UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6227
Lee Enterprises, Incorporated
------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 42-0823980
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
215 N. Main Street, Davenport, Iowa 52801
-----------------------------------------
(Address of principal executive offices)
(563) 383-2100
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by a 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 [ ]
As of March 31, 2002, 34,194,904 shares of Common Stock and 10,011,079 shares of
Class B Common Stock of the Registrant were outstanding.
1
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LEE ENTERPRISES, INCORPORATED
TABLE OF CONTENTS PAGE
- ------------------------------------------------------------ --------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income - Three months and
six months ended March 31, 2002 and 2001 3
Consolidated Balance Sheets - March 31, 2002 and
September 30, 2001 4
Consolidated Statements of Cash Flows - Six months
ended March 31, 2002 and 2001 5
Notes to Consolidated Financial Statements 6 - 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 15
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 15
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
- ----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31 March 31
- ----------------------------------------------------------------------------------------------------------
(Thousands, except per common share data) 2002 2001 2002 2001
- ----------------------------------------------------------------------------------------------------------
Operating revenue:
Advertising ........................................ $ 62,305 $ 63,864 $ 135,157 $ 141,535
Circulation ........................................ 20,194 19,729 40,786 40,903
Other .............................................. 15,815 17,046 31,821 34,357
Equity in net income of associated companies ....... 1,752 1,318 3,929 3,884
- ----------------------------------------------------------------------------------------------------------
100,066 101,957 211,693 220,679
- ----------------------------------------------------------------------------------------------------------
Operating expenses:
Compensation ....................................... 40,777 41,480 81,557 85,042
Newsprint and ink .................................. 8,321 9,957 18,320 21,094
Depreciation ....................................... 3,590 4,287 7,659 8,412
Amortization of intangible assets .................. 1,882 3,890 3,804 7,800
Other .............................................. 24,776 26,749 51,276 55,096
- ----------------------------------------------------------------------------------------------------------
79,346 86,363 162,616 177,444
- ----------------------------------------------------------------------------------------------------------
Operating income ...................................... 20,720 15,594 49,077 43,235
- ----------------------------------------------------------------------------------------------------------
Nonoperating income (expenses), net:
Financial income ................................... 2,467 8,431 5,235 17,942
Financial expense .................................. (2,843) (3,181) (5,882) (6,345)
Loss on sales of assets ............................ -- -- (40) --
Other, net ......................................... -- (234) (268) (631)
- ----------------------------------------------------------------------------------------------------------
(376) 5,016 (955) 10,966
- ----------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes . 20,344 20,610 48,122 54,201
Income tax expense .................................... 7,220 7,469 16,998 20,045
- ----------------------------------------------------------------------------------------------------------
Income from continuing operations ..................... 13,124 13,141 31,124 34,156
Discontinued operations:
Gain (loss) on disposition, net of income tax effect -- (85) -- 250,802
- ----------------------------------------------------------------------------------------------------------
Net income ............................................ $ 13,124 $ 13,056 $ 31,124 $ 284,958
==========================================================================================================
Earnings per common share:
Basic:
Continuing operations ............................ $ 0.30 $ 0.30 $ 0.71 $ 0.78
Discontinued operations .......................... -- -- -- 5.75
- ----------------------------------------------------------------------------------------------------------
Net income ............................................ $ 0.30 $ 0.30 $ 0.71 $ 6.53
==========================================================================================================
Diluted:
Continuing operations ............................ $ 0.30 $ 0.30 $ 0.70 $ 0.78
Discontinued operations .......................... -- -- -- 5.70
- ----------------------------------------------------------------------------------------------------------
Net income ............................................ $ 0.30 $ 0.30 $ 0.70 $ 6.48
- ----------------------------------------------------------------------------------------------------------
Dividends per common share ............................ $ 0.17 $ 0.17 $ 0.34 $ 0.34
==========================================================================================================
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
3
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
- ----------------------------------------------------------------------------------------------------
March 31 September 30
(Thousands, except per share data) 2002 2001
- ----------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents .......................................... $ 370,650 $ 272,169
Temporary cash investments ......................................... 108,380 211,221
Accounts receivable, net ........................................... 36,969 41,349
Receivable from associated companies ............................... -- 1,500
Inventories ........................................................ 4,003 3,997
Other .............................................................. 8,039 7,441
- ----------------------------------------------------------------------------------------------------
Total current assets .................................................. 528,041 537,677
- ----------------------------------------------------------------------------------------------------
Investments ........................................................... 31,469 32,525
Property and equipment, net ........................................... 114,984 119,061
Intangible and other assets ........................................... 301,482 311,134
- ----------------------------------------------------------------------------------------------------
$ 975,976 $ 1,000,397
====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt ............................... $ 23,200 $ 11,600
Income taxes payable ............................................... 9,309 57,281
Other .............................................................. 60,572 56,258
- ----------------------------------------------------------------------------------------------------
Total current liabilities ............................................. 93,081 125,139
- ----------------------------------------------------------------------------------------------------
Long-term debt, less current maturities ............................... 150,200 161,800
Deferred items ........................................................ 30,709 31,514
Stockholders' equity:
Serial convertible preferred, no par value;
authorized 500 shares: none issued .............................. -- --
Common, $2 par value; authorized 60,000 ............................ 68,390 67,318
shares; issued and outstanding:
March 31, 2002 34,195 shares
September 30, 2001 33,659 shares
Class B Common, $2 par value; authorized ........................... 20,022 20,758
30,000 shares; issued and outstanding:
March 31, 2002 10,011 shares
September 30, 2001 10,379 shares
Additional paid-in capital ......................................... 53,064 48,164
Unearned compensation .............................................. (2,433) (1,130)
Retained earnings .................................................. 562,943 546,834
- ----------------------------------------------------------------------------------------------------
Total stockholders' equity ............................................ 701,986 681,944
- ----------------------------------------------------------------------------------------------------
$ 975,976 $ 1,000,397
====================================================================================================
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
4
LEE ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- ------------------------------------------------------------------------------------------------
Six Months Ended
March 31
- ------------------------------------------------------------------------------------------------
(Thousands) 2002 2001
- ------------------------------------------------------------------------------------------------
Cash provided by operating activities:
Net income ......................................................... $ 31,124 $ 284,958
Less: discontinued operations ..................................... -- (250,802)
- ------------------------------------------------------------------------------------------------
Income from continuing operations ..................................... 31,124 34,156
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities of continuing operations:
Depreciation and amortization ...................................... 11,463 16,212
Distributions in excess of current earnings of associated companies 198 2,484
Other, net ......................................................... (2,547) (6,905)
- ------------------------------------------------------------------------------------------------
Net cash provided by operating activities ............................. 40,238 45,947
- ------------------------------------------------------------------------------------------------
Cash provided by (required for) investing activities:
Sales (purchases) of temporary cash investments, net ............... 102,841 (456,585)
Purchases of property and equipment ................................ (4,235) (4,920)
Acquisitions, net .................................................. (292) (4,230)
Proceeds from sales of assets ...................................... 7,130 --
Other .............................................................. 144 (1,992)
- ------------------------------------------------------------------------------------------------
Net cash provided by (required for) investing activities .............. 105,588 (467,727)
- ------------------------------------------------------------------------------------------------
Cash provided by (required for) financing activities:
Payments on short-term debt ........................................ -- (37,937)
Common stock transactions .......................................... (207) (8,633)
Dividends paid ..................................................... (7,503) (7,382)
Other .............................................................. 3,560 5,355
- ------------------------------------------------------------------------------------------------
Net cash required for financing activities ............................ (4,150) (48,597)
- ------------------------------------------------------------------------------------------------
Net cash provided by (required for) discontinued operations ........... (43,195) 479,231
- ------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents ............................. 98,481 8,854
Cash and cash equivalents:
Beginning of period ................................................ 272,169 29,427
- ------------------------------------------------------------------------------------------------
End of period ......................................................... $ 370,650 $ 38,281
================================================================================================
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
5
LEE ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1 Basis of Presentation
The consolidated financial statements included herein are unaudited. In
the opinion of management, these statements contain all adjustments
(consisting of only normal recurring items) necessary to present fairly
the financial position of Lee Enterprises, Incorporated and subsidiaries
(the Company) as of March 31, 2002 and the results of operations and cash
flows for the periods presented. These consolidated financial statements
should be read in conjunction with the Consolidated Financial Statements
and Notes thereto included in the Company's 2001 Annual Report on Form
10-K.
