SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1997
Commission file number 1-12383
Rockwell International Corporation
(Exact name of registrant as specified in its charter)
Delaware 25-1797617
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
600 Anton Boulevard, Suite 700, Costa Mesa, California 92626-7147
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (714) 424-4565
(Office of the Corporate Secretary)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
200,880,282 shares of registrant's Common Stock, $1.00 par value, were
outstanding on January 31, 1998
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Page
No.
Condensed Consolidated Balance Sheet--
December 31, 1997 and September 30, 1997........... 2
Consolidated Statement of Income --
Three Months Ended December 31, 1997 and 1996...... 3
Consolidated Statement of Cash Flows--
Three Months Ended December 31, 1997 and 1996...... 4
Notes to Financial Statements...................... 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................................... 9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk................................. 12
PART II. OTHER INFORMATION:
Item 2. Changes in Securities and Use of Proceeds ........ 13
Item 5. Other Information................................. 13
Item 6. Exhibits and Reports on Form 8-K.................. 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ROCKWELL INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
December 31 September 30
1997 1997
ASSETS (In millions)
<S> <C> <C>
Current assets:
Cash......................................... $ 183 $ 283
Receivables (less allowance for doubtful
accounts: December 31, 1997, $67;
September 30, 1997, $62)................... 1,294 1,319
Inventories.................................. 1,616 1,526
Deferred income taxes........................ 251 254
Other current assets......................... 271 302
Total current assets................. 3,615 3,684
Net property.................................... 2,246 2,245
Intangible assets............................... 1,795 1,789
Other assets.................................... 248 253
TOTAL.................. $ 7,904 $ 7,971
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt.............................. $ 342 $ 66
Accounts payable............................. 757 840
Accrued compensation and benefits............ 409 436
Accrued income taxes......................... 138 96
Other current liabilities.................... 484 532
Total current liabilities............ 2,130 1,970
Long-term debt.................................. 157 156
Accrued retirement benefits..................... 778 795
Other liabilities............................... 239 239
Total liabilities........... 3,304 3,160
Shareowners' equity:
Common Stock (shares issued: 216.4).......... 216 216
Additional paid-in capital................... 904 901
Retained earnings............................ 4,438 4,409
Currency translation......................... (127) (103)
Common Stock in treasury, at cost (shares held:
December 31, 1997, 13.9;
September 30, 1997, 9.6).................. (831) (612)
Total shareowners' equity... 4,600 4,811
TOTAL.................. $ 7,904 $ 7,971
</TABLE>
See Notes to Financial Statements.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31
1997 1996
(In millions)
<S> <C> <C>
Revenues:
Sales.............................................. $ 1,979 $ 1,853
Other income....................................... 25 18
Total revenues................................... 2,004 1,871
Costs and expenses:
Cost of sales...................................... 1,402 1,285
Selling, general, and administrative............... 356 336
Purchased research and development................. 103 -
Interest........................................... 4 4
Total costs and expenses......................... 1,865 1,625
Income from continuing operations
before income taxes................................ 139 246
Provision for income taxes....................... 50 92
INCOME FROM CONTINUING OPERATIONS.................... 89 154
Income from discontinued operations.................. - 25
NET INCOME........................................... $ 89 $ 179
(In dollars)
Basic earnings per share:
Continuing operations........................... $ 0.43 $ 0.70
Discontinued operations......................... - 0.12
Net Income...................................... $ 0.43 $ 0.82
Diluted earnings per share:
Continuing operations........................... $ 0.43 $ 0.69
Discontinued operations......................... - 0.12
Net Income...................................... $ 0.43 $ 0.81
Cash dividends per share............................. $ 0.26 $ 0.29
(In millions)
Average outstanding shares:
Basic........................................... 204.8 218.7
Diluted......................................... 207.8 221.8
</TABLE>
See Notes to Financial Statements.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31
1997 1996
(In millions)
<S> <C> <C>
CONTINUING OPERATIONS:
Operating Activities
Income from continuing operations....................... $ 89 $ 154
Adjustments to income from continuing operations to
arrive at cash provided by operating activities:
Depreciation........................................ 93 95
Amortization of intangible assets................... 25 22
Deferred income taxes............................... (40) 15
Pension expense, net of contributions............... 9 13
Purchased research and development.................. 103 -
Changes in assets and liabilities, excluding effects
of acquisitions, divestitures and foreign currency
adjustments:
Receivables..................................... 37 28
Inventories..................................... (51) (14)
Accounts payable................................ (83) (166)
Accrued income taxes............................ 46 55
Other assets and liabilities.................... (74) (20)
Cash Provided by Operating Activities........ 154 182
Investing Activities
Property additions...................................... (109) (94)
Acquisition of businesses, net of cash acquired......... (158) (1)
Proceeds from disposition of property and businesses.... 13 557
Cash (Used for) Provided by Investing
Activities................................. (254) 462
Financing Activities
Increase (decrease) in short-term borrowings............ 283 (246)
Payments of long-term debt.............................. - (1)
Net increase (decrease) in debt......................... 283 (247)
Purchase of treasury stock.............................. (239) (61)
Cash dividends.......................................... (52) (63)
Reissuance of common stock.............................. 8 14
Cash Used for Financing Activities........... - (357)
CASH (USED FOR) PROVIDED BY CONTINUING OPERATIONS....... (100) 287
CASH USED FOR DISCONTINUED OPERATIONS.. ................ - (157)
(DECREASE) INCREASE IN CASH............................. (100) 130
CASH AT BEGINNING OF PERIOD............................. 283 663
CASH AT END OF PERIOD................................... $ 183 $ 793
</TABLE>
Income tax payments were $41 million and $25 million in the three months ended
December 31, 1997 and 1996, respectively.
