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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file Number 1-4001
UNION CAMP CORPORATION
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(Exact Name of Registrant as Specified in Its Charter)
VIRGINIA 13-5652423
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1600 VALLEY ROAD, WAYNE, NEW JERSEY 07470
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(Address of Principal Executive Offices) (Zip Code)
(201) 628-2000
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(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
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69,640,369 shares of Registrant's Common Stock, Par Value $1 Per Share, were
outstanding as of the close of business on September 30, 1996.
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UNION CAMP CORPORATION
INDEX
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Page
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Part I. FINANCIAL INFORMATION*
Item 1. Financial Statements. 2
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 7
Part II. OTHER INFORMATION
Item 1. Legal Proceedings. 9
Item 6. Exhibits and Reports on Form 8-K. 9
</TABLE>
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*A summary of the Registrant's significant accounting policies is contained in
the Registrant's Form 10-K for the year ended December 31, 1995 which has
previously been filed with the Commission.
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PART I. FINANCIAL INFORMATION
Item I. Financial Statements.
UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
($ in thousands, except per share)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $1,017,310 $1,073,494 $2,929,613 $3,203,935
Costs and other charges:
Cost of products sold 794,319 674,033 2,182,609 2,029,991
Selling and administrative expenses 105,454 96,140 308,431 285,408
Depreciation and cost of timber harvested 70,578 68,732 208,492 203,583
---------- ---------- ---------- ----------
Income from operations 46,959 234,589 230,081 684,953
Gross interest expense 29,334 29,892 86,407 94,732
Less capitalized interest (1,046) (851) (2,848) (8,082)
Other (income) expense - net (7,869) (4,126) (11,524) (597)
---------- ---------- ---------- ----------
Income before income taxes and
minority interest 26,540 209,674 158,046 598,900
---------- ---------- ---------- ----------
Income taxes:
Current 6,591 51,915 38,797 149,320
Deferred 3,147 25,167 20,124 73,028
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Total income taxes 9,738 77,082 58,921 222,348
---------- ---------- ---------- ----------
Minority interest (net of tax) (2,449) (2,846) (8,130) (8,648)
---------- ---------- ---------- ----------
Net Income $ 14,353 $ 129,746 $ 90,995 $ 367,904
========== ========== ========== ==========
Earnings per share: $0.21 $1.85 $1.32 $5.25
Dividends per share $0.45 $0.41 $1.35 $1.21
</TABLE>
Earnings per share are computed on the basis of the average number of common
shares outstanding:
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Quarter Ended September 30, 69,421,132 70,199,410
Nine Months Ended September 30, 69,164,387 70,104,025
</TABLE>
See also the accompanying notes to consolidated financial statements.
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UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
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<S> <C> <C>
ASSETS
Cash and cash equivalents $ 54,148 $ 30,332
Receivables-net 548,303 489,967
Inventories at lower of cost or market:
Finished goods 248,713 242,732
Raw materials 106,902 109,181
Supplies 116,940 116,804
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Total inventories 472,555 468,717
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Assets held for resale - 1,289
Other 41,266 43,512
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Total current assets 1,116,272 1,033,817
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Plant and equipment, at cost 6,517,458 6,304,113
Less: accumulated depreciation 3,126,818 2,918,963
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3,390,640 3,385,150
Timberlands, less cost of timber harvested 349,637 274,935
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Total property 3,740,277 3,660,085
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Other assets 218,936 144,441
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Total Assets $5,075,485 $4,838,343
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 599,538 $ 620,113
Long-term debt 1,337,790 1,151,536
Deferred income taxes 736,496 709,850
Other liabilities and minority interest 259,177 235,152
Stockholders' equity (Shares outstanding
1996: 69,640,369; 1995: 69,078,078) 2,142,484 2,121,692
---------- ----------
Total Liabilities and Stockholders' Equity $5,075,485 $4,838,343
========== ==========
</TABLE>
See also the accompanying notes to consolidated financial statements.
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UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
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1996 1995
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<S> <C> <C>
Cash Provided By (Used For) Operations:
Net income $ 90,995 $ 367,904
Adjustments to reconcile net income
to cash provided by operations:
Depreciation, amortization, and cost of company
timber harvested 221,756 215,690
Deferred income taxes 20,124 73,028
Other 11,041 8,544
Changes in operational assets and liabilities:
Receivables 25,461 (68,867)
Inventories 36,119 (50,328)
Other assets 1,448 (4,591)
Accounts payable, taxes and other liabilities (37,148) 6,817
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Cash Provided By Operations 369,796 548,197
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Cash (Used For) Provided By Investment Activities:
Capital expenditures:
Plant and Equipment (191,632) (159,172)
Timberlands (85,878) (18,503)
Proceeds from sale of businesses -- 36,133
Payments for acquired businesses (37,269) --
Other 4,460 7,485
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(310,319) (134,057)
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Cash (Used For) Provided By Financing Activities:
Change in short-term notes payable 21,003 (275,792)
Repayments of long-term debt (48,052) (46,216)
Proceeds from issuance of long-term debt 150,000 22,625
Repurchase of common stock (65,114) --
Dividends paid (93,550) (84,835)
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(35,713) (384,218)
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Effect of exchange rate changes on cash 52 119
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Increase (decrease) in cash and cash equivalents 23,816 30,041
Balance at beginning of year 30,332 13,256
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Balance at end of period $ 54,148 $ 43,297
========= =========
Supplemental cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 88,639 $ 93,257
Income taxes $ 44,275 $ 128,559
</TABLE>
See also the accompanying notes to consolidated financial statements.