Because of seasonal and other factors, the results of operations for the
three months and six months ended March 31, 2002 are not necessarily
indicative of the results to be expected for the full year.
Certain amounts as previously reported have been reclassified to conform
with the current period presentation.
2 Investment in Associated Companies
The Company has a 50% ownership interest in Madison Newspapers, Inc.
(MNI), a company that publishes daily and Sunday newspapers and other
publications in Madison, three other daily newspapers and various other
publications in Wisconsin; and also holds interests in Internet service
ventures.
Summarized financial information of MNI is as follows:
-----------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31 March 31
-----------------------------------------------------------------------------------------------
(Thousands) 2002 2001 2002 2001
-----------------------------------------------------------------------------------------------
Revenue ............................................... $24,400 $24,557 $50,870 $54,016
Operating expenses, excluding depreciation
and amortization .................................... 17,718 19,075 36,043 38,726
Depreciation and amortization ......................... 971 1,161 1,975 2,322
Operating income ...................................... 5,711 4,321 12,852 12,968
Net income ............................................ 3,503 2,637 7,859 7,769
===============================================================================================
In April 2002, a subsidiary of MNI acquired the assets of Citizen
Newspapers, LLC, which owns the Beaver Dam Daily Citizen and various other
publications published in Wisconsin.
3 Income Taxes
The provision for income taxes includes deferred taxes and is based upon
estimated annual effective tax rates in the tax jurisdictions in which the
Company operates.
6
4 Earnings Per Common Share
The following table sets forth the computation of basic and diluted
earnings per common share:
---------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31 March 31
---------------------------------------------------------------------------------------------------
(Thousands, except per common share data) 2002 2001 2002 2001
---------------------------------------------------------------------------------------------------
Income applicable to common stock:
Continuing operations ............................... $ 13,124 $ 13,141 $ 31,124 $ 34,156
Discontinued operations ............................. -- (85) -- 250,802
----------------------------------------------------------------------------------------------------
Net income ............................................ $ 13,124 $ 13,056 $ 31,124 $284,958
====================================================================================================
Weighted average common shares outstanding ............ 44,164 43,753 44,125 43,755
Less non-vested restricted stock ...................... 123 88 116 90
----------------------------------------------------------------------------------------------------
Basic average common shares ........................... 44,041 43,665 44,009 43,665
Dilutive stock options and restricted stock ........... 290 367 277 337
----------------------------------------------------------------------------------------------------
Dilutive average common shares ........................ 44,331 44,032 44,286 44,002
-===================================================================================================
Earnings per common share:
Basic:
Continuing operations ............................. $ 0.30 $ 0.30 $ 0.71 $ 0.78
Discontinued operations ........................... -- -- -- 5.75
----------------------------------------------------------------------------------------------------
Net income ............................................ $ 0.30 $ 0.30 $ 0.71 $ 6.53
====================================================================================================
Diluted:
Continuing operations ............................. $ 0.30 $ 0.30 $ 0.70 $ 0.78
Discontinued operations ........................... -- -- -- 5.70
----------------------------------------------------------------------------------------------------
Net income ............................................ $ 0.30 $ 0.30 $ 0.70 $ 6.48
====================================================================================================
5 Sales of Assets
In December 2001, the Company sold all of the assets of its specialty
publication in Klamath Falls, Oregon. In January 2002, the Company sold
all of the operating assets of its specialty publications in Las Vegas,
Nevada, Great Falls, Montana and St. George, Utah. In February 2002, the
Company sold all of the operating assets of its specialty publication in
Redding, California. Net proceeds from the sales totaled approximately
$7,130,000. The Company realized a net loss on the transactions. The
estimated loss, which was recognized in the year ended September 2001,
approximates the actual amount.
6 Stock Ownership Plans
A summary of stock option activity related to the Company's stock option
plan is as follows:
--------------------------------------------------------------------------
Weighted Average
Exercise Price
(Thousands, except per common share data) Shares Price
-------------------------------------------------------------------------
Outstanding at September 30, 2001 ............. 967 $ 26.44
Granted ....................................... 269 35.46
Exercised ..................................... (125) 25.99
Cancelled ..................................... (18) 27.62
--------------------------------------------------------------------------
Outstanding at March 31, 2002 ................. 1,093 $ 28.69
==========================================================================
Options to purchase 1,131,000 shares of common stock with a weighted
average exercise price of $25.46 per share were outstanding at March 31,
2001.
7
7 Impact of Recently Issued Accounting Standards
In July 2001, the FASB issued Statement No. 141, Business Combinations,
and Statement No. 142, Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated or completed after June 30, 2001. Statement 141
also specifies criteria intangible assets acquired in a purchase method
business combination must meet to be recognized and reported apart from
goodwill. Statement 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually. Statement 142 also requires that intangible
assets with definite useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and reviewed
for impairment in accordance with Statement 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of.
In August 2001, FASB issued Statement No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which supersedes FASB
Statement No. 121, discussed above, but retains the fundamental provisions
of Statement 121 with regard to recognition and measurement of impairment
of long-lived assets.
The Company was required to adopt the provisions of Statement 141
immediately, except with regard to business combinations initiated prior
to July 1, 2001, and Statements 142 and 144 effective no later than
October 1, 2002. Furthermore, intangible assets determined to have an
indefinite useful life and goodwill that are acquired in a purchase
business combination completed after June 30, 2001 will not be amortized.
The Company elected to adopt Statements 141, 142 and 144 effective October
1, 2001.
Statement 141 requires, upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in
a prior purchase business combination, and make any necessary
reclassifications in order to conform with the new criteria for
recognition apart from goodwill. Upon adoption of Statement 142, the
Company reassessed the useful lives and residual values of all intangible
assets acquired in purchase business combinations. In addition, the
Company is required to test the intangible assets identified as having an
indefinite useful life and goodwill for impairment in accordance with the
provisions of Statement 142. There were no significant reclassifications
or impairment losses identified as a result of adoption.
Changes in the carrying amount of goodwill are as follows:
----------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31 March 31
----------------------------------------------------------------------------------------------------------
(Thousands) 2002 2001 2002 2001
----------------------------------------------------------------------------------------------------------
Goodwill, beginning of period ......................... $ 228,753 $ 241,064 $ 230,231 $ 241,960
Goodwill related to acquisitions ...................... 247 276 247 2,826
Goodwill related to sales of businesses ............... (8,153) -- (9,631) (1,455)
Amortization .......................................... -- (1,991) -- (3,982)
----------------------------------------------------------------------------------------------------------
Goodwill, end of period ............................... $ 220,847 $ 239,349 $ 220,847 $ 239,349
==========================================================================================================
The impact of adoption of these statements is as follows:
---------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31 March 31
----------------------------------------------------------------------------------------------------
(Thousands) 2002 2001 2002 2001
----------------------------------------------------------------------------------------------------
Income from continuing operations, as reported ........ $ 13,124 $ 13,141 $ 31,124 $ 34,156
Goodwill amortization, net of income tax benefit ...... -- 1,488 -- 2,976
Goodwill amortization of associated companies ......... -- 59 -- 118
----------------------------------------------------------------------------------------------------
Income from continuing operations, as adjusted ........ 13,124 14,688 31,124 37,250
Discontinued operations ............................... -- (85) -- 250,802
----------------------------------------------------------------------------------------------------
Net income, as adjusted ............................... $ 13,124 $ 14,603 $ 31,124 $288,052
====================================================================================================
8
The earnings per common share impact related to the adoption of these
statements is as follows:
--------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
March 31 March 31
--------------------------------------------------------------------------------------------------------
2002 2001 2002 2001
--------------------------------------------------------------------------------------------------------
Basic:
Income from continuing operations, as reported .............. $ 0.30 $ 0.30 $ 0.71 $ 0.78
Goodwill amortization ....................................... -- 0.03 -- 0.07
--------------------------------------------------------------------------------------------------------
Income from continuing operations, as adjusted .............. 0.30 0.33 0.71 0.85
Discontinued operations ..................................... -- -- -- 5.75
--------------------------------------------------------------------------------------------------------
Net income, as adjusted ....................................... $ 0.30 $ 0.33 $ 0.71 $ 6.60
--------------------------------------------------------------------------------------------------------
Diluted:
Income from continuing operations, as reported .............. $ 0.30 $ 0.30 $ 0.70 $ 0.78
Goodwill amortization ....................................... -- 0.03 -- 0.07
--------------------------------------------------------------------------------------------------------
Income from continuing operations, as adjusted .............. 0.30 0.33 0.70 0.85
Discontinued operations ..................................... -- -- -- 5.70
--------------------------------------------------------------------------------------------------------
Net income, as adjusted ....................................... $ 0.30 $ 0.33 $ 0.70 $ 6.55
========================================================================================================
8 Subsequent Event
In April 2002, the Company acquired the stock of Howard Publications, Inc.