See Notes to Financial Statements.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management of Rockwell International Corporation (the
company or Rockwell) the unaudited financial statements contain all
adjustments, consisting solely of adjustments of a normal recurring
nature, necessary to present fairly the financial position, results of
operations, and cash flows for the periods presented. These statements
should be read in conjunction with the company's Annual Report on Form
10-K for the fiscal year ended September 30, 1997. The results of
operations for the three-month period ended December 31, 1997 are not
necessarily indicative of the results for the full year. Certain prior
year amounts have been reclassified to conform with the current
presentation.
It is the company's practice at the end of each interim reporting period
to make an estimate of the effective tax rate expected to be applicable
for the full fiscal year. The rate so determined is used in providing
for income taxes on a year-to-date basis.
The company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" in the first quarter of fiscal 1998. The adoption
of this standard had no effect on the company's financial statements.
2. In December 1997, the company acquired the In-Flight Entertainment (IFE)
business of Hughes-Avicom International, Inc. (Hughes-Avicom), a leading
supplier of airborne interactive IFE systems. The acquisition has been
accounted for as a purchase as of December 31, 1997, and the company has
recorded a charge of $103 million ($63 million after-tax) for purchased
research and development. The remaining assets acquired and liabilities
assumed have been recorded at estimated fair values determined by the
company's management based on information currently available.
3. Discontinued operations include the Automotive business and the Aerospace
and Defense businesses (A&D Business). On September 30, 1997, the
company completed the spin-off of its Automotive business into an
independent, separately traded, publicly held company by distributing all
of the issued and outstanding shares of Meritor Automotive, Inc.
(Meritor) to the company's shareowners on the basis of one share of
Meritor Common Stock for every three shares of company common stock
owned. On December 6, 1996, the company completed the merger of its
former A&D Business with a subsidiary of The Boeing Company (Boeing) in a
transaction valued at approximately $3.2 billion, including the
assumption by Boeing of $2.3 billion of liabilities of the company,
principally debt, and the issuance of $0.9 billion of Boeing stock to
Rockwell shareowners in exchange for their interest in the A&D Business
(the Reorganization).
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the results of discontinued operations
(in millions).
Three Months Ended
December 31, 1996
Revenues:
Automotive......................................... $ 767
A&D Business....................................... 535
Total............................................ $ 1,302
Income before income taxes:
Automotive......................................... $ 44
A&D Business....................................... -
Total............................................ $ 44
Net income:
Automotive............................................ $ 25
A&D Business.......................................... -
Total............................................... $ 25
The earnings of the A&D Business for the first two months of 1997 were
entirely offset by expenses relating to the Reorganization.
4. Inventories are summarized as follows (in millions):
December 31 September 30
1997 1997
Finished goods............................. $ 424 $ 414
Work in process............................ 759 702
Raw materials, parts, and supplies......... 429 404
Total.................................... 1,612 1,520
Adjustment to the carrying value of
certain inventories to a LIFO basis...... 4 6
Inventories................................ $ 1,616 $ 1,526
5. Intangible assets are summarized as follows (in millions):
December 31 September 30
1997 1997
Goodwill.................................. $ 1,237 $ 1,249
Trademarks, patents, product technology,
and other intangibles................... 558 540
Intangible assets....................... $ 1,795 $ 1,789
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. Short-term debt consisted of the following (in millions):
December 31 September 30
1997 1997
Commercial paper......................... $ 260 $ -
Short-term foreign bank borrowings....... 80 64
Current portion of long-term debt........ 2 2
Short-term debt......................... $ 342 $ 66
At December 31, 1997, the company had $1.5 billion of unsecured credit
facilities with various banks to support commercial paper borrowings.
There were no significant commitment fees or compensating balance
requirements under these facilities.
Short-term credit facilities available to foreign subsidiaries amounted
to $315 million at December 31, 1997 and consisted of arrangements for
which there are no significant commitment fees.