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UNION CAMP CORPORATION
AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The information furnished in this report is unaudited but includes all
adjustments which, in the opinion of management, are necessary for a
fair presentation of results for the interim periods reported. The
adjustments made were of a normal recurring nature, except as described
in Notes 3 and 4.
Note 2. On August 2, 1996, the company acquired The Alling & Cory Company
(Alling & Cory) a paper distribution business, for consideration
totaling $88.5 million, consisting of 1.7 million shares of company
common stock and $5.4 million cash. The acquisition was accounted for
under the purchase method and accordingly, the net assets and results
of operations have been included in the consolidated financial
statements since the date of acquisition. The excess of purchase price
over the estimated fair values of the net tangible and intangible
assets acquired has been treated as goodwill. Goodwill will be
amortized on a straight-line basis over a period not to exceed 40
years. This acquisition did not have a material pro forma impact on
consolidated earnings.
Note 3. Included in "Income from Operations" for the nine months ended
September 30, 1996 is a second quarter pre-tax charge of $2.9 million
for estimated severance costs related to the company's decision to
outsource timber harvesting operations.
Note 4. Included in "Other Income/Expense" for the third quarter of 1996 is a
$3.2 million pre-tax gain from the sale of land.
Note 5. "Other Assets" increased by more than $74 million from year-end 1995,
primarily due to an investment in a 50% interest in a corrugated
container plant in Turkey, and due to goodwill associated with the
acquisition of Alling & Cory in August 1996.
Note 6. Included in "Current Liabilities" are $84 million and $90 million of
commercial paper borrowings at September 30, 1996 and year-end 1995,
respectively.
5
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Note 7. The company has included $46 million of commercial paper borrowings in
"Long-Term Debt" for the September 30, 1996 Consolidated Balance Sheet.
Note 8. Included in "Other Liabilities and Minority Interest" at September 30,
1996 and year-end 1995 are $77.2 million and $69.3 million,
respectively, representing the minority interest in Union Camp's 68%
owned subsidiary, Bush Boake Allen.
Note 9. Certain amounts have been reclassified for 1995 to conform with the
1996 presentation.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net income for the third quarter of 1996 was $14.4 million or $.21 per share,
compared to $129.7 million or $1.85 per share for the third quarter of last
year. The significant decline in earnings was primarily due to lower product
prices in both the domestic and export paper and paper products markets.
Operating income for the quarter was $47.0 million, an 80% decrease from the
$234.6 million reported for last year's third quarter.
Net income for the first nine months of 1996 was $91.0 million or $1.32 per
share, compared to $367.9 million or $5.25 per share for the same period last
year. Operating income for the first nine months of 1996 was $230.1 million, a
66% decrease from the $685.0 million reported for the first nine months of 1995.
Net sales for the third quarter were $1.0 billion, 5% below the previous year's
comparable quarter. Total paper product shipments were approximately 881,000
tons, a 3% increase from last year's third quarter. However, lower selling
prices for the company's paper and packaging products more than offset the
slight increase in volume. Included in third quarter sales is $112 million from
The Alling & Cory Company (Alling & Cory), a paper distribution business
acquired in August 1996. Their impact on third quarter operating results was not
material.
Operating income for the paper and paperboard segment was $20.5 million, a 90%
decrease from the $215.2 million reported for the third quarter of last year.
The decline in earnings was primarily attributable to lower average selling
prices for both domestic and export linerboard and uncoated business papers,
despite an increase in shipments. Average selling prices for the company's
linerboard and uncoated business papers decreased 44% and 33%, respectively,
compared to last year's third quarter, however, linerboard prices began to
improve during the period. As a result of the market conditions during the third
quarter, the company took approximately 65,000 tons of market-related linerboard
mill downtime, and anticipates taking 26,000 tons of linerboard mill downtime
during the fourth quarter.
Packaging segment operating income was $9.8 million for the third quarter of
1996, compared to $10.9 million for last year's comparable quarter. Average
selling prices decreased for the domestic corrugated container operations,
resulting in a 17% decrease in operating income for the third quarter of 1996
compared to the same period of 1995. However, prices for corrugated containers
began to stabilize near the end of the quarter as demand strengthened. Earnings
for the flexible packaging operations in the third quarter of 1996 improved 16%
over the same quarter of last year, primarily attributable to an improvement in
average selling prices. Overseas corrugated container operations reported a $1.7
million decline in operating income primarily resulting from lower average
selling prices, which was partially offset by an increase in shipments.
