preferred shares 3,478 46
Other liabilities 375 (55)
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,895 1,321
EFFECT OF EXCHANGE RATE CHANGES ON CASH 401 (395)
--------- --------
INCEASE (DECREASE) IN CASH AND CASH EQUIVALENTS 112 (4,076)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,835 6,899
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,947 $ 2,823
========= ========
See notes to consolidated financial statements.
Page 5
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Reference is made to the financial statements included in the Company's annual
Report (Form 10-K) filed with the Securities and Exchange Commission for the
year ended March 31, 2001.
The financial statements for the periods ended September 30, 2001 and 2000 are
unaudited and include all adjustments necessary to a fair presentation of the
results of operations for the periods then ended. All such adjustments are of a
normal recurring nature. The results of the Company's operations for any interim
period are not necessarily indicative of the results of the Company's operations
for a full year.
EBOOKMAN PROVISIONS
In February 2001 the Company began shipment of its new eBookMan product that had
been in development for approximately one year. Through September 30, 2001 sales
of this product have been below expectations, as the eBook market did not
develop and grow as anticipated. Because of the lower than expected sales, the
Company recorded provisions totaling $4,201 to reduce the carrying value of its
eBookMan inventory and certain related assets and provide for price protection
related to the eBookMan product.
NOTES PAYABLE
The Company is not in compliance with certain financial covenants of its Senior
Note Agreement pertaining to EBITDA coverage of interest expense and fixed
charges. Therefore, the $10,404 of Senior Notes and the $7,107 due under the
Company's $25,000 Revolving Credit Facility are shown as current liabilities.
The Company is currently in discussions with the Noteholders to restructure the
Agreement to allow the Company to operate in compliance with all financial
covenants. At March 31 $2,000 of Senior Notes were included in current
liabilities and the remaining $8,329, along with the $4,064 due under the
Revolving Credit Facility, were shown as long-term liabilities.
Page 6
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
OPERATIONS
Under FAS No. 131 "Disclosure about Segments of an Enterprise and Related
Information", the Company's operations are treated as one operating segment as
it only reports profit and loss information on an aggregate basis to the chief
operating decision maker of the Company. Information about the Company's product
sales are as follows (in thousands):
Three Months Ended Six Months Ended
------------------- ------------------
September 30, September 30,
------------------- ------------------
Product Sales 2001 2000 2001 2000
------------- -------- ------- -------- -------
Reference $15,679 $17,171 $27,547 $31,845
Rolodex 4,156 3,253 6,098 5,566
eBookMan (1,121) 1,078 --
Other 86 -- 150
-------- -------- -------- -------
Total Sales $18,714 $20,510 $34,723 $37,561
======== ======== ======== =======
Approximate foreign sources of revenues including export sales were as follows
(in thousands):
Three Months Ended Six Months Ended
------------------- --------------------
September 30, September 30,
------------------- --------------------
Product Sales 2001 2000 2001 2000
------------- ------- ------- ------- -------
Europe $ 3,922 $ 4,125 $ 7,858 $10,054
Other International 1,851 1,241 2,945 2,338
For the three-month periods ended September 30, 2001 and 2000, one customer in
each period accounted for more than 10% of the Company's revenues. Total sales
to these customers were $1,910 and $2,500 respectively. The sales of $1,910 in
2001 were comprised of reference product while the sales of $2,500 in 2000 and
included reference product and Rolodex Electronic products. For the six months
ended September 30, 2001 and 2000 no customer accounted for more than 10% of the
Company's revenues.
Page 7
ISSUANCE OF PREFERRED STOCK
In April 2001, Dr. James H. Simons, the Company's Chairman of the Board, paid
$3,500,000 for 3,500 shares of the Company's Series A 10% Convertible Preferred
Stock for which he had subscribed in March 2001. For additional information
regarding the Preferred Stock issue, refer to the financial statements included
in the Company's annual Report (Form 10-K) for the year ended March 31, 2001
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the FASB issued Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("SFAS 142). SFAS No. 142 changes
the accounting for goodwill from an amortization method to an impairment-only
approach. The provisions of this statement are required to be applied starting
with fiscal years beginning after December 15, 2001 and applied to all goodwill
and other intangible assets recognized in its financial statements at that date.