7. Other current liabilities are summarized as follows (in millions):
December 31 September 30
1997 1997
Contract reserves and advance payments..... $ 129 $ 146
Accrued product warranty................... 119 113
Accrued taxes other than income taxes...... 46 46
Other...................................... 190 227
Other current liabilities................ $ 484 $ 532
8. Long-term debt consisted of the following (in millions):
December 31 September 30
1997 1997
6.8% notes, payable in 2003............... $ 141 $ 141
Other obligations, principally foreign.... 18 17
Total................................... 159 158
Less current portion..................... 2 2
Long-term debt......................... $ 157 $ 156
In January 1998, the company issued $800 million aggregate principal
amount of long-term notes and debentures in a public offering. The
offering included three series of debt: $350 million principal amount
of 6.15% notes due in 2008 issued at par; $250 million principal amount
of 6.70% debentures due in 2028, issued at par; and $200 million principal
amount of 5.20% debentures due in 2098, issued at a discount yielding
approximately $150 million of proceeds.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
9. Accrued retirement benefits consisted of the following (in millions):
December 31 September 30
1997 1997
Accrued retirement medical costs......... $ 682 $ 684
Accrued pension costs.................... 151 166
Total.................................. 833 850
Amount classified as current liability... 55 55
Accrued retirement benefits............ $ 778 $ 795
10. Claims have been asserted against the company for utilizing the
intellectual property rights of others in certain of the company's
products. The resolution of these matters may result in the negotiation
of a license agreement, a settlement or the resolution of such claims
through arbitration or litigation. The company accrues the estimated
cost of the ultimate resolution of these matters. Management believes
that the resolution of these matters will not have a material adverse
effect on the company's financial statements.
Various other lawsuits, claims and proceedings have been or may be
instituted or asserted against the company relating to the conduct of
its business, including those pertaining to product liability, safety
and health, environmental, and employment matters. Pursuant to the
Reorganization, Rockwell has agreed to indemnify Boeing for certain
government contract and environmental matters related to operations of
the A&D Business for periods prior to the merger. In connection with
the spin-off, Meritor has agreed to indemnify the company for
substantially all contingent liabilities related to the Automotive
business. Although the outcome of litigation cannot be predicted with
certainty and some lawsuits, claims, or proceedings may be disposed of
unfavorably to the company, management believes the disposition of
matters which are pending or asserted will not have a material adverse
effect on the company's financial statements.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
1998 First Quarter Compared to 1997 First Quarter
The contributions to sales and earnings by business segment for the continuing
operations of the company for the first quarter of fiscal 1998 and 1997 are
presented below (in millions).
Three Months Ended
December 31
1997 1996
Sales
Automation $ 1,139 $ 1,061
Avionics & Communications 426 374
Semiconductor Systems 414 418
Total $ 1,979 $ 1,853
Operating Earnings
Automation $ 144 $ 131
Avionics & Communications 74 59
Semiconductor Systems 43 81
Purchased Research & Development (103) -
Operating earnings 158 271
General corporate - net (15) (21)
Interest expense (4) (4)
Provision for income taxes (50) (92)
Income from continuing operations 89 154
Income from discontinued operations - 25
Net Income $ 89 $ 179
Purchased research and development relates to the acquisition of an
Avionics and Communications business.
First quarter fiscal 1998 sales of approximately $2.0 billion were up seven
percent from last year's first quarter due to volume increases and increased
market share penetration in the Automation and Avionics & Communications
businesses. The composition of sales was as follows (in millions):
Three Months Ended
December 31
1997 1996
U.S. Commercial $ 1,125 $ 1,059
International 717 678
U.S. Government 137 116
Total $ 1,979 $ 1,853
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
RESULTS OF OPERATIONS (CONTINUED)
Income from continuing operations for the 1998 first quarter, before an
acquisition-related special charge, was $152 million, or 74 cents per share,
compared to $154 million, or 70 cents per share, for 1997. First quarter 1998
earnings per share were higher due to the company's stock repurchase program.
The 1998 first quarter acquisition-related special charge of $63 million
after-tax, or 31 cents per share, relates to the write-off of purchased
research and development in connection with the December 1997 acquisition of
the in-flight entertainment (IFE) business of Hughes-Avicom International,
Inc. Including this charge, net income for the first quarter of 1998 was
$89 million, or 43 cents per share. Net income for the first quarter of
1997, including discontinued operations, totaled $179 million, or 82 cents
per share.
Automation earnings increased ten percent in the first quarter of 1998 to $144
million from $131 million in 1997's first quarter. Automation's higher
earnings in 1998 are primarily attributable to increased volume in the United
States where sales were up nine percent over the comparable period in 1997.
Automation's first quarter earnings as a percent of sales increased to 12.6
percent from 12.3 percent in last year's first quarter.
Avionics & Communications achieved a 25 percent increase in operating earnings
to $74 million, before an acquisition-related special charge, from $59 million
in 1997's first quarter. Sales were up 14 percent to $426 million from $374
million in last year's first quarter primarily due to a sales increase of over
40 percent for the air transport business in the first quarter of 1998.
Earnings, before the acquisition-related special charge, as a percent of sales
increased to 17.4 percent from 15.8 percent in the first quarter of 1997.
Including the special charge, Avionics & Communications incurred a first
quarter operating loss of $29 million.
Semiconductor Systems earnings for the first quarter of 1998 were 47 percent
lower than 1997's first quarter on approximately the same sales.