The company's non-paper businesses reported an 18% increase in operating income,
compared to last year's third quarter. Operating income for the wood products
segment was $16.1 million for the quarter, compared to $5.1 million for last
year's third quarter. Volume and average selling prices increased compared to
the third quarter of 1995 and the second quarter of 1996, as lumber prices
continued to improve during the year. The chemical group reported operating
income of $16.5 million, 27% below the third quarter of last year. Although
shipments for the specialty chemical operations increased, the combination of
lower average selling prices and higher raw material costs more than offset the
increase, resulting in the decline in operating income. Raw material costs are
continuing to increase into the fourth quarter. Also contributing to the decline
in group earnings was weakness within the company's Bush Boake Allen flavors,
fragrances and aroma chemicals business. The weakness was primarily in aroma
chemicals, reflecting reduced sales volumes and continuing cost pressures on
turpentine based products.
7
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Depreciation expense for the first nine months of 1996 increased 1% compared to
the comparable period of 1995, due to the start up of a recovery boiler at the
Savannah mill at the end of the first quarter of last year.
Cash flow from operations for the first nine months of 1996 was $369.8 million,
compared to $548.2 million for last year's comparable period. The decrease was
primarily due to the lower earnings and decreased deferred taxes, partially
offset by decreased working capital (excluding the effect of the Alling & Cory
acquisition). Capital expenditures for the first nine months of this year
totaled $277.5 million, compared to $177.7 million last year. This increase is
primarily due to a large timberland acquisition in early 1996. Total debt
increased $123 million during the first nine months of 1996, primarily
attributable to the issuance of $150 million of 7% 10-year notes. The ratio of
long-term debt to total capital was 31.7% at September 30, 1996, compared to
28.9% at year-end 1995.
On August 2, 1996, the company acquired the outstanding shares of Alling & Cory
for consideration totaling $88.5 million, consisting of 1.7 million shares of
company common stock and $5.4 million cash.
Net working capital was $516.7 million at September 30, 1996, compared to $413.7
million at year-end 1995. The increase in working capital was primarily
attributable to the acquisition of Alling & Cory.
During the third quarter of 1996, the company repurchased 668,000 shares of its
common stock for a total cost of $33.0 million, bringing the total stock
repurchased this year under its stock repurchase program to 1.3 million shares.
In September 1996, the company sold its Kansas City container plant. This sale
did not have a significant impact on the company's operations.
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Statements in this report that are not historical are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially. Such risks and uncertainties with respect to the company
include the effect of general economic conditions, fluctuations in supply and
demand for the company's products including exports and potential imports, paper
industry production capacity, operating rates and competitive pricing pressures.
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8
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
During the second quarter of 1995 Union Camp was named as a
defendant in two lawsuits brought in Texas state court in Brazoria County by
approximately 2,700 plaintiffs who, for the most part, alleged they sustained
personal injury while performing work at various sites in Alabama. Approximately
50 of these plaintiffs claimed to have been exposed to asbestos on the Company's
premises in Alabama. Approximately 180 other defendants were named in these two
Brazoria County suits. In February 1996 the Company entered a settlement
agreement with the attorneys for approximately 1,250 of these plaintiffs for an
amount which was not material to the Company. During the third quarter of 1996
settlement was reached with attorneys representing the remaining 1,450
plaintiffs for an amount which is not material to the Company.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
No. Description
3.2 Bylaws of Union Camp Corporation,
as amended September 24, 1996.
11 Statement re computation of per share earnings.
27 Financial data schedule.
b) Reports on Form 8-K.
During the third quarter of 1996, the Registrant filed a Current
Report on Form 8-K dated August 16, 1996 in which it reported
under Item 5 - "Other Events".
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION CAMP CORPORATION
----------------------------------
(Registrant)
Date: November 13, 1996 /S/ Dirk R. Soutendijk
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DIRK R. SOUTENDIJK
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Date: November 13, 1996 /S/ JAMES M. REED
---------------------- ----------------------------------
VICE CHAIRMAN OF THE BOARD AND
CHIEF FINANCIAL OFFICER
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EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NO. DESCRIPTION PAGE
<S> <C> <C>
3.2 Bylaws of Union Camp Corporation, 13
as amended September 24, 1996
11 Statement re computation of per 34
share earnings
27 Financial data schedule 35
</TABLE>
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EXHIBIT 3.2
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BY-LAWS
UNION CAMP CORPORATION
(AS AMENDED SEPTEMBER 24, 1996)
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BY-LAWS
OF
UNION CAMP CORPORATION
(AS AMENDED SEPTEMBER 24, 1996)
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ARTICLE I
Stock
SECTION 1. Form and Execution of Certificates. The certificates of
shares of stock of the Corporation shall be in such form not inconsistent with
the Articles of Incorporation as shall be approved by the Board of Directors.