The Company expects to adopt this standard for its fiscal year commencing April
1, 2002 and is currently evaluating the impact of SFAS 142 on its financial
results.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements to conform to the current year presentation. These reclassifications
had no effect on previously reported results of operations or retained earnings.
Page 8
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
================================================================================
RESULTS OF OPERATIONS (in thousands)
Overview
The retail market for handheld eBook readers has not developed and grown as
anticipated, resulting in substantially lower sales of eBookMan than were
expected. Accordingly, the Company has incurred, and reported in the second
quarter, losses from operations of eBookMan and a write-down of inventory and
certain retail marketing and promotion costs pertaining to eBookMan. As a
result, the Company incurred net losses of ($5,875) and ($7,832) respectively
for the three- and six-month periods ended September 30, 2001.
Three months ended September 30, 2001 compared with three months ended September
30, 2000:
A comparative summary of the results of operations of the Company's core
business (Reference and ROLODEX(R) Electronics products) and eBookMan product
line is shown below.
For the Quarter Ended For the Quarter Ended
September 30, 2001 September 30, 2000
------------------------------------- ------------------------------------
Core eBookMan Total Core eBookMan Total
-------- -------- -------- -------- -------- --------
SALES $ 19,835 $ (1,121)* $ 18,714 $ 20,510 $ -- $ 20,510
COST OF SALES 11,734 243 11,977 11,699 -- 11,699
PROVISION FOR LOSS ON
EBOOKMAN INVENTORY -- 2,898 2,898 -- -- --
-------- -------- -------- -------- -------- --------
TOTAL COST OF SALES 11,734 3,141 14,875 11,699 -- 11,699
-------- -------- -------- -------- -------- --------
GROSS MARGIN 8,101 (4,262) 3,839 8,811 -- 8,811
OPERATING EXPENSES 6,655 2,334 8,989 6,830 1,058 7,888
-------- -------- -------- -------- -------- --------
OPERATING INCOME (LOSS) 1,446 (6,596) (5,150) 1,981 (1,058) 923
INTEREST AND OTHER (334) (391) (725) (715) -- (715)
-------- -------- -------- -------- -------- --------
NET INCOME (LOSS) $ 1,112 $ (6,987) $ (5,875) $ 1,266 $ (1,058) $ 208
======== ======== ======== ======== ======== ========
* After provisions for returns and price protection of $1,722.
Net Sales
Sales of $18,714 for the quarter ended September 30, 2001 were 9% lower than
sales of $20,510 last year due to negative sales of eBookMan of ($1,121)
resulting from return and price protection provisions of $1,722 and lower sales
of reference products of $1,492, partially offset by increased ROLODEX(R)
Electronics products sales of $903.
Gross Margin
Gross Margin was $3,839 or 21% of sales in the current period primarily because
of a write-down of inventory and provisions for price protection and returns of
eBookMan aggregating $4,016. Core business gross margin of $8,101 is 41% of
sales compared with $8,811 or 43% of sales last year. The reduction in core
business gross margin percentage resulted from lower margin ROLODEX(R)
Electronics products comprising 21% of sales in the current period compared with
16% last year.
Page 9
Operating Expenses
Total operating expenses increased to $8,989 compared with $7,888 in the prior
period. Sales and marketing expenses increased by $1,460 to $5,675 from $4,215
primarily because of $1,088 of promotional expense relating to eBookMan and
increased customer advertising allowances of $228. General and administrative
expenses were reduced to $2,271 from $2,447 in the prior period. Research and
development costs were reduced to $1,043 from $1,226 because the prior period
included $227 of non-recurring vendor charges pertaining to the development of
eBookMan.
Other Income/Expense
Interest expense of $441 for the current period approximates the $410 of the
prior period. Currency transaction losses net of investment income were $284
this year compared with $305 last year.
Net Income (Loss)
There was a net loss of ($5,875) for the current period compared with net income
of $208 last year. The current year's loss is wholly attributable to eBookMan
operations and inventory write down aggregating $6,987. The Company's core
Reference and ROLODEX(R) Electronics products business had net income of $1,112
for the current period compared with $1,266 last year.