(Howard), a privately owned company comprised of 16 daily newspapers, one
of which is jointly owned, and related specialty publications. The
transaction is valued at $694,000,000 and was funded in part with
approximately $434,000,000 in cash and temporary cash investments. New
bank borrowing funded the remainder of the purchase price. Certain
non-publishing businesses are not included in the transaction.
The Company paid the purchase price and expenses related to the
transaction from $434,000,000 of available funds, including proceeds from
the sale of its broadcast properties, which was substantially completed in
October 2000, and revolving loans under the terms of a five year,
$350,000,000 credit agreement dated as of March 28, 2002 among the
Company, Bank of America, N.A. (BofA), as administrative agent, and the
other lenders party thereto. The initial interest rate of the revolving
loans is, at the option of the Company, LIBOR plus 1.25% or a base rate
equal to the greater of the federal funds rate plus 0.5% or the BofA prime
rate. The credit agreement contains covenants, including interest coverage
and leverage ratios, which are not expected to be restrictive to normal
operations or historical amounts of stockholder dividends.
The representations and warranties of Howard stockholders are secured for
varying amounts pursuant to an escrow agreement between the Company and
the indemnifying Howard stockholders.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion includes comments and analysis relating to the
Company's results of operations and financial condition as of and for the three
months and six months ended March 31, 2002. This discussion should be read in
conjunction with the Consolidated Financial Statements and related Notes
thereto.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor"
for forward-looking statements. This report contains information that may be
deemed forward-looking and that is based largely on the Company's current
expectations and is subject to certain risks, trends and uncertainties that
could cause actual results to differ materially from those anticipated. Among
such risks, trends and other uncertainties are changes in advertising demand,
newsprint prices, interest rates, labor costs, legislative and regulatory
rulings and other results of operations or financial conditions, difficulties in
integration of acquired business or maintaining employee and customer
relationships and increased capital and other costs. The words "may," "will,"
"would," "could," "believes," "expects," "anticipates," "intends," "plans,"
"projects," "considers" and similar expressions generally identify
forward-looking statements. Readers are cautioned not to place undue reliance on
such forward-looking statements, which are made as of the date of this report.
The Company does not undertake to publicly update or revise its forward-looking
statements.
9
CONTINUING OPERATIONS - QUARTER ENDING MARCH 31, 2002
Operating results, as reported in the Consolidated Financial Statements, are
summarized below:
- ---------------------------------------------------------------------------------------------
Three Months Ended
March 31
- ---------------------------------------------------------------------------------------------
(Thousands, except per common share data) 2002 2001 Percent Change
- ---------------------------------------------------------------------------------------------
Operating revenue .................................. $ 100,066 $ 101,957 (1.9)%
Income before interest, taxes, depreciation
and amortization (EBITDA) (1) ................... 26,192 23,771 10.2
Operating income ................................... 20,720 15,594 32.8
Nonoperating income (expense), net ................. (376) 5,016 NM
Income from continuing operations .................. 13,124 13,141 (0.1)
Earnings per common share:
Basic ........................................... $ 0.30 $ 0.30 --%
Diluted ......................................... 0.30 0.30 --
==============================================================================================
(1) EBITDA is not a financial performance measurement under accounting
principles generally accepted in the United States (GAAP), and should not
be considered in isolation or as a substitute for GAAP performance
measurements. EBITDA is also not reflected in the Consolidated Statements
of Cash Flows, but it is a common and meaningful alternative performance
measurement for comparison to other companies in the newspaper publishing
industry. The computation also excludes other nonoperating items, primarily
the gains and losses on sales of businesses and losses related to other
ventures.
Revenue, as reported in the Consolidated Financial Statements, consists of the
following:
- -----------------------------------------------------------------------------------------------
Three Months Ended
March 31
- -----------------------------------------------------------------------------------------------
(Thousands) 2002 2001 Percent Change
- -----------------------------------------------------------------------------------------------
Advertising:
Retail .......................................... $ 37,451 $ 37,078 1.0%
National ........................................ 2,485 2,560 (2.9)
Classified:
Employment ................................... 5,144 6,589 (21.9)
Automotive ................................... 4,862 4,855 0.1
Real estate .................................. 3,690 3,613 2.1
All other .................................... 8,673 9,169 (5.4)
Total classified ................................ 22,369 24,226 (7.7)
- ------------------------------------------------------------------------------------------------
Total advertising .................................. 62,305 63,864 (2.4)
- ------------------------------------------------------------------------------------------------
Circulation ........................................ 20,194 19,729 2.4
Other:
Commercial printing ............................. 5,750 6,318 (9.0)
Internet/online ................................. 1,592 1,327 20.0
Niche publications and other .................... 6,147 6,831 (10.0)
Editorial service contracts ..................... 2,326 2,570 (9.5)
- -------------------------------------------------------------------------------------------------
15,815 17,046 (7.2)
Equity in net income of associated companies ....... 1,752 1,318 32.9
- -------------------------------------------------------------------------------------------------
Total operating revenue ............................ $ 100,066 $ 101,957 (1.9)%
=================================================================================================
Revenue and Operating Expenses - Same Property
The following discussion of revenue and operating expenses is presented on an
operating basis, which includes 100% of the revenue and expenses of MNI, which
is owned 50% by the Company and accounted for in the Consolidated Financial
Statements using the equity method. It is also exclusive of acquisitions and
divestitures. The Company believes such comparisons provide the most meaningful
information for an understanding of its business.
10
The quarter ended March 31, 2002 had one more Sunday and one fewer Monday
compared to the same period last year, which positively impacts substantially
all categories of revenue.
Advertising lineage, as reported on an operating basis for daily newspapers
only, consists of the following:
- --------------------------------------------------------------------------------
Three Months Ended
March 31
- --------------------------------------------------------------------------------
(Thousands of Inches) 2002 2001 Percent Change
- --------------------------------------------------------------------------------
Advertising:
Retail ................................ 581 584 (0.5)%
National .............................. 94 89 5.6
Classified ............................ 1,512 1,521 (0.6)
- --------------------------------------------------------------------------------
2,187 2,194 (0.3)%
================================================================================
For the three months ended March 31, 2002, total revenue declined $715,000, or
0.6%, with a decline in total advertising revenue of $573,000, or 0.7%, and a
decline in total advertising lineage of 7,000 inches, or 0.3%. Retail revenue
increased $1,601,000, or 3.6%, and retail rates increased 4.3% during the same
three-month period. Increased emphasis on rate discipline and new accounts
helped offset declines in advertising volume caused by weak economic conditions.
Classified advertising revenue decreased approximately $2,155,000, or 7.0%, for
the three months ended March 31, 2002. Higher margin employment advertising at
the daily newspapers accounted for substantially all of the decrease and
declined 24.6% for the period. The national help wanted index registered a 36%
decline in employment advertising lineage for the same period. Real estate
advertising increased 3.6% due in part to attractive mortgage rates. The
automotive category was flat.
Circulation revenue increased $754,000, or 3.1%. The Company's unaudited daily
newspaper circulation increased 1.6% and Sunday circulation increased 0.7% for
the three months ended March 31, 2002. The Company remains focused on growing
circulation units through a number of initiatives.
Other revenue decreased $896,000, or 4.3%. Commercial printing was down
$582,000, or 7.3% for the quarter due to losses of, or declines in volume from,
key customers. Internet/online revenue increased $298,000, or 20.6%, due to
growth in advertising revenue and cross-selling with the Company's newspapers,
partially offsetting the overall decline in other revenue.
The following table sets forth the percentage of revenue of certain operating
expenses:
- --------------------------------------------------------------------------------
Three Months Ended
March 31
- --------------------------------------------------------------------------------
2002 2001
- --------------------------------------------------------------------------------
Compensation ............................................... 39.9% 40.0%
Newsprint and ink .......................................... 8.8 10.6
Other operating expenses ................................... 24.6 25.4
- --------------------------------------------------------------------------------
73.3 76.0
- --------------------------------------------------------------------------------
EBITDA Margin .............................................. 26.7 24.0
Depreciation and amortization .............................. 5.2 7.4
- --------------------------------------------------------------------------------
Operating margin ........................................... 21.5% 16.6%
================================================================================
Costs other than depreciation and amortization decreased $3,730,000, or 4.0%.