Certificates of stock shall be signed by the Chairman of the Board, the
President or by a Vice President and the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, except that where any such certificates
shall be countersigned by a transfer agent or by a registrar, other than the
Corporation, the signatures of any of the officers above specified may be
facsimiles, engraved or printed. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of its
issue.
SECTION 2. Regulations. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates of stock and concerning certificates of stock
issued, transferred or registered in lieu or replacement of any lost, stolen,
destroyed or mutilated certificates of stock.
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SECTION 3. Transfer Agent and Registrar. The Board of Directors may
appoint a transfer agent or transfer agents and a registrar or registrars of
transfer for any or all classes of the capital stock of the Corporation, and may
require stock certificates of any or all classes to bear the signature of either
or both.
SECTION 4. Closing of Transfer Books, Fixing of Record Date. The Board
of Directors may fix in advance a date, not exceeding 70 days preceding the date
of any meeting of stockholders, or the date for the payment of any dividend, or
the date for the determination of stockholders for any other proper purpose, as
a record date for the determination of the stockholders exclusively entitled to
notice of and to vote at any such meeting, or any adjournment thereof, or
entitled to receive payment of any such dividend, or for any other proper
purpose.
SECTION 5. Restrictions on Transfer. The Board of Directors may impose
restrictions on transfer of securities of the Corporation pursuant to the Rights
Agreement, dated as of January 25, 1996, by and between the Corporation and The
Bank of New York, as and to the extent required by such Rights Agreement, as
amended from time to time.
SECTION 6. Control Share Acquisitions. Article 14.1 of the Virginia
Stock Corporation Act shall not apply to acquisitions of the Corporation.
2
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ARTICLE II
Stockholders
SECTION 1. Annual Meeting. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held at such time, and at such place,
either within or without the State of Virginia, as may be designated in the
notice thereof, on the last Tuesday in April of each year if not a legal
holiday, but if a legal holiday, then on the next succeeding business day or on
such other date as the Board of Directors may determine at any time in advance
of such date.
At the annual meeting of stockholders, only such business shall be
conducted as shall have been properly brought before the meeting (a) by or at
the direction of the Board of Directors or (b) by any stockholder of the
Corporation who shall be entitled to vote at such meeting and who complies with
the procedures set forth in this Section 1.
In addition to any other applicable requirements, for business,
including the nomination of one or more persons for election as Directors, to be
properly brought before the annual meeting by a stockholder, such stockholder
must have given timely advance written notice thereof to the Secretary of the
Corporation. The Secretary shall deliver timely received notices to the Board of
Directors or a committee designated by the Board for review. To be timely, a
stockholder's notice must be received by the Secretary at the principal
executive offices of the Corporation not less than sixty days in advance of the
first anniversary date of the annual
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meeting of shareholders for the preceding year; provided, however, if and only
if the annual meeting is not scheduled to be held within a period which
commences 30 days before such anniversary date and ends 30 days after such
anniversary date, such notice shall be given not later than 60 days in advance
of the meeting date unless the date of such meeting is not publicly disclosed by
the Corporation (by press release or by a document filed by the Corporation with
the Securities and Exchange Commission) at least 85 days prior thereto, in which
case such notice shall be given not later than the close of business on the date
that is 25 days following the first public disclosure by the Corporation of the
date of the annual meeting. In calculating days, the day of such annual meeting
shall not be included so that stockholders shall begin counting with the day
immediately preceding the day of the annual meeting which, for purposes of such
calculation, shall be one day in advance of the annual meeting.
A stockholder's notice to the Secretary shall set forth as to each
matter of business the stockholder proposes to bring before the annual meeting:
(a) a description of the business intended to be brought before the annual
meeting, including the text of any resolution to be presented, and the reasons
for conducting such business at the annual meeting; (b) the name and address of
the stockholder proposing such business; (c) a representation that the
stockholder is a holder of record of stock of the Corporation entitled to vote
at the annual meeting and intends to appear in person or by proxy at the meeting
to bring the business specified in the notice before the meeting; (d) the class
and number of shares of stock of the Corporation owned (i) of record and (ii)
beneficially by the stockholder; and (e) any material interest of the
stockholder in the business to be brought before the meeting.
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A stockholder's notice of intent to make a nomination of one or more
persons for election as Directors at the annual meeting of stockholders shall,
in addition to the information required above, set forth as to each such person:
(a) the name, age and business and residence addresses of the person; (b) the
principal occupation or employment of the person; (c) the class and number of
shares of stock of the Corporation owned (i) of record and (ii) beneficially by
the person; (d) a description of all arrangements or understandings between the
stockholder and the person and any other person or persons (naming such other
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (e) such other information regarding the person as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had the person been
nominated by the Board of Directors; and (f) the written consent of the person
to serve as a Director of the Corporation if so elected. The Corporation may
require any stockholder proposing to nominate one or more persons for election
as Directors to furnish such other information as may reasonably be required by
the Corporation to determine the eligibility of each such person to serve as a
Director of the Corporation.