Semiconductor Systems achieved unit volume increases in both modem and
non-modem products and reduced manufacturing costs in the first quarter of
1998; however, results were below 1997's first quarter due to lower pricing on
the V.34 modem product, slower ramp-up of the new K56flex modem related to a
delay in reaching a standards agreement, and continuing major investments in
new non-modem product lines. Earnings as a percent of sales for the 1998
first quarter were 10.4 percent compared to 19.4 percent for the first quarter
of 1997 but up from 9.2 percent in the fourth quarter of 1997.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
FINANCIAL CONDITION
The major uses of cash for the first quarter of 1998 were the acquisition of
the IFE business of Hughes-Avicom International, Inc., and the stock
repurchase program.
During the first quarter of 1998, the company completed the $1 billion stock
repurchase program announced in December 1996 and is in the process of
executing the additional $500 million stock repurchase program approved by the
company's Board of Directors in September 1997. In February 1998 the
company's Board of Directors approved an additional $500 million stock
repurchase program. Through December 31, 1997, the company repurchased 18.1
million shares of its common stock for $1.1 billion relating to these
programs, of which 4.7 million shares were repurchased for $239 million during
the first quarter of 1998. Future stock repurchases are expected to be funded
by cash generated by operating activities, commercial paper borrowings and
proceeds from long-term notes and debentures.
A major source of cash for the first quarter of 1997 was from the sale of the
Graphic Systems business for approximately $600 million, consisting of $553
million in cash and $47 million in preferred stock.
In January 1998, the company issued $800 million aggregate principal amount of
long-term notes and debentures in a public offering. The proceeds of this
debt offering of $750 million were used to repay approximately $380 million of
outstanding short-term commercial paper borrowings, and the balance will be
used for general corporate purposes, including the company's ongoing share
repurchase program.
Information with respect to the effect on the company and its manufacturing
operations of compliance with environmental protection requirements and
resolution of environmental claims is contained under the caption
Environmental Matters in Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations of the company's Annual Report
on Form 10-K for the fiscal year ended September 30, 1997. Management
believes that at December 31, 1997 there has been no material change to this
information.
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
Item 3. Quantitative And Qualitative Disclosures About Market Risk
The company's financial instruments include cash, equity securities, short-
and long-term debt, and foreign currency forward exchange contracts. At
December 31, 1997, the carrying values of the company's financial instruments
approximated their fair values based on current market prices and rates.
It is the policy of the company not to enter into derivative financial
instruments for speculative purposes. The company enters into foreign
currency forward exchange contracts to protect itself from adverse currency
rate fluctuations on foreign currency commitments entered into in the ordinary
course of business. These commitments are generally for terms of less than
one year. The foreign currency forward exchange contracts are executed with
creditworthy banks and are denominated in currencies of major industrial
countries. The notional amount of all the company's outstanding foreign
currency forward exchange contracts aggregated $392 million at December 31,
1997 and $239 million at September 30, 1997. The gains and losses relating to
these foreign currency forward exchange contracts are deferred and included in
the measurement of the foreign currency transaction subject to the hedge. The
company believes that any gain or loss incurred on foreign currency forward
exchange contracts is offset by the effects of currency movements on the
respective underlying hedged transactions.
Based on the company's overall currency rate exposure at December 31, 1997, a
10% change in currency rates would not have had a material effect on the
financial position, results of operations or cash flows of the company.
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On October 1, 1997, the company issued 199 shares of restricted
common stock to John D. Nichols, a director of the company; these
shares were issued in payment for the retainer fees otherwise payable
in cash and deferred by Mr. Nichols pursuant to the terms of the
Directors Stock Plan. On December 31, 1997, the company issues 7,792
shares of restricted common stock to Don H. Davis, Jr. in partial
payment of an incentive compensation award under the Annual Incentive
Compensation Plan for Senior Executive Officers. The issuance of all
these shares was exempt from the registration requirements of the
Securities Act of 1933 pursuant to Section 4(2) thereof.
Item 5. Other Information
Government Contracts
For information on the company's United States government contracting
business, certain risks of that business and claims related thereto,
see the information set forth under the caption Government Contracts
in Item 1, Business, on page 3 of the company's Annual Report on Form
10-K for fiscal year ended September 30, 1997, which is incorporated
herein by reference.
Cautionary Statement
The Quarterly Report on Form 10-Q contains statements relating to
future results of the company (including certain projections and
business trends) that are "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. Actual results
may differ materially from those projected as a result of certain
risks and uncertainties, including but not limited to changes in
political and economic conditions; domestic and foreign government
spending, budgetary and trade policies; demand for and market
acceptance of new and existing products; successful development of
advanced technologies; and competitive product and pricing pressures;
as well as other risks and uncertainties, including but not limited
to those detailed from time to time in the company's Securities and
Exchange Commission filings.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3-b-1 - By-Laws of the company as in effect on the
date hereof.