Compensation expense decreased $423,000, or 0.9%, due to workforce reductions,
delayed salary increases and changes in benefit programs. Overall, full-time
equivalent personnel declined 3.2%. Newsprint and ink costs decreased
$2,216,000, or 17.0%, as the result of continued price decreases, offset
partially by a 3.2% increase in consumption. Other operating costs, exclusive of
depreciation and amortization, decreased $1,091,000, or 3.5%.
11
On October 1, 2001 the Company adopted the provisions of FASB Statements 141 and
142. As a result, goodwill acquired in a purchase business combination is no
longer being amortized, but is tested for impairment annually. Amortization
expense related to goodwill was $2,088,000 for the three months ended March 31,
2001.
Nonoperating Income and Income Taxes - As Reported
Financial income decreased $5,964,000 to $2,467,000 in 2002, due to a
significant decline in reinvestment rates in the Company's investment portfolio
and, to a lesser extent, investment in tax-exempt securities. Further, the
Company's invested balances have decreased due to required income tax payments,
offset to some extent by funds generated from operations.
Income taxes were 35.5% and 36.2% of income from continuing operations before
income taxes for the three months ended March 31, 2002 and 2001, respectively.
Municipal income in the current year reduced the effective tax rate. In
addition, the prior year effective tax rate included the effect of goodwill
amortization that was not deductible for tax purposes.
CONTINUING OPERATIONS - SIX MONTHS ENDING MARCH 31, 2002
Operating results, as reported in the Consolidated Financial Statements, are
summarized below:
- ---------------------------------------------------------------------------------------------
Six Months Ended
March 31
- ---------------------------------------------------------------------------------------------
(Thousands, except per common share data) 2002 2001 Percent Change
- ---------------------------------------------------------------------------------------------
Operating revenue .................................. $ 211,693 $ 220,679 (4.1)%
Income before interest, taxes, depreciation
and amortization (EBITDA) ....................... 60,540 59,447 1.8
Operating income ................................... 49,077 43,235 13.5
Nonoperating income (expense), net ................. (955) 10,966 NM
Income from continuing operations .................. 31,124 34,156 (8.9)
Earnings per common share:
Basic ........................................... $ 0.71 $ 0.78 (9.0)%
Diluted ......................................... 0.70 0.78 (10.3)
==============================================================================================
Revenue, as reported in the Consolidated Financial Statements, consists of the
following:
- ----------------------------------------------------------------------------------------------
Six Months Ended
March 31
- ----------------------------------------------------------------------------------------------
(Thousands) 2002 2001 Percent Change
- ----------------------------------------------------------------------------------------------
Advertising:
Retail .......................................... $ 84,351 $ 86,274 (2.2)%
National ........................................ 5,159 5,614 (8.1)
Classified:
Employment ................................... 10,263 13,889 (26.1)
Automotive ................................... 10,171 10,008 1.6
Real estate .................................. 7,574 7,529 0.6
All other .................................... 17,639 18,221 3.2
Total classified ................................ 45,647 49,647 (8.1)
- -----------------------------------------------------------------------------------------------
Total advertising .................................. 135,157 141,535 (4.5)
- -----------------------------------------------------------------------------------------------
Circulation ........................................ 40,786 40,903 (0.3)
Other:
Commercial printing ............................. 12,318 13,474 (8.6)
Internet/online ................................. 3,086 2,549 21.1
Niche publications and other .................... 11,956 13,445 (11.1)
Editorial service contracts ..................... 4,461 4,889 (8.8)
- -----------------------------------------------------------------------------------------------
31,821 34,357 (7.4)
Equity in net income of associated companies ....... 3,929 3,884 1.2
- -----------------------------------------------------------------------------------------------
Total operating revenue ............................ $ 211,693 $ 220,679 (4.1)%
===============================================================================================
12
Revenue and Operating Expenses - Same Property
The following discussion of revenue and operating expenses is presented on an
operating basis, which includes 100% of the revenue and expenses of MNI, which
is owned 50% by the Company and accounted for in the Consolidated Financial
Statements using the equity method. It is also exclusive of acquisitions and
divestitures. The Company believes such comparisons provide the most meaningful
information for an understanding of its business.
The six months ended March 31, 2002 had the same number of Sundays and weekdays
as the same period last year.
Advertising lineage, as reported on an operating basis for daily newspapers
only, consists of the following:
- --------------------------------------------------------------------------------------
Six Months Ended
March 31
- ---------------------------------------------------------------------------------------
(Thousands of Inches) 2002 2001 Percent Change
- ---------------------------------------------------------------------------------------
Advertising:
Retail .......................................... 3,626 3,796 (4.5)%
National ........................................ 191 213 (10.3)
Classified ...................................... 3,128 3,182 (1.7)
- ---------------------------------------------------------------------------------------
6,945 7,191 (3.4)%
=======================================================================================
For the six months ended March 31, 2002, total revenue declined $8,900,000, or
3.4%, with a decline in total advertising revenue of $6,733,000, or 3.9%, and a
decline in total advertising lineage of 246,000 inches, or 3.4%. Retail revenue
decreased $1,246,000, or 1.2%, while retail rates increased 3.3% during the same
six-month period. Increased emphasis on rate discipline and new accounts helped
offset declines in advertising volume caused by weak economic conditions.
Classified advertising revenue decreased approximately $4,979,000, or 8.0%, in
2002. Higher margin employment advertising at the daily newspapers accounted for
substantially all of the decrease and declined 29% for the six-month period. The
national help wanted index reflected a 37.8% decline in employment advertising
lineage for the same period. Automotive and other categories were flat.
Circulation revenue was flat year over year. The Company's audited daily
newspaper circulation increased 1.8% and Sunday circulation increased 0.4% for
the six months ended March 31, 2002. The Company is focused on growing
circulation units through a number of initiatives.
Other revenue decreased $2,113,000, or 5.1%. Commercial printing declined
$1,016,000, or 6.0%, due to losses of, or declines in volume from, key
customers. Internet/online revenue increased $529,000, or 18.8%, due to growth
in advertising revenue and cross-selling with the Company's newspapers,
partially offsetting the overall decline in other revenue.
The following table sets forth the percentage of revenue of certain operating
expenses:
- --------------------------------------------------------------------------------
Six Months Ended
March 31
- --------------------------------------------------------------------------------
2002 2001
- --------------------------------------------------------------------------------
Compensation ................................................ 38.0% 37.8%
Newsprint and ink ........................................... 9.3 10.4
Other operating expenses .................................... 24.0 24.2
- --------------------------------------------------------------------------------
71.3 72.4
- --------------------------------------------------------------------------------
EBITDA Margin ............................................... 28.7 27.6
Depreciation and amortization ............................... 5.2 6.8
- --------------------------------------------------------------------------------
Operating margin ............................................ 23.5% 20.8%
================================================================================
Costs other than depreciation and amortization decreased $9,073,000, or 4.7%.
Compensation expense decreased $2,859,000, or 2.8%, due to workforce reductions,
delayed salary increases and changes in benefit programs. Overall, full-time
equivalent personnel declined 3.4%. Newsprint and ink costs decreased
$3,716,000, or 13.5%, as the result of continued price decreases offsetting a
0.9% increase in consumption. Other operating costs, exclusive of depreciation
and amortization, decreased $2,498,000, or 3.9%.
13
On October 1, 2001 the Company adopted the provisions of FASB Statements 141 and
142. As a result, goodwill acquired in a purchase business combination is no
longer being amortized, but is tested for impairment annually. Amortization
expense related to goodwill was $4,176,000 for the six months ended March 31,
2001.
Nonoperating Income and Income Taxes - As Reported
Financial income decreased $12,707,000 to $5,235,000 in 2002, due to a
significant decline in reinvestment rates in the Company's investment portfolio
and, to a lesser extent, investment in tax-exempt securities. Further, the
Company's invested balances have decreased due to required income tax payments,
offset to some extent by funds generated from operations.
Income taxes were 35.3% and 37.0% of income from continuing operations before
income taxes for the six months ended March 31, 2002 and 2001, respectively.
Municipal income in the current year reduced the effective tax rate. In
addition, the prior year effective tax rate included the effect of goodwill
amortization that was not deductible for tax purposes.