In the event a stockholder attempts to bring business before the annual
meeting without complying with the provisions of this Section 1, the presiding
officer of the meeting shall determine and declare to the meeting that the
business was not properly brought before the meeting, and such business shall
not be transacted.
SECTION 2. Special Meeting. Special meetings of the stockholders for any
purpose or purposes may be held at any time and at any place, within or without
the State of Virginia,
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designated in the call thereof, whenever called by the Board of Directors, the
Chairman of the Board, the President, or as otherwise provided by law.
SECTION 3. Notice. Written notice of every annual or special meeting of
the stockholders, stating the place, day and hour and purpose or purposes
thereof, shall be given to each stockholder of record entitled to vote thereat,
either personally or by mailing the notice to him at his address as it appears
on the stock transfer books of the Corporation. Where such notice of a
stockholders' meeting includes as a purpose thereof action with respect to an
amendment of the Articles of Incorporation or a reduction of stated capital or a
plan of merger or consolidation, such notice shall be given in the manner
hereinabove provided, but at least 25 and not more than 50 days before the date
of any such meeting and any such notice shall be accompanied by a copy of the
proposed amendment or plan of reduction or merger or consolidation.
SECTION 4. Quorum. A quorum at any meeting of the stockholders shall
consist of a majority of the stock of the Corporation entitled to vote, present
in person or by proxy, unless otherwise required by law or the Articles of
Incorporation. If at the time and place of the meeting there is present less
than a quorum, a majority of the stock present in person or by proxy and
entitled to vote, shall have power to adjourn the meeting from time to time
without notice until a quorum is secured, and thereupon any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 5. Organization. All meetings of the stockholders shall be
presided over by the Chairman of the Board, or in his absence, by the President,
or in his absence, by the Chairman of the Executive Committee. In case none of
such officers of the Corporation shall be
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present, a chairman shall be elected by the vote of a majority of the stock
present in person or by proxy entitled to vote. The Secretary of the Corporation
or an Assistant Secretary shall act as secretary of every such meeting when
present, and in the absence of either, the presiding officer may appoint any
other officer of the Corporation to act as Secretary.
SECTION 6. Inspectors. At any annual or special meeting of stockholders,
inspectors of election may be appointed by the presiding officer of the meeting
for the purpose of opening and closing the polls, receiving and taking charge of
proxies, and receiving and counting the ballots or the votes of stockholders
otherwise given and shall in writing certify to the returns. No candidate for
election as director shall be appointed or act as inspector.
ARTICLE III
Directors
SECTION 1. Number, Vacancy. The property, business and affairs of the
Corporation shall be managed by a Board of 12 directors. Except as otherwise
provided by law or in these By-laws or in the Articles of Incorporation, the
directors shall be elected by the stockholders at each annual meeting of
stockholders and shall serve until the next succeeding annual meeting and until
their successors shall have been elected. In the event of any vacancy in the
directors resulting from death, resignation, disqualification, an increase by
thirty percent (30%) or less in the number of directors last elected by the
stockholders, or other cause, the remaining directors, although less than a
quorum, by an affirmative vote of a majority thereof, may fill such vacancy.
SECTION 2. Regular Meeting. Regular meetings of the Board of Directors
shall be held, either within or without the State of Virginia, as shall from
time to time be determined
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by the Board of Directors. After there has been such determination and notice
thereof has been given to each member of the Board of Directors, no further
notice shall be required for any such regular meeting. The annual meeting of
the Board of Directors may be held, without notice, on the same day as and
after the annual meeting of the stockholders.
SECTION 3. Special Meeting. Special meetings of the Board of Directors
shall be held, either within or without the State of Virginia, upon the order of
the Board, or the call of the Chairman of the Board, the President, or three
directors. The Secretary, or other officer performing his duties, shall give
notice to each director of the time and place of each meeting, by mailing the
same at least two days before the meeting or by telegraphing or telephoning the
same prior to the meeting.
SECTION 4. Quorum. A majority of the number of directors fixed by these
By-laws shall constitute a quorum for the transaction of business except as
otherwise provided by law or the Articles of Incorporation or these By-laws, but
a majority of those present at the time and place of any meeting, although less
than a quorum, may adjourn from time to time without notice, until a quorum is
secured.
SECTION 5. Compensation. The Board of Directors shall have the authority
to fix the compensation of the directors and of members of the Executive
Committee and of other committees of the Board.
SECTION 6. Indemnification of Officers, Directors and Employees.