Six months ended September 30, 2001, compared with six months ended September
30, 2000:
A comparative summary of operations for the Company's core business (Reference
and ROLODEX(R) Electronics products) and eBookMan product lines is shown below.
Six Months Ended Six Months Ended
September 30, 2001 September 30, 2000
------------------------------------- ------------------------------------
Core eBookMan Total Core eBookMan Total
-------- -------- -------- -------- -------- --------
SALES $ 33,645 $ 1,078* $ 34,723 $ 37,561 $ -- $ 37,561
COST OF SALES 19,430 1,909 21,339 21,291 -- 21,291
PROVISION FOR LOSS ON
EBOOKMAN INVENTORY -- 2,898 2,898 --
-------- -------- -------- -------- -------- --------
TOTAL COST OF SALES 19,430 4,807 24,237 21,291 -- 21,291
-------- -------- -------- -------- -------- --------
GROSS MARGIN 14,215 (3,729) 10,486 16,270 -- 16,270
OPERATING EXPENSES 13,246 3,847 17,093 13,022 1,287 14,309
-------- -------- -------- -------- -------- --------
OPERATING INCOME (LOSS) 969 (7,576) (6,607) 3,248 (1,287) 1,961
INTEREST AND OTHER (510) (715) (1,225) (1,320) -- (1,320)
-------- -------- -------- -------- -------- --------
NET INCOME (LOSS) $ 459 $ (8,291) $ (7,832) $ 1,928 $ (1,287) $ 641
======== ======== ======== ======== ======== ========
* After provisions for returns and price protection of $2,250.
Net Sales
Sales of $34,723 for the six-month period ended September 30, 2001 were $2,838
or 8% lower than sales of $37,561 in the prior period. The primary reasons for
the decline were a reduction of $1,736 in sales of reference products in the
United States consumer and OEM markets and a decline of $2,040 in European sales
of reference products, caused in part by weaker currencies, offset by eBookMan
sales of $1,078.
Page 10
Gross Margin
Gross margin in the current period was $10,486 or 30% of sales including
eBookMan operations and write-down of inventory aggregating ($3,729) or 11% of
sales. Core business gross margin of $14,215 approximates 42% of sales compared
with $16,270 or 43% of sales in the prior period.
Operating Expenses
Total operating expenses increased to $17,093 from $14,309 in the prior period.
The increase is attributable to higher sales and marketing expenses of $2,983
caused by an increase of $2,423 in eBookMan operations and $560 in the core
business. The eBookMan increase consists primarily of advertising and promotion
expenses of $1,934 while the core business increase is attributable to increased
personnel expenses of $220 and increased customer advertising allowances of
$201. General and administrative expense was reduced to $4,552 in the current
period from $4,771 in the prior period primarily because of a lower provision
for bad debts of $205 and lower depreciation and amortization of $158. Research
and development expense remained relatively constant at $ 2,013 compared with
$1,993 in the prior period.
Other Income/Expense
Interest expense of $815 for the current period approximates the $814 of the
prior period. Currency transaction losses net of investment income were $410
this year compared with $506 last year.
Net Income (Loss)
There was a net loss of ($7,832) in the current period compared with net income
of $641 in the prior period. The current year's loss is wholly attributable to
eBookMan operations and inventory write down aggregating $8,291. The Company's
core Reference and ROLODEX(R) Electronics products business net income in the
current period decreased by $1,469 to $459 from $1,928 in the prior period. The
reduction in core business net income results from lower sales of $3,916 and
lower gross margin of $2,055, partially offset by lower interest expense and
currency transaction losses of $810.
Changes In Financial Condition - September 30, 2001 compared with March 31, 2001
Inventories increased to $24,125 from $20,879 at March 31 as the amount of core
business inventory seasonally increased to $18,675 from $12,550 while the
carrying value of eBookMan inventory decreased to $5,450 from $8,329 at March
31, 2001.
Other assets increased from $29,703 to $30,319 as capitalized software
development costs of $1,976 relating to the Company's new enterprise resource
system were partially offset by net amortization of prior development costs and
licenses.
Accounts payable and accrued expenses increased to $17,555 from $13,647
primarily because of the seasonal increase in core business inventory and the
accrual of price protection of $716 pertaining to eBookMan.