Discontinued Operations
In March 2000, the Board of Directors of the Company made a determination to
sell its broadcast properties. In May 2000 the Company entered into an agreement
to sell substantially all of its broadcasting operations, consisting of eight
network-affiliated and seven satellite television stations, to Emmis
Communications Corporation and consummated the transaction in October 2000. The
net proceeds of approximately $565,000,000 resulted in an after-tax gain for
financial reporting purposes of approximately $250,800,000. The results for the
broadcast properties have been classified as discontinued operations for all
periods presented.
In July 2001, the Company completed the sale of its last broadcasting property.
Net proceeds of the sale totaled approximately $7,600,000. The after-tax gain of
approximately $4,000,000 on the sale is reflected in discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities of continuing operations was $40,238,000
for the six months ended March 31, 2002 and $45,947,000 for the same period in
2001. Reduced income from continuing operations and decreased depreciation and
amortization offset changes in working capital.
Cash provided by investing activities totaled $105,588,000 during the six months
ended March 31, 2002, and consumed $467,727,000 in the prior year. Changes in
the Company's mix of investments account for the majority of the change.
The Company anticipates that funds necessary for capital expenditures, which are
expected to total approximately $12,000,000 in 2002, and other requirements will
be available from internally generated funds, its remaining investment portfolio
and, if necessary, by accessing the capital markets.
The Company entered into a five year, $350,000,000 Credit Agreement in March
2002. The primary purposes of the agreement were to fund the acquisition of
Howard Publications, Inc. as described in Note 8 to the Consolidated Financial
Statements, and to provide liquidity for other corporate purposes.
Under the terms of the Company's 1998 Note Purchase Agreement (the 1998
Agreement), the Company was required to repay the outstanding balance of
$161,800,000 on October 1, 2002 unless the Company reinvested the net proceeds
of the sale of its broadcast operations or obtained a waiver or amendment of
that provision of the 1998 Agreement. The acquisition described in Note 8 to the
Consolidated Financial Statements satisfies the conditions of the Company's 1998
Agreement with regard to reinvestment of the net proceeds of the sale of
broadcast operations. If repayment had been required, a substantial prepayment
penalty would have also been required, based upon interest rates in effect at
that time. Other covenants under this agreement are not considered restrictive
to normal operations or historical amounts of stockholder dividends.
Cash required for financing activities totaled $4,105,000 during the six months
ended March 31, 2002, and $48,957,000 in the prior year. Debt repayments and
lower stock activity account for the differences between years.
Cash required for discontinued operations totaled $43,195,000 during the six
months ended March 31, 2002, primarily for income tax payments related to the
gain on sale of discontinued operations. Cash provided by discontinued
operations totaling $479,231,000 in the prior year primarily reflects net
proceeds from the sale of such operations.
14
OTHER FACTORS
The Company has not been significantly impacted by inflationary pressures over
the last several years. The Company anticipates that changing costs of
newsprint, its basic raw material, may impact future operating costs. Price
increases (or decreases) for the Company's products are implemented when deemed
appropriate by management. The Company continuously evaluates price increases,
productivity improvements and cost reductions to mitigate the impact of
inflation.
MARKET RISK MANAGEMENT
The Company is exposed to market risk stemming from changes in interest rates
and commodity prices. Changes in these factors could cause fluctuations in
earnings and cash flows. In the normal course of business, exposure to certain
of these market risks is managed as described below.
Interest Rates
Interest rate risk in the Company's investment portfolio is managed by investing
only in securities with a maturity at date of acquisition of 180 days or less.
The average maturity of the investment portfolio is 17 days at March 31, 2002.
Only high-quality investments are considered. In April 2002, the Company
liquidated substantially all of its investment portfolio, in conjunction with
the acquisition of Howard Publications, Inc.
The Company's debt structure and interest rate risk are managed through the use
of fixed and floating rate debt. The Company's primary exposure is to United
States interest rates.
Commodities
Certain materials used by the Company are exposed to commodity price changes.
The Company manages this risk through instruments such as purchase orders and
non-cancelable supply contracts. The Company is also involved in continuing
programs to mitigate the impact of cost increases through identification of
sourcing and operating efficiencies. Primary commodity price exposures are
newsprint and, to a lesser extent, ink.
A $10 per ton newsprint price increase would result in an annualized reduction
in income from continuing operations before income taxes of approximately
$650,000, excluding MNI.
Sensitivity to Changes in Value
The estimates that follow are intended to measure the maximum potential fair
value or earnings the Company could lose in one year from adverse changes in
market interest rates under normal market conditions. The calculations are not
intended to represent actual losses in fair value or earnings that the Company
expects to incur. The estimates do not consider favorable changes in market
rates. The positions included in the calculations are temporary cash
investments, which total $108,380,000 at March 31, 2002, and fixed-rate debt,
which totals $173,400,000.
The table below presents the estimated maximum potential one-year loss in fair
value and earnings before income taxes from a 100 basis point movement in
interest rates on market risk sensitive instruments outstanding at March 31,
2002:
- --------------------------------------------------------------------------------
Estimated Impact on
- --------------------------------------------------------------------------------
Income from Continuing
Operations Before Income
(Thousands) Fair Value Taxes
- --------------------------------------------------------------------------------
Temporary cash investments ....... $ (50) $(1,033)
Fixed rate debt .................. (6,900) --
================================================================================
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Information with respect to this item is included in Management's Discussion and
Analysis of Financial Condition and Results of Operations under the heading
"Market Risk Management."
15
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders the Company was held on January 23, 2002.
Rance E. Crain was re-elected, and Herbert W. Moloney III was elected, as
directors for a three-year terms expiring at the 2005 annual meeting. Directors
whose terms of office continued after the meeting are: Mary E. Junck, William E.
Mayer, Mark Vittert, Gregory P. Schermer, Andrew E. Newman and Gordon D.
Prichett.
Votes were cast, all by proxy, for nominees for director as follows:
For Withheld
- --------------------------------------------------------------------------------
Rance E. Crain 101,906,434 4,975,585
Herbert W. Moloney III 101,902,692 4,979,327
Item 6. Exhibits and Reports on Form 8-K
Exhibits: 3 Amended and restated By-Laws as of January 23, 2002.
The following reports on Form 8-K were filed during the three months
ended March 31, 2002.
Date of Report: February 12, 2002
Item 9. The Company issued a news release on February 11 announcing
plans to conduct a conference call and webcast on
February 12, 2002.
Date of Report: February 12, 2002
Item 5. The Company announced plans to acquire all of the outstanding
stock of Howard Publications, Inc. and a new $350,000,000
credit facility.
16
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.
LEE ENTERPRISES, INCORPORATED
/s/ Carl G. Schmidt DATE: May 15, 2002
- -------------------------------------------
Carl G. Schmidt
Vice President, Chief Financial Officer,
and Treasurer
(Principal Financial and Accounting Officer)
17
BY-LAWS
OF
LEE ENTERPRISES, INCORPORATED
-----------------------------
(A Delaware corporation)
Effective January 23, 2002
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal office shall be at
229 South State Street, in the City of Dover, County of Kent, State of Delaware,
and the name of the resident agent in charge thereof is THE PRENTICE-HALL
CORPORATION SYSTEM, INC.
SECTION 2. Other Offices. The corporation may also have an
office or offices at such other place or places, within or without the State of
Delaware, as the Board of Directors may from time to time designate or the
business of the corporation require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. Annual Meetings. An annual meeting of the
stockholders of the corporation shall be held at such time and place within or
without the State of Delaware as may be determined by the Board of Directors,
and as shall be designated in the notice of said meeting, for the purpose of
electing directors and for the transaction of such other proper business, notice
of which was given in the notice of the meeting.
SECTION 2. Nomination of Directors and other business.
(a) Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors. Nominations of
persons for election as directors may be made at a meeting of stockholders only
(x) by or at the direction of the Board of Directors, (y) by any person or
persons authorized to do so by the Board or (z) by any stockholder of the
corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section 2. Any such
nomination, other than those made by or at the direction of the Board or by
persons authorized by the Board, shall be made pursuant to timely notice in
writing to the Chairman of the Nominating Committee of the Board of Directors.