(a) Each director and officer of the Corporation shall be
indemnified by the Corporation against all costs and expenses reasonably
incurred by or imposed upon him in connection with or resulting from any action,
suit or proceeding to which he may be made a party
8
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by reason of his being or having been a director or officer of the Corporation
(whether or not he continues to be a director or officer at the time of
incurring such cost or expense), except in relation to matters as to which a
recovery shall be had against him by reason of his having been finally adjudged
in such action, suit or proceeding to have been derelict in the performance of
his duty as such director or officer. The foregoing qualification shall not,
however, prevent a settlement by the Corporation prior to final adjudication
when such settlement appears to be in the interest of the Corporation. The right
of indemnification herein provided shall not be exclusive of other rights to
which any director or officer may be entitled as a matter of law. (Adopted by
the stockholders of the Corporation March 3, 1942.)
(b) As used in the following subsections of this Section 6:
"Applicant" means the person seeking indemnification pursuant
to this Section.
"Expenses" includes counsel fees.
"Liability" means the obligation to pay a judgment,
settlement, penalty, fine, including any excise tax assessed with respect
to an employee benefit plan, or reasonable expenses incurred with respect to a
proceeding.
"Official capacity" means, (i) when used with respect to a
director, the office of director in the Corporation; or (ii) when used with
respect to an individual other than a director, the office in the Corporation
held by the officer or the employment or agency relationship undertaken by the
employee or agent on behalf of the Corporation.
9
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<PAGE>
"Official capacity" does not include service for any other
foreign or domestic corporation or any partnership, joint venture, trust,
employee benefit plan, or other enterprise.
"Party" includes an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
"Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal.
(c) The Corporation shall indemnify any person who was or is a
party to any proceeding by reason of the fact that he is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, trustee, partner, officer or employee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability incurred by him in connection with such
proceeding if (i) he believed, in the case of conduct in his official capacity,
that his conduct was in the best interests of the Corporation, and in all other
cases that his conduct was at least not opposed to its best interests, and, in
the case of any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful, (ii) in connection with a proceeding by or in the right of
the Corporation, he was not adjudged liable to the Corporation, and (iii) in
connection with any proceeding charging improper benefit to him, whether or not
involving action in his official capacity, he was not adjudged liable on the
basis that personal benefit was improperly received by him. A person is
considered to be serving an employee benefit plan at the corporation's request
if his duties to the corporation also impose duties on, or otherwise involve
services by, him to the plan or to
10
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<PAGE>
participants in or beneficiaries of the plan. A person's conduct with respect
to an employee benefit plan for a purpose he believed to be in the interests
of the participants and beneficiaries of the plan is conduct that satisfies
the requirements of this subsection.
(d) The termination of any 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 applicant did not meet the
standard of conduct described in subsection (c) of this Section.
(e) To the extent that the applicant has been successful on the
merits or otherwise in defense of any proceeding referred to in subsection (c)
of this Section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(f) Any indemnification under subsection (c) of this Section
(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 applicant
is proper in the circumstances because he has met the applicable standard of
conduct set forth in subsection (c).
The determination shall be made:
(i) By the Board of Directors by a majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
(ii) If a quorum cannot be obtained under paragraph (i) of this
subsection, by majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;
11
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<PAGE>
(iii) By special legal counsel:
(A) Selected by the Board of Directors or its committee
in the manner prescribed in paragraph (i) or (ii) of this subsection; or
(B) If a quorum of the Board of Directors cannot be
obtained under paragraph (i) of this subsection and a committee cannot be
designated under paragraph (ii) of this subsection, selected by majority vote of
the full Board of Directors, in which selection directors who are parties may
participate; or
(iv) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under paragraph (iii)
of this subsection to select counsel.
(g) (i) The Corporation may pay for or reimburse the reasonable
expenses incurred by any applicant who is a party to a proceeding in advance of
final disposition of the proceeding if:
(A) The applicant furnishes the Corporation a written statement
of his good faith belief that he has met the standard of conduct described in
subsection (c);
(B) The applicant furnishes the Corporation a written
undertaking, executed personally or on his behalf, to repay the advance if it is
ultimately determined that he did not meet the standard of conduct; and
12
<PAGE>
<PAGE>
(C) A determination is made that the facts then known to those
making the determination would not preclude indemnification under this Section.
(ii) The undertaking required by subparagraph (B) of paragraph (i) of
this subsection shall be an unlimited general obligation of the applicant but
need not be secured and may be accepted without reference to financial ability
to make repayment.
(iii) Determinations and authorizations of payments under this
subsection shall be made in the manner specified in subsection (f).
(h) The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in subsection (c) of
this Section who was or is a party to any proceeding, by reason of the fact that
he is or was an agent of the Corporation, or is or was serving at the request of
the Corporation as an agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, to the same extent as if such
person were specified as one to whom indemnification is granted in subsection
(c). The provisions of subsections (d) through (g) of this Section shall be
applicable to any indemnification provided hereafter pursuant to this subsection
(h).
(i) The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Section and may also procure insurance, in such amounts as the Board
of Directors may determine, 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, employee benefit plan or other
enterprise,
13
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<PAGE>
against any liability asserted against or incurred by him in any such capacity
or arising from his status as such, whether or not the Corporation would have
power to indemnify him against such liability under the provisions of this
Section.