Exhibit 3-b-2 - Copy of resolution of the Board of Directors
of the company, adopted February 4, 1998,
amending the By-Laws of the company effective
February 4, 1998.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K (Continued)
(a) Exhibits: (continued)
Exhibit 11 - Computation of Earnings Per Share
Exhibit 12 - Computation of Ratio of Earnings to Fixed
Charges for the Three Months Ended December
31, 1997.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
The company filed a Current Report on Form 8-K dated October
10, 1997 in respect of the completion on September 30, 1997 of
the spin-off of its Automotive business to holders of shares of
common stock, par value $1 per share, of company, by means of
the distribution to such holders of all outstanding shares of
Common Stock, par value $1 per share (including the preferred
share purchase rights associated with such Common Stock), of
Meritor. Meritor began operations as an independent,
separately traded, publicly-held company on October 1, 1997.
<PAGE>
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.
ROCKWELL INTERNATIONAL CORPORATION
(Registrant)
Date February 12, 1998 By W. E. Sanders
W. E. Sanders
Vice President and Controller
(Principal Accounting Officer)
Date February 12, 1998 By W. J. Calise, Jr.
W. J. Calise, Jr.
Senior Vice President,
General Counsel and Secretary
<PAGE>
ROCKWELL INTERNATIONAL CORPORATION
INDEX OF EXHIBITS TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
Page
Exhibit 3-b-1 - By-Laws of the company as in effect on the 17
date hereof.
Exhibit 3-b-2 - Copy of resolution of the Board of Directors 18
of the company, adopted February 4, 1998,
amending the By-Laws of the company effective
February 4, 1998.
Exhibit 11 - Computation of Earnings Per Share for the 40
Three Months Ended December 31, 1997.
Exhibit 12 - Computation of Ratio of Earnings to 41
Fixed Charges for the Three Months Ended December
31, 1997.
<PAGE>
Exhibit 3-b-1
ROCKWELL INTERNATION CORPORATION
ADVICE OF ACTION
To: THOSE CONCERNED Date: FEBRUARY 4, 1998
Subject: BY-LAW AMENDMENTS
You are hereby notified of action as follows:
By: BOARD OF DIRECTORS
Place of Meeting: COSTA MESA, CALIFORNIA
Date of Meeting: FEBRUARY 4, 1998
RESOLVED, that the By-Laws of this Corporation be, and they hereby are
amended, effective immediately, by revising Section 8 of Article V to read in
its entirety as follows:
"SECTION 8. Chairman of the Board of Directors. The
Chairman of the Board of Directors shall be the chief executive
officer of the Corporation and, subject to the control of the Board
of Directors, shall have general and overall charge of the business
and affairs of the Corporation and of its officers. He shall preside
at all meetings of the shareowners and of the Board of Directors and
shall enforce the observance of the rules of order for the meetings
of the shareowners and the Board and of the by-laws of the
Corporation. He shall keep the Board of Directors appropriately
informed on the business and affairs of the Corporation."
by deleting Section 9 of Article V and all references in the By-Laws to the
office of President; and by redesignating Sections 10 through 16 of Article V
as Sections 9 through 15 thereof.
I, William J. Calise, Jr., Secretary of Rockwell International Corporation,
hereby certify that the foregoing resolution was duly adopted by the Board of
Directors at a meeting held in Costa Mesa, California on February 4, 1998, and
that the same is in full force and effect.
/s/ William J. Calise, Jr.
Secretary
BY-LAWS 3-b-2
OF ROCKWELL INTERNATIONAL CORPORATION
(AS AMENDED EFFECTIVE FEBRUARY 4, 1998)
ARTICLE I.
OFFICES
SECTION 1. Registered Office in Delaware; Resident Agent. The address
of the Corporation's registered office in the State of Delaware and the name and
address of its resident agent in charge thereof are as filed with the Secretary
of State of the State of Delaware.
SECTION 2. Other Offices. The Corporation may also have an office or
offices at such other place or places either within or without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation requires.
ARTICLE II.
MEETINGS OF SHAREOWNERS
SECTION 1. Place of Meetings. All meetings of the shareowners of the
Corporation shall be held at such place, within or without the State of
Delaware, as may from time to time be designated by resolution passed by the
Board of Directors.
SECTION 2. Annual Meeting. An annual meeting of the shareowners for the
election of directors and for the transaction of such other proper business,
notice of which was given in the notice of meeting, shall be held on a date and
at a time as may from time to time be designated by resolution passed by the
Board of Directors.
SECTION 3. Special Meetings. A special meeting of the shareowners for
any purpose or purposes shall be called only by the Board of Directors pursuant
to a resolution adopted by a majority of the whole Board.
SECTION 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of the shareowners, whether annual or special,
shall be mailed, postage prepaid, not less than ten nor more than sixty days
before the date of the meeting, to each shareowner entitled to vote at such
meeting, at the shareowner's address as it appears on the records of the
Corporation. Every such notice shall state the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called. Notice of any adjourned meeting of the shareowners shall
not be required to be given, except when expressly required by law.