Such stockholder's notice of a proposed nomination shall set forth, as to each
person whom the stockholder proposes to nominate for election or re-election as
a director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the corporation which are
beneficially owned by the person, and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as now or hereafter amended; and as to the stockholder giving the
notice, (v) the name and record address of such stockholder and (vi) the class
and number of shares of the corporation which are beneficially owned by such
stockholder. The corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the corporation to determine
the eligibility of such proposed nominee to serve as director. No person shall
be eligible for election as a director of the corporation unless nominated in
accordance with the procedures set forth herein and unless qualified under the
other provisions of these bylaws. If the chairman of the meeting determines that
a nomination was not made in accordance with the foregoing procedure, he or she
shall so declare to the meeting and the defective nomination shall be
disregarded.
1
(b) To be properly brought before any annual or special
meeting of stockholders, business must be either (x) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board,
(y) otherwise properly brought before the meeting by or at the direction of the
Board, or (z) otherwise properly brought before the meeting by a stockholder. In
addition to any other applicable requirements, for business to be properly
brought before a meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the corporation. A
stockholder's notice to the Secretary shall set forth with respect to each
matter the stockholder proposes to bring before the meeting (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and number
of shares of the corporation which are beneficially owned by the stockholder,
and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at any meeting of stockholders except in accordance with the
procedures set forth in this Section 2, provided, however, that nothing in this
Section 2 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the meeting. If the chairman of the meeting
determines that such business was not properly brought before the meeting in
accordance with the foregoing procedure, he or she shall so declare to the
meeting, and any such business not properly brought before the meeting shall not
be transacted.
(c) To be timely, a stockholder's notice of nomination or
other business must be delivered to, or mailed and received at, the principal
executive offices of the corporation, as to the annual meeting of stockholders,
not later than the date fixed annually by the Board of Directors and set forth
in the proxy statement for the preceding annual meeting. As to any other meeting
such notice shall be given not less than 40 days nor more that 65 days prior to
the meeting; provided, however, that in the event that less than 45 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 15th day following the day on which such
notice of the date of the special meeting was mailed or such public disclosure
was made, whichever first occurs.
SECTION 3. Special Meetings. Special meetings of the
stockholders may be held at such time and place within or without the State of
Delaware as may be designated in the notice of said meeting, upon call of the
Board of Directors or Chairman and President.
SECTION 4. Notice of Meetings and Adjourned Meetings. Unless
otherwise provided by law, written notice of any meeting of the stockholders
stating the place, date, hour and purpose or purposes of the meeting shall be
given not less than ten (10) nor more than fifty (50) days before the date of
the meeting to each stockholder entitled to vote at such meeting. If mailed,
notice shall be deemed for all purposes to have been given when deposited in the
United States mail, postage prepaid, directed to the stockholder at the address
of the stockholder as it appears on the records of the corporation. An affidavit
of the Secretary or an Assistant Secretary or of the transfer agent of the
corporation that the notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken, provided that if the
adjournment is for more than thirty (30) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
SECTION 5. Record Date for Determination of Stockholders. In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the stock record books of the corporation shall not be closed, but the Board of
Directors shall fix, in advance, a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of such meeting, nor more
than sixty (60) days prior to any other action.
A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
2
SECTION 6. Quorum. Except as otherwise provided by law or the
Restated Certificate of Incorporation of the corporation, a quorum of all
meetings of stockholders shall consist of the holders of record of stock
representing a majority of the voting power of all classes of the corporation,
issued and outstanding, entitled to vote at the meeting, present in person or by
proxy. For purposes of the foregoing, two or more classes or series of stock
shall be considered a single class if the holders thereof are entitled to vote
together as a single class at the meeting. In the absence of a quorum at any
meeting or any adjournment thereof, a majority of the voting power of those
present in person or by proxy and entitled to vote may adjourn such meeting from
time to time. At any adjourned meeting at which a quorum is present any business
may be transacted which might have been transacted at the meeting as originally
called.
SECTION 7. Organization. Meetings of the stockholders shall be
presided over by the Chairman and President. If he or she is not present, a Vice
President shall preside. In their absence or inability to act, another person
designated by the Chairman and President shall preside. The Secretary of the
corporation, or an Assistant Secretary, shall act as secretary of every meeting,
but if neither the Secretary nor an Assistant Secretary is present, the
presiding officer shall choose any person present to act as secretary of the
meeting.
SECTION 8. Voting. Except as provided in Section 9 or as
otherwise provided by law, each stockholder entitled to vote at any meeting of
stockholders shall be entitled to such number of votes as is specified, in
respect of the class or series of capital stock held by such stockholder, in the
corporation's Restated Certificate of Incorporation. Any vote of stock of the
corporation may be given by the stockholder entitled thereto in person or by his
or her proxy appointed by an instrument in writing, subscribed by such
stockholder or his or her attorney thereto authorized and delivered to the
Secretary of the meeting; provided, however, that no proxy shall be voted on
after three (3) years from its date unless said proxy provides for a longer
period. Except as otherwise required by law or the Restated Certificate of
Incorporation or these By-Laws, or in electing directors, all matters coming
before any meeting of the stockholders shall be decided by the vote of a
majority of the voting power of all classes of stock of the corporation present
in person or by proxy at such meeting and entitled to vote thereat, a quorum
being present. At all elections of directors the voting may, but need not be, by
ballot and a plurality of the votes cast thereat shall elect.
SECTION 9. Voting of Shares by Aliens. No more than twenty
percent (20%) of the outstanding shares of stock of the corporation entitled to
vote on any matter submitted to stockholders (including the election of
directors) shall be voted, directly or indirectly, by or for the account of all
aliens as a group. All references herein to "alien" shall include the
representatives, associates and affiliates of such alien. The term "alien",
"representative", "associate", and "affiliate" shall be defined as set forth in
Subdivision (J) to Article FOURTH of the Restated Certificate of Incorporation
of the corporation.
SECTION 10. List of Stockholders. The officer who has charge
of the stock ledger of the corporation shall prepare and make, at least ten (10)
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
SECTION 11. Inspectors of Voting. Except as otherwise provided
by statute, the Chairman and President or in his or her absence the chairman of
the meeting, shall appoint one or more inspectors of voting for each meeting of
stockholders.
SECTION 12. Meeting Procedures. Meetings of stockholders shall
be conducted in a fair manner but need not be governed by any prescribed rules
of order. The presiding officer's rulings on procedural matters shall be final.
The presiding officer is authorized to impose reasonable time limits on the
remarks of individual stockholders and may take such steps as such officer may
deem necessary or appropriate to assure that the business of the meeting is
conducted in a fair and orderly manner including, without limitation, to adjourn
any meeting and determine the date, time and place at which any adjourned
meeting shall be reconvened, unless otherwise determined by the Board of
Directors.
3
ARTICLE III
DIRECTORS
SECTION 1. Powers, Number, Qualification, Term, Quorum and
Vacancies. The property, affairs and business of the corporation shall be
managed by its Board of Directors, consisting of such number as shall be fixed
from time to time by resolution adopted at a meeting of the stockholders or as
may be determined by the Board of Directors as hereinafter provided. The number
of directors shall never be less than three (3). The directors shall be divided
into three classes as nearly equal in number as possible, with the term of
office of one class expiring each year. Following expiration of terms for which
they were elected, each class of directors shall thereafter be elected for a
three-year term. The directors shall have power from time to time, and at any
time, when the stockholders as such are not assembled in a meeting, regular or
special, to increase or decrease their own number. During the intervals between
annual meetings of stockholders, any vacancy occurring in the Board of Directors
caused by resignation, removal, death or incapacity, and any newly created
directorships resulting from an increase in the number of directors, shall be
filled by a majority vote of the directors then in office, whether or not a
quorum. Each director chosen to fill a vacancy shall hold office for the
unexpired term in respect of which such vacancy occurred. Each director chosen
to fill a newly created directorship shall hold office until the next election
of the class for which such director shall have been chosen. When the number of
directors is changed, any newly created directorships or any decrease in
directorships shall be so apportioned among the classes as to make all classes
as nearly equal in number as possible. Each director shall serve until a
successor shall have been duly elected and qualified, except in the event of
resignation, removal, death or other incapacity.
Directors need not be stockholders. No alien (including the
representatives, associates and affiliates thereof) shall be eligible to serve
as a director of the corporation. The terms "alien", "representative",
"associate", and "affiliate", shall be defined as set forth in Subparagraph (J)
to Article FOURTH of the Restated Certificate of Incorporation of the
corporation.
A majority of the members of the Board of Directors then
acting, but in no event less than one-third nor less than two (2) of the number
of directors authorized, acting at a meeting duly assembled, shall constitute a
quorum for the transaction of business, but if at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting, without further notice, from time to time until a
quorum shall have been obtained.