(j) The Board of Directors is hereby empowered to cause the
Corporation to contract in advance to indemnify any person specified in
subsection (c) of this Section provided that such contract does not permit
indemnification if the proposed indemnitee failed to meet the standard of
conduct set forth in subsection (c).
(k) Every reference herein to directors, officers, employees or
agents shall include former directors, officers, employees and agents and their
respective heirs, executors and administrators. The indemnification hereby
provided and provided hereafter pursuant to the power hereby conferred on the
Board of Directors shall not be exclusive of any other rights to which any
person may be entitled, including any right under policies of insurance that may
be purchased and maintained by the Corporation or others, with respect to
claims, issues or matters in relation to which the Corporation would not have
the power to indemnify such person under the provisions of this Section.
(l) For the purposes of this Section, references to the
"Corporation" include all constituent corporations absorbed in a consolidation
or merger as well as the resulting or surviving corporation so that any person
who is or was a director, officer or employee of such a constituent corporation
or is or was serving at the request of such constituent corporation as a
director, officer or employee 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
14
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<PAGE>
resulting or surviving corporation as he would if he had served the resulting
or surviving corporation in the same capacity.
(m) If any part of this Section 6 shall be found, in any claim,
action, suit or proceeding, to be invalid or ineffective, the validity and the
effect of the remaining parts shall not be affected.
SECTION 7. Executive Committee. The Board of Directors may, by a
resolution adopted by a majority of the number of directors fixed by these
By-laws, appoint an Executive Committee to consist of two or more directors as
determined by the Board. A majority of the members appointed shall constitute a
quorum. Such Committee shall have the power of the Board of Directors in the
management of the property, business and affairs of the Corporation, except the
power to declare dividends, or to approve an amendment of the Articles of
Incorporation or of these By-laws or to approve a plan of merger or
consolidation. Such Committee shall keep regular minutes of its proceedings and
shall report to the Board and be subject to its directions. The Board may fill
vacancies therein in the same manner as original appointments to such Committee.
Meetings of the Executive Committee shall be held, either within or without the
State of Virginia, upon the order of the Committee or the call of the Chairman
of the Executive Committee, or two or more members of the Committee. The
Secretary, or other officer performing his duties, shall give notice to each
Executive Committee member of the time and place of each Executive Committee
meeting, by mailing the same at least two days before the meeting or by
telegraphing or telephoning the same prior to the meeting.
15
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<PAGE>
SECTION 8. Other Committees. From time to time the Board of Directors by
a resolution adopted by a majority of the directors present at a meeting at
which a quorum is present may appoint any other committee or committees of
directors for any purpose or purposes, to the extent lawful, which shall have
such powers as shall be determined and specified by the Board of Directors in
the resolution of appointment. Meetings of any such committees shall be held
either within or without the State of Virginia, upon the order of such
committee, or the call of the Chairman, such committee, or two or more members
of such committee. The Secretary, or other officer performing his duties, shall
give notice to each member of such committee of the time and place of each
meeting of such committee, by mailing the same at least two days before the
meeting or by telegraphing or telephoning the same prior to the meeting.
SECTION 9. Action Without a Meeting. Unless otherwise restricted by law
or the Articles of Incorporation, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting if a written consent, setting forth the action so to be
taken, shall be signed by all of the directors or all of the members of the
committee, as the case may be. Action taken under this Section is effective when
the last director signs the consent unless the consent specifies a different
effective date, in which event the action taken is effective as of the date
specified therein provided the consent states the date of execution by each
director.
SECTION l0. Termination of Committee Membership. In the event any person
shall cease to be a director of the Corporation, such person shall
simultaneously therewith cease to be a member of any committee.
16
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<PAGE>
ARTICLE IV
Officers
SECTION 1. Officers. The officers of the Corporation shall be the
Chairman of the Board, the Vice Chairman of the Board, President, Chairman of
the Executive Committee, one or more Senior Executive Vice Presidents, Executive
Vice Presidents, Senior Vice Presidents, Vice Presidents, Secretary, Treasurer,
General Counsel, Comptroller, Assistant Secretaries, Assistant Treasurers, and
Assistant Comptrollers, and such other officers and agents as may be required by
law, or as may be deemed useful. The Chairman of the Board, the Vice Chairman of
the Board, the President and the Chairman of the Executive Committee shall each
be a member of the Board of Directors. Any person may hold at the same time any
two of the offices above named, except the offices of President and Secretary.
SECTION 2. Election of Officers; Term of Office. All officers and agents
shall be elected annually by the Board of Directors at each annual meeting of
the Board. If the Board of Directors shall fail to fill any designated office at
an annual meeting or if any vacancy shall occur, or if any office shall be newly
created, such office may be filled at any meeting of the Board of Directors.