SECTION 5. List of Shareowners. The Secretary shall, from information
obtained from the transfer agent, prepare and make, at least ten days before
<PAGE>
every meeting of shareowners, a complete list of the shareowners entitled to
vote at the meeting, arranged in alphabetical order, and showing the
address of each shareowner and the number of shares registered in the name of
each shareowner. Such list shall be open to the examination of any shareowner,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten 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
shareowner who is present. The stock ledger shall be the only evidence as to who
are the shareowners entitled to examine the stock ledger, the list referred to
in this section or the books of the Corporation, or to vote in person or by
proxy at any meeting of shareowners.
SECTION 6. Quorum. At each meeting of the shareowners, the holders of a
majority of the issued and outstanding stock of the Corporation present either
in person or by proxy shall constitute a quorum for the transaction of business
except where otherwise provided by law or by the Certificate of Incorporation or
by these by-laws for a specified action. Except as otherwise provided by law, in
the absence of a quorum, a majority in interest of the shareowners of the
Corporation present in person or by proxy and entitled to vote shall have the
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until shareowners holding the requisite amount of
stock shall be present or represented. At any such adjourned meeting at which a
quorum may be present, any business may be transacted which might have been
transacted at a meeting as originally called, and only those shareowners
entitled to vote at the meeting as originally called shall be entitled to vote
at any adjournment or adjournments thereof. The absence from any meeting of the
number of shareowners required by law or by the Certificate of Incorporation or
by these by-laws for action upon any given matter shall not prevent action at
such meeting upon any other matter or matters which may properly come before the
meeting, if the number of shareowners required in respect of such other matter
or matters shall be present.
SECTION 7. Organization. At every meeting of the shareowners the
Chairman of the Board, or, in his absence, a director or an officer of the
Corporation designated by the Board, shall act as Chairman. The Secretary,
or, in his absence, an Assistant Secretary, shall act as Secretary at all
meetings of the shareowners. In the absence from any such meeting of the
Secretary and the Assistant Secretaries, the Chairman may appoint any person
to act as Secretary of the meeting.
SECTION 8. Notice of Shareowner Business and Nominations.
(A) Annual Meetings of Shareowners. (1) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the shareowners may be made at an annual meeting of
shareowners (a) pursuant to the Corporation's notice of meeting, (b) by or at
the direction of the Board of Directors or (c) by any shareowner of the
Corporation who was a shareowner of record at the time of giving of notice
provided for in this by-law, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this by-law.
2 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
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(2) For nominations or other business to be properly brought before
an annual meeting by a shareowner pursuant to clause (c) of paragraph (A) (1) of
this by-law, the shareowner must have given timely notice thereof in writing to
the Secretary of the Corporation and such other business must otherwise be a
proper matter for shareowner action. To be timely, a shareowner's notice shall
be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 60th day nor earlier
than the close of business on the 90th day prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the shareowner to be timely must be so
delivered not earlier than the close of business on the 90th day prior to such
annual meeting and not later than the close of business on the later of the 60th
day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made by the
Corporation. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a shareowner's
notice as described above. Such shareowner's notice shall set forth (a) as to
each person whom the shareowner proposes to nominate for election or reelection
as a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14a-11 thereunder (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (b) as to
any other business that the shareowner proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareowner and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the shareowner giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such shareowner, as they appear on the Corporation's
books, and of such beneficial owner and (ii) the class and number of shares of
the Corporation which are owned beneficially and of record by such shareowner
and such beneficial owner.
(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of
this by-law to the contrary, in the event that the number of directors to be
elected to the Board of Directors of the Corporation is increased and there
is no public announcement by the Corporation naming all of the nominees for
director or specifying the size of the increased Board of Directors at least
70 days prior to the first anniversary of the preceding year's annual
meeting, a shareowner's notice required by this by-law shall also be considered
timely, but only with respect to nominees for any new positions created by
such increase, if it shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on
the 10th day following the day on which such public announcement is first
made by the Corporation.
(B) Special Meetings of Shareowners. Only such business shall be
conducted at a special meeting of shareowners as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
3 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
of shareowners at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any shareowner of the Corporation
who is a shareowner of record at the time of giving of notice provided for in
this by-law, who shall be entitled to vote at the meeting and who complies with
the notice procedures set forth in this by-law. In the event the Corporation
calls a special meeting of shareowners for the purpose of electing one or more
directors to the Board of Directors, any such shareowner may nominate a person
or persons (as the case may be), for election to such position(s) as specified
in the Corporation's notice of meeting, if the shareowner's notice required by
paragraph (A)(2) of this by-law shall be delivered to the Secretary at the
principal executive offices of the Corporation not earlier than the close of
business on the 90th day prior to such special meeting and not later than the
close of business on the later of the 60th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a shareowner's notice as described above.
(C) General. (1) Only such persons who are nominated in accordance with
the procedures set forth in this by-law shall be eligible to serve as directors
and only such business shall be conducted at a meeting of shareowners as shall
have been brought before the meeting in accordance with the procedures set forth
in this by-law. Except as otherwise provided by law, the Certificate of
Incorporation or these by-laws, the Chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this by-law and, if any proposed
nomination or business is not in compliance with this by-law, to declare that
such defective proposal or nomination shall be disregarded.