SECTION 2. Meetings. Meetings of the Board of Directors shall
be held at such place within or outside the State of Delaware as may from time
to time be fixed by resolution of the Board of Directors, or as may be specified
in the notice of the meeting. Regular meetings of the Board of Directors shall
be held at such times as may from time to time be fixed by resolution of the
Board of Directors, and special meetings may be held at any time upon the call
of the Chairman and President or any two (2) directors by oral, telegraphic,
facsimile or other written notice duly communicated to, served on, sent, or
mailed to each director at his or her principal address as recorded in the
records of the corporation not less than twenty-four (24) hours before such
meeting. A meeting of the Board of Directors shall be held without notice
immediately after the annual meeting of stockholders. Notice need not be given
of regular meetings of the Board of Directors held at times fixed by resolution
of the Board of Directors. Meetings may be held at any time without notice if
all the directors are present, or if at any time before or after the meeting
those not present waive notice of the meeting in writing.
SECTION 3. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors, or any committee
thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Board or
committee.
SECTION 4. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two (2) or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Any such committee, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it;
provided, however, that in the absence or disqualification of any member of such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or she or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
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SECTION 5. Dividends. Subject always to the provisions of the
law and the Certificate of Incorporation, the Board of Directors shall have full
power to determine whether any, and if any, what part of any, funds legally
available for the payment of dividends shall be declared in dividends and paid
to stockholders; the division of the whole or any part of such funds of the
corporation shall rest wholly within the lawful discretion of the Board of
Directors, and it shall not be required at any time, against such discretion, to
divide or pay any part of such funds among or to the stockholders as dividends
or otherwise; and the Board of Directors may fix a sum which may be set aside or
reserved over and above the capital paid in of the corporation as working
capital for the corporation or as a reserve for any proper purpose, and from
time to time may increase, diminish, and vary the same in its absolute judgment
and discretion.
SECTION 6. Removal of Directors. A director may be removed
from office at any time, but only for cause, by the affirmative vote of the
holders of a majority of the outstanding shares of stock entitled to vote for
the election of directors at a meeting of the stockholders called for that
purpose.
SECTION 7. Indemnification of officers, directors, employees
and aliens.
(a) Each officer, director, employee and agent of the
corporation and each person serving at the request of the corporation as an
officer, director, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified (including payment of
expenses in advance) by the corporation to the full extent from time to time
provided or authorized by the General corporation Law of the State of Delaware.
This right of indemnification shall not be exclusive of other indemnification
rights to which any such person may be entitled under contract, by-law, vote of
stockholders or disinterested directors, policy of insurance or otherwise. The
subsequent provisions of this By-law shall not limit or otherwise modify the
foregoing provision.
(b) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interest of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
(c) The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection with the defense or settlement of such action or suit if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such persons shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
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(d) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (b) and (c), or in
defense of any claim, issue or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him or her in connection therewith.
(e) Any indemnification under subsections (b) and (c) (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in subsections (b) and (c).
Such determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
(f) Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation as authorized in this Section. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(g) The indemnification and advance of expenses provided by or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office. The corporation shall have authority to enter into indemnification
agreements with its officers and directors, the terms of which shall be approved
by the Board of Directors.
(h) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him or her and incurred by him or her in any such capacity, or arising out of
his or her status as such, whether or not the corporation would have the power
to indemnify him or her against such liability under the provisions of this
section.
(i) For purposes of this Section, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Section with
respect to the resulting or surviving corporation as he or she would have with
respect to such constituent corporation if its separate existence had continued.
(j) For purposes of this Section, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he or she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this Section. References to "actions" or "proceedings" shall include
administrative or investigative inquiries as well as suits at law or in equity.
(k) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
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ARTICLE IV
OFFICERS, GROUPS AND STAFF
SECTION 1. Number. The Board of Directors at its first meeting
after each annual meeting of the stockholders, or at any time thereafter, shall
elect a Chairman and President (acting as Chief Executive Officer), one or more
Vice Presidents (the number to be determined by the Board of Directors), a
Secretary and a Treasurer. The Board of Directors may elect or appoint from time
to time one or more Group Presidents, Vice Presidents, Assistant Secretaries and
Assistant Treasurers and such other officers and agents as it shall deem
necessary.
SECTION 2. Term and Removal. Each elective officer shall hold
office until the next annual meeting of the Board of Directors, or until his or
her successor is elected and qualifies. Each appointive officer shall hold
office at the will of the Board of Directors. Any officer elected or appointed
by the Board of Directors may be removed, either with or without cause, at any
time, by the affirmative vote of a majority of the members of the Board of
Directors then in office. A vacancy in any office arising from any cause may be
filled by the Board of Directors.
SECTION 3. Chairman and President. The Chairman and President
shall be Chief Executive Officer of the corporation, shall preside at all
meetings of the Board of Directors, and shall have general supervision of the
business, affairs and property of the corporation and over its several officers,
subject to the control of the Board of Directors. He or she shall be ex officio
a member of all standing committees, other than the Audit and Executive
Compensation Committees, and shall see that all orders and resolutions of the
Board of Directors are carried into effect. He or she shall make recommendations
to the Board of Directors with respect to corporate policies and other matters
of importance which he or she believes should be submitted for Board
consideration. He or she shall have all the powers usually vested in the office
of a general manager and chief executive officer of a corporation. He or she
shall have power to execute contracts and other documents on behalf of the
corporation, under seal or otherwise, except as to those matters as may be
specifically reserved to the Board of Directors by resolution adopted from time
to time by the Board of Directors.
SECTION 4. Group Presidents. Each Group President shall be a
corporate officer and within the limitations placed by the policies adopted by
the Board of Directors or the Chairman and President, shall be the chief
operating officer of the operating group assigned and shall in general supervise
and control such business and affairs of the group and operations assigned
thereto and perform such other duties as may be prescribed from time to time by
the Chairman and President or the Board of Directors.
SECTION 5. Vice Presidents. Each Vice President shall have
such powers and perform such duties as may be assigned to him or her by the
Chairman and President or the Board of Directors.
SECTION 6. Secretary. The Secretary shall attend all sessions
of the Board of Directors and all meetings of the stockholders and record all
votes and the minutes of all proceedings in a book to be kept for that purpose.
He or she shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors and shall perform
such other duties as may be prescribed by the Chairman and President or the
Board of Directors. He or she shall keep in safe custody the seal of the
corporation and, when authorized to do so, affix the same to any instrument
requiring it, and when so affixed it shall be attested by his or her signature
or by the signature of the Treasurer or an Assistant Secretary.
SECTION 7. Treasurer. The Treasurer shall have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for monies due and payable to the corporation from any
source whatsoever and deposit all such monies in the name of the corporation in
such banks, trust companies or other depositaries as shall be selected in
accordance with the provisions of Article VI of these By-Laws; and, in general,
perform all of the duties incident to the office of Treasurer and such other
duties as shall from time to time be assigned to him or her by the Chairman and
President or the Board of Directors.
SECTION 8. Assistant Secretaries and Assistant Treasurers.
Assistant Secretaries and Assistant Treasurers, if any, shall be elected or
appointed by the Board of Directors and shall have such powers and shall perform
such duties as shall be assigned to them by the Chairman and President or the
Board of Directors.
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SECTION 9. Establishment of Groups. The Board of Directors or
the Chairman and President may cause the business of the corporation to be
divided into one or more groups, based upon product or service, geographical
territory, character and type of operations, or upon such other basis as the
Board of Directors or the Chairman and President may from time to time determine
to be advisable. A group shall operate under the authority and direction of a
Group President and may operate under trade names approved for such purpose as
may be authorized by the Board of Directors or the Chairman and President.
SECTION 10. Group Officers. The Group President of a group,
after authorization by the Chairman and President, may appoint any number of
group officers (who shall not, by virtue of such appointment, be corporate
officers), and may remove any such group officer. Such officers shall have such
authority as may from time to time be assigned by the Group President.
SECTION 11. Staff Officers. The Chairman and President may
appoint any number of staff officers (who shall not, by virtue of such
appointment, be corporate officers), and may remove any such staff officer as
the Chairman and President may deem appropriate from time to time. Such officers
shall have such authority as may from time to time be assigned by the Chairman
and President.
ARTICLE V
CERTIFICATES OF STOCK AND UNCERTIFICATED STOCK
SECTION 1. Certificates of Shares and Uncertificated Shares.