Each officer shall hold office until his successor is duly elected, or
until his earlier death, resignation or removal, provided that the terms of
office of all officers shall terminate at any annual meeting of the Board of
Directors at which the President is elected. The Board of Directors shall have
the power to remove any officer, with or without cause, at any time.
17
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<PAGE>
ARTICLE V
Powers and Duties of Officers
SECTION l. Chairman of the Board. The Chairman of the Board shall be the
chief executive officer of the Corporation and shall have general supervision
over the business of the Corporation. He shall preside at all meetings of the
stockholders and the Board of Directors.
SECTION 2. Chairman of the Executive Committee. The Chairman of the
Executive Committee shall be the presiding officer of the Executive Committee
and shall have such other powers and duties as may be assigned to him by the
Board of Directors.
SECTION 3. President. The President shall be the chief operating officer
of the Corporation and shall have such other powers and duties as may from time
to time be assigned to him by the Board of Directors or the Chairman of the
Board.
SECTION 4. Other officers. All officers other than those expressly
referred to in this Article V shall have such powers and duties as usually
pertain to their respective offices, in addition to the powers and duties
conferred by law or by other sections of these By-laws, and such other duties
and powers as may be assigned to them by the Board of Directors, the Chairman of
the Board or the President.
ARTICLE VI
Fiscal Year
SECTION 1. Fiscal Year. The fiscal year of the Corporation shall end on
December 31 of each year.
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<PAGE>
ARTICLE VII
Checks, Notes, Drafts, Contracts, Etc.
SECTION 1. Checks, Notes, Drafts, Etc. All checks, notes, drafts or
other orders for the payment of money of the Corporation shall be signed,
endorsed or accepted in the name of the Corporation by such officer or person as
may be designated from time to time either by the Board of Directors or by an
officer authorized by the Board of Directors to make such designation.
SECTION 2. Execution of Contracts, Deeds, Etc. The Board of Directors
may authorize any officer or agent in the name and on behalf of the Corporation
to enter into or execute and deliver any and all deeds, bonds, mortgages,
contracts and other obligations or instruments, and such authority may be
general or confined to specific instances.
ARTICLE VIII
Seal
SECTION 1. Form. The Corporate Seal of the Corporation shall be the Seal
impressed on the margin hereof.
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<PAGE>
ARTICLE IX
Waiver of Notice
SECTION 1. Waiver of Notice. Any stockholder, director or officer may
waive any notice required to be given in accordance with law, these By-laws or
the Articles of Incorporation by attendance in person or by a writing signed by
the person or persons entitled to said notice or by his proxy, whether before or
after the time or event referred to in said notice, which waiver shall be deemed
equivalent to such notice.
ARTICLE X
Amendment to By-laws
SECTION 1. By the Directors. Except as otherwise provided by law, the
Board of Directors shall have the power to make, amend and repeal the By-laws of
the Corporation.
SECTION 2. By the Stockholders. By-laws made by the Board of Directors
may be repealed or changed, and new By-laws made, by the stockholders and the
stockholders may prescribe that any By-laws made by them shall not be altered,
amended or repealed by the directors. Any such action shall be taken at any
annual or special meeting of stockholders, provided that the notice of such
meeting shall have included such action among the purposes of the meeting.
20
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<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Income ($000) $14,353 $129,746 $90,995 $367,904
Weighted Average Common
Shares Outstanding 69,421,132 70,199,410 69,164,387 70,104,025
Earnings Per Share $0.21 $1.85 $1.32 $5.25
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Primary Basis 69,784,214 70,968,515 69,568,382 70,702,533
Primary Earnings Per Share $0.21 $1.83 $1.31 $5.20
Weighted Average Common
Shares Outstanding
Including Common Stock
Equivalents - Fully
Diluted Basis 69,784,214 70,985,037 69,568,382 70,889,652
Fully Diluted Earnings Per Share $0.21 $1.83 $1.31 $5.19
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND THE CONSOLIDATED BALANCE SHEET AT
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 54,148
<SECURITIES> 0
<RECEIVABLES> 567,713
<ALLOWANCES> 19,410
<INVENTORY> 472,555
<CURRENT-ASSETS> 1,116,272
<PP&E> 6,867,095
<DEPRECIATION> 3,126,818
<TOTAL-ASSETS> 5,075,485
<CURRENT-LIABILITIES> 599,538
<BONDS> 1,337,790
<COMMON> 69,640
0
0
<OTHER-SE> 2,072,844
<TOTAL-LIABILITY-AND-EQUITY> 5,075,485
<SALES> 2,929,613
<TOTAL-REVENUES> 2,929,613
<CGS> 2,182,609
<TOTAL-COSTS> 2,699,532
<OTHER-EXPENSES> (11,524)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 83,559
<INCOME-PRETAX> 158,046
<INCOME-TAX> 58,921
<INCOME-CONTINUING> 90,995<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90,995
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
<FN>
<F1> REFLECTS ADJUSTMENT FOR MINORITY INTEREST (NET OF TAX) OF $8,130
</FN>
</TABLE>