(2) For purposes of this by-law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this by-law, a
shareowner shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this by-law. Nothing in this by-law shall be deemed to affect any
rights (i) of shareowners to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the
holders of any series of Preferred Stock to elect directors under specified
circumstances.
SECTION 9. Business and Order of Business. At each meeting of the
shareowners such business may be transacted as may properly be brought before
such meeting, except as otherwise provided by law or in these by-laws. The order
of business at all meetings of the shareowners shall be as determined by the
4 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
Chairman, unless otherwise determined by a majority in interest of the
shareowners present in person or by proxy at such meeting and entitled to vote
thereat.
SECTION 10. Voting. Except as otherwise provided by law, the
Certificate of Incorporation or these by-laws, each shareowner shall at every
meeting of the shareowners be entitled to one vote for each share of stock held
by such shareowner. Any vote on stock may be given by the shareowner entitled
thereto in person or by proxy appointed by an instrument in writing, subscribed
(or transmitted by electronic means and authenticated as provided by law) by
such shareowner or by the shareowner's attorney thereunto authorized, and
delivered to the Secretary; provided, however, that no proxy shall be voted
after three years from its date unless the proxy provides for a longer period.
Except as otherwise provided by law, the Certificate of Incorporation or these
by-laws, at all meetings of the shareowners, all matters shall be decided by the
vote (which need not be by ballot) of a majority in interest of the shareowners
present in person or by proxy and entitled to vote thereat, a quorum being
present.
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. General Powers. The property, affairs and business of the
Corporation shall be managed by or under the direction of its Board of
Directors.
SECTION 2. Number, Qualifications, and Term of Office. Subject to the
rights of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances, the number of directors of the
Corporation shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the
whole Board. A director need not be a shareowner.
The directors, other than those who may be elected by the holders of
any series of Preferred Stock or any other series or class of stock, as provided
herein or in any Preferred Stock Designation, shall be divided into three
classes, as nearly equal in number as possible. One class of directors shall be
initially elected for a term expiring at the annual meeting of shareowners to be
held in 1997, another class shall be initially elected for a term expiring at
the annual meeting of shareowners to be held in 1998, and another class shall be
initially elected for a term expiring at the annual meeting of shareowners to be
held in 1999. Members of each class shall hold office until their successors are
elected and shall have qualified. At each annual meeting of the shareowners of
the Corporation, commencing with the 1997 annual meeting, the successors of the
class of directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast at such meeting to hold office for a term
expiring at the annual meeting of shareowners held in the third year following
the year of their election.
SECTION 3. Election of Directors. At each meeting of the shareowners
for the election of directors, at which a quorum is present, the directors shall
5 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
be the persons receiving the greatest number of votes cast by the holders of
stock entitled to vote for such directors.
SECTION 4. Quorum and Manner of Acting. A majority of the members of
the Board of Directors shall constitute a quorum for the transaction of business
at any meeting, and the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board of Directors
unless otherwise provided by law, the Certificate of Incorporation or these
by-laws. In the absence of a quorum, a majority of the directors present may
adjourn any meeting from time to time until a quorum shall be obtained. Notice
of any adjourned meeting need not be given. The directors shall act only as a
board and the individual directors shall have no power as such.
SECTION 5. Place of Meetings. The Board of Directors may hold its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 6. First Meeting. Promptly after each annual election of
directors, the Board of Directors shall meet for the purpose of organization,
the election of officers and the transaction of other business, at the same
place as that at which the annual meeting of shareowners was held or as
otherwise determined by the Board. Notice of such meeting need not be given.
Such meeting may be held at any other time or place which shall be specified in
a notice given as hereinafter provided for special meetings of the Board of
Directors.
SECTION 7. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such places and at such times as the Board shall from time to
time determine. If any day fixed for a regular meeting shall be a legal holiday
at the place where the meeting is to be held, then the meeting which would
otherwise be held on that day shall be held at the same hour on the next
succeeding business day not a legal holiday. Notice of regular meetings need not
be given.
SECTION 8. Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board and shall
be called by the Chairman of the Board or the Secretary at the written request
of three directors. Notice of each such meeting stating the time and place of
the meeting shall be given to each director by mail, telephone, other electronic
transmission or personally. If by mail, such notice shall be given not less than
five days before the meeting; and if by telephone, other electronic transmission
or personally, not less than two days before the meeting.
A notice mailed at least two weeks before the meeting need not state the purpose
thereof except as otherwise provided in these by-laws. In all other cases the
notice shall state the principal purpose or purposes of the meeting. Notice of
any meeting of the Board need not be given to a director, however, if waived by
the director in writing before or after such meeting or if the director shall be
present at the meeting.
SECTION 9. Organization. At each meeting of the Board of Directors, the
Chairman of the Board, or, in his absence, a director or an officer of the
Corporation designated by the Board, shall act as Chairman. The Secretary, or,
6 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
in the Secretary's absence, any person appointed by the Chairman, shall act as
Secretary of the meeting.