The Board of Directors may authorize the issuance of some or all of the shares
of its common stock without certificates. The authorization does not affect
shares already represented by certificates until they are surrendered to the
corporation. Shares of stock held by or for the account of aliens (including the
representatives, associates, and affiliates thereof) shall be represented by
"Foreign Share Certificates". The terms "alien", "representative", "associate"
and "affiliate" shall be defined as set forth in Subparagraph (J) of Article
FOURTH of the Restated Certificate of Incorporation of the corporation. All such
other shares of stock shall be represented by either "Domestic Share
Certificates" or, in the case of uncertificated stock, by such written
statements issued by the corporation in respect of uncertificated shares. All
such certificates or written statements shall be in such form and design as the
Board of Directors may approve and each certificate or written statement shall
be signed by the Chairman and President or a Vice President and the Secretary or
Assistant Secretary, and shall express on its face its number, date of issuance,
the number of shares for which and the person to whom issued.
SECTION 2. Ownership, Control and Transfer of Shares. Not more
than twenty percent (20%) of the outstanding shares of stock of the corporation
shall at any time be owned or controlled, directly or indirectly, by or for the
account of all aliens as a group. Shares of stock shall be transferable on the
books of the corporation by the holder thereof in person or by duly authorized
attorney upon the surrender of the certificate representing shares to be
transferred, properly endorsed, or, in the case of uncertificated stock, by the
registration of the transfer of the uncertificated shares on the books of the
corporation by the holder thereof; provided, however, that shares of stock other
than shares represented by foreign share certificates shall be transferable to
aliens or any person holding for the account thereof only when the aggregate
number of shares of stock owned by or for the account of all aliens as a group
will not then be more than twenty percent (20%) of the number of shares
outstanding. The Board of Directors may direct that, before shares of stock
shall be transferred on the books of the corporation, the corporation may
require information as to whether the proposed transferee is an alien or will
own the stock for the account of an alien. The issuance or transfer of any of
the shares of stock at any time outstanding to an alien contrary to the
provisions of this Section shall be void. All references herein to "alien" shall
include the representatives, associates and affiliates of such alien. The terms
"alien", "representative", "affiliate", "associate", "control" and "person"
shall be defined as set forth in Subparagraph (J) to Article FOURTH of the
Restated Certificate of Incorporation of the corporation.
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Transfers of shares of the capital stock of the corporation
shall be made only on the books of the corporation by the registered holder
thereof, or by his or her attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation, or with a
transfer clerk or a transfer agent appointed as in Section 4 of this Article
provided, and on surrender of the certificate or certificates for such shares
properly endorsed and the payment of all taxes thereon, or, in the case of
uncertificated stock, by the registration of the transfer of the uncertificated
shares and the payment of all taxes thereon. The person in whose name shares of
stock stand on the books of the corporation shall be deemed the owner thereof
for all purposes as regards the corporation; provided that whenever any transfer
of shares shall be made for collateral security, and not absolutely, such fact,
if known to the Secretary of the corporation, shall be so expressed in the entry
of transfer. The Board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these By-Laws,
concerning the issue, transfer, and registration of certificates for shares or
uncertificated shares of the capital stock of the corporation.
The certificates of stock or written statement in respect of
uncertificated shares shall be signed by the Chairman and President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and sealed with the seal of the corporation. If a
certificate of stock or written statement is countersigned (1) by a transfer
agent other than the corporation or its employee, or (2) by a registrar other
than the corporation or its employee, any other signature on the certificate or
written statement may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate of stock or written statement shall have ceased to be such officer,
transfer agent or registrar before such certificate of stock or written
statement is issued, it may be issued by the corporation with the same effect as
if he or she were such officer, transfer agent or registrar at the date of
issue.
SECTION 3. Lost, Stolen, Destroyed, or Mutilated Certificates.
No certificate for shares of stock in the corporation shall be issued in place
of any certificate alleged to have been lost, destroyed or stolen, except on
production of such evidence of such loss, destruction or theft and on delivery
to the corporation, if the Board of Directors shall so require, of a bond of
indemnity in such amount (not exceeding twice the value of the shares
represented by such certificate), upon such terms and secured by such surety as
the Board of Directors may in its discretion require.
SECTION 4. Transfer Agent and Registrar. The Board of
Directors may appoint one or more Transfer Clerks or one or more Transfer Agents
and one or more Registrars, and may require all certificates of stock to bear
the signature or signatures of any of them.
SECTION 5. Rules and Regulations. The Board of Directors shall
have power and authority to make all such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the capital stock of the corporation.
ARTICLE VI
BANK ACCOUNTS, CHECKS, LOANS, ETC.
SECTION 1. Bank Accounts and Checks. Such officers or agents
of the corporation as from time to time shall be designated by the Board of
Directors shall have authority to deposit any funds of the corporation in such
banks or trust companies as shall from time to time be designated by the Board
of Directors; and such officers or agents as from time to time shall be
designated by the Board of Directors shall have authority to withdraw from time
to time any or all of the funds of the corporation so deposited in any bank or
trust company, upon checks, drafts or other instruments or orders for the
payment of money, drawn against the account or in the name or behalf of the
corporation, and made or signed by such officers or agents; and each bank or
trust company with which funds of the corporation are so deposited is authorized
to accept, honor, cash and pay, without limit as to amount, all checks, drafts
or other instruments or orders for the payment of money, when drawn, made or
signed by officers or agents so designated by the Board of Directors, regardless
of whether the same are payable to the order of any officer or agent signing the
same, until written notice of the revocation by the Board of Directors of the
authority of such officers or agents shall have been received by such bank or
trust company. The officers of the corporation or any of them shall from time to
time certify to the banks or trust companies in which funds of the corporation
are deposited, the signatures of the officers or agents of the corporation so
authorized to draw against the same, and such signatures may include the
signature of such certifying officer or officers.
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SECTION 2. Loans. Such officers or agents of the corporation
as from time to time shall be designated by the Board of Directors shall have
authority to effect loans, advances or other forms of credit at any time or
times for the corporation from such banks or trust companies as the Board of
Directors shall from time to time designate, and as security for the repayment
of such loans, advances or other forms of credit to assign, transfer, endorse
and deliver, either originally or in addition or substitution, any or all
stocks, bonds, rights and interests of any kind in or to stocks or bonds,
certificates of such rights or interests, deposits, accounts, documents covering
merchandise, bills receivable and other commercial paper and evidences of debt,
at any time held by the corporation; and for such loans, advances, or other
forms of credit to make, execute and deliver one or more notes, acceptances or
other written obligations of the corporation on such terms, and with such
provisions as to the securities including the sale or disposition thereof, as
such officers or agents shall deem proper; and also to sell to, or discount or
rediscount with, such banks or trust companies any and all commercial paper,
bills receivable, acceptances and other instruments and evidences of debt at any
time held by the corporation, and to that end to endorse, transfer and deliver
the same. The officers of the corporation or any of them shall from time to time
certify the signatures of the officers or agents so authorized, which may
include the signature of such certifying officer or officers, to each bank or
trust company so designated by the Board of Directors; and each such bank or
trust company is authorized to rely upon such certification until written notice
of the revocation by the Board of Directors of the authority of such officers or
agents shall have been received by such bank or trust company.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall begin on the first
day of October in each year and shall end on the thirtieth day of September next
following, unless otherwise determined by the Board of Directors.
ARTICLE VIII
CORPORATE SEAL
The corporate seal of the corporation shall consist of two
concentric circles, between which shall be the name of the corporation, and in
the center shall be inscribed the year of its incorporation and the words,
"Corporate Seal, Delaware".
ARTICLE IX
AMENDMENTS
The By-Laws of the corporation shall be subject to alteration,
amendment or repeal and new By-Laws not inconsistent with any provision of the
Restated Certificate of Incorporation or statute may be made, either by the
affirmative vote of the holders of record of stock representing a majority of
the voting power of all classes of stock of the corporation present in person or
by proxy at any annual or special meeting of the Stockholders and entitled to
vote thereat, a quorum being present, or by the affirmative vote of a majority
of the whole Board, given at any regular or special meeting of the Board,
provided that notice of the proposal to so make, alter, amend or repeal such
By-Laws be included in the notice of such meeting of the Board or the
Stockholders, as the case may be. By-Laws made, altered or amended by the Board
may be altered, amended or repealed by the Stockholders at any annual or special
meeting thereof.