The $10,404 of Senior Notes and the $7,107 due under the Company's $25,000
Revolving Credit Facility are shown as current liabilities because the Company
is not in compliance with certain financial covenants of its Senior Note
Agreement pertaining to EBITDA coverage of interest expense and fixed charges.
At March 31, $2,000 of Senior Notes was included in current liabilities and the
remaining $8,329, along with the $4,064 due under the Revolving Credit Facility,
were shown as long term liabilities.
In April 2001, the Company received $3,500 in payment for the Convertible
Preferred Stock that had been subscribed for in March 2001.
Page 11
Liquidity and Capital Resources
The Company has a $25,000 secured Revolving Credit Facility with a commercial
lender which expires on December 7, 2002. Borrowings under the facility bear
interest at the bank's prime rate plus 3/8%. As of September 30, 2001, the
Company had outstanding borrowings of $7,107 under this facility and had a
balance of $10,404 outstanding under its Senior Notes. The Company is not in
compliance with certain financial covenants of its Senior Note Agreement
pertaining to EBITDA coverage of interest expense and fixed charges. The Company
is currently in discussions with the Noteholders to restructure the Agreement to
allow the Company to operate in compliance with all financial covenants and is
in discussions with the lender to extend the term of the Revolving Credit
Facility.
Management believes that cash flow from operations and the secured Revolving
Credit Facility will be adequate to provide for the Company's liquidity and
capital needs for the foreseeable future subject to satisfactory completion of
discussions with the lender. The Company has no material commitments for capital
expenditures in the next twenty-four months.
Page 12
PART II
ITEM 3. DEFAULT UPON SENIOR SECURITIES
The Company is not in compliance with certain financial covenants of
its Senior Note Agreement pertaining to EBITDA coverage of interest
expense and fixed charges. The Company is currently in discussions
with the Noteholders to restructure the Agreement to allow the Company
to operate in compliance with all financial covenants.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
The Annual Meeting of Shareholders of the Company was held on July 20,
2001. Reference is made to the Company's Proxy Statement furnished to
shareholders in connection with the solicitation of proxies in
connection with that Annual Meeting. In connection with the annual
election of directors, nine incumbent directors were re-elected with
Edward H. Cohen and James H. Simons each receiving 7,096,003 votes
with 578,477 votes withheld; Kenneth D. Cron and Howard L. Morgan
receiving 7,096,253 votes with 578,227 votes withheld; James Meister
and Jerry R. Schubel receiving 7,088,311 votes with 586,159 votes
withheld; Barry Lipsky receiving 7,095,003 votes with 579,477 votes
withheld; Leonard M. Lodish receiving 7,091,949 votes with 582,531
votes withheld; and William H. Turner receiving 7,095,803 votes with
578,677 votes withheld. Shareholders approved the increase in the
number of shares with respect to which options may be granted under
the Company's 1998 Stock Option Plan and certain other amendments
thereto with 3,836,285 votes for and 901,517 votes against with 7,750
abstentions. Shareholders approved the issuance of 10,000,000 shares
of Series A Preferred Stock with a value of $2.50 per share by vote of
4,056,939 votes in favor, 680,863 votes against, and 7,750
abstentions. Shareholders ratified the appointment of Radin, Glass &
Co. as auditors for the Company's 2002 fiscal year by vote of
7,657,501 in favor, 12,479 votes against, and 4,500 abstentions.
ITEM 5. OTHER INFORMATION
ROLODEX(R) is a registered trademark of Berol Corporation, a
subsidiary of Newell Rubbermaid, Inc. Rocket eBook is a trademark of
NuvoMedia, Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No additional exhibits are required and no reports on Form 8-K were
filed.
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.
FRANKLIN ELECTRONIC PUBLISHERS,
INCORPORATED
Registrant
November 14, 2001 /s/ Barry J. Lipsky
------------------ -------------------------
Date Barry J. Lipsky, President and
Chief Executive Officer
(Duly Authorized Officer)
November 14, 2001 /s/ Arnold D. Levitt
------------------ ---------------------
Date Arnold D. Levitt, Senior Vice President,
Chief Financial Officer, and Treasurer
(Principal Financial and Accounting Officer)