SECTION 10. Order of Business. At all meetings of the Board of
Directors, business shall be transacted in the order determined by the Board.
SECTION 11. Resignations. Any director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board or the Secretary
of the Corporation. The resignation of any director shall take effect at the
time specified therein, and unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
SECTION 12. Compensation. Each director shall be paid such
compensation, if any, as shall be fixed by the Board of Directors.
SECTION 13. Indemnification of Directors and Officers.
(A) 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 such person 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 (except in each of the foregoing
situations to the extent any agreement, arrangement or understanding of agency
contains provisions that supersede or abrogate indemnification under this
section) of another corporation or of any partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
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 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 such
person 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.
(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 or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that such person 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 (except in each of the
foregoing situations to the extent any agreement, arrangement or understanding
of agency contains provisions that supersede or abrogate indemnification under
this section) of another corporation or of any partnership, joint venture,
trust, employee benefit plan or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such
person acted in
7 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
good faith and in a manner such person 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 person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware 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 of Delaware or such
other court shall deem proper.
(C) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (A) and (B), or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by or on
behalf of such person in connection therewith. If any such person is not wholly
successful in any such action, suit or proceeding but is successful, on the
merits or otherwise, as to one or more but less than all claims, issues or
matters therein, the Corporation shall indemnify such person against all
expenses (including attorneys' fees) actually and reasonably incurred by or on
behalf of such person in connection with each claim, issue or matter that is
successfully resolved. For purposes of this subsection and without limitation,
the termination of any claim, issue or matter by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
(D) Notwithstanding any other provision of this section, to the extent
any person is a witness in, but not a party to, any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person 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 (except in each of the foregoing situations
to the extent any agreement, arrangement or understanding of agency contains
provisions that supersede or abrogate indemnification under this section) of
another corporation or of any partnership, joint venture, trust, employee
benefit plan or other enterprise, such person shall be indemnified against all
expenses (including attorneys' fees) actually and reasonably incurred by or on
behalf of such person in connection therewith.
(E) Indemnification under subsections (A) and (B) (unless ordered by a
court) shall be made 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 such person has met the applicable
standard of conduct set forth in subsections (A) and (B). Such determination
shall be made (1) if a Change of Control (as hereinafter defined) shall not have
occurred, (a) by the Board of Directors by a majority vote of the Disinterested
Directors (as hereinafter defined), even though less than a quorum or (b) if
there are no Disinterested Directors or, even if there are Disinterested
Directors, a majority of such Disinterested Directors so directs, by (i)
Independent Counsel (as hereinafter defined) in a written opinion to the Board
of Directors, a copy of which shall be delivered to the claimant, or (ii) the
shareowners of the Corporation; or (2) if a Change of Control shall have
8 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
occurred, by Independent Counsel selected by the claimant in a written opinion
to the Board of Directors, a copy of which shall be delivered to the claimant,
unless the claimant shall request that such determination be made by or at the
direction of the Board of Directors, in which case it shall be made in
accordance with clause (1) of this sentence. Any claimant shall be entitled to
be indemnified against the expenses (including attorneys' fees) actually and
reasonably incurred by such claimant in cooperating with the person or entity
making the determination of entitlement to indemnification (irrespective of the
determination as to the claimant's entitlement to indemnification) and, to the
extent successful, in connection with any litigation or arbitration with
respect to such claim or the enforcement thereof.
(F) If a Change of Control shall not have occurred, or if a Change of
Control shall have occurred and a director, officer, employee or agent requests
pursuant to clause (2) of the second sentence in subsection (E) that the
determination whether the claimant is entitled to indemnification be made by or
at the direction of the Board of Directors, the claimant shall be conclusively
presumed to have been determined pursuant to subsection (E) to be entitled to
indemnification if (1)(a) within fifteen days after the next regularly scheduled
meeting of the Board of Directors following receipt by the Corporation of the
request therefor, the Board of Directors shall not have resolved by majority
vote of the Disinterested Directors to submit such determination to (i)
Independent Counsel for its determination or (ii) the shareowners for their
determination at the next annual meeting, or any special meeting that may be
held earlier, after such receipt, and (b) within sixty days after receipt by the
Corporation of the request therefor (or within ninety days after such receipt if
the Board of Directors in good faith determines that additional time is required
by it for the determination and, prior to expiration of such sixty-day period,
notifies the claimant thereof), the Board of Directors shall not have made the
determination by a majority vote of the Disinterested Directors, or (2) after a
resolution of the Board of Directors, timely made pursuant to clause (1)(a)(ii)
above, to submit the determination to the shareowners, the shareowners meeting
at which the determination is to be made shall not have been held on or before
the date prescribed (or on or before a later date, not to exceed sixty days
beyond the original date, to which such meeting may have been postponed or
adjourned on good cause by the Board of Directors acting in good faith);
provided, however, that this sentence shall not apply if the claimant has
misstated or failed to state a material fact in connection with his or her
request for indemnification. Such presumed determination that a claimant is
entitled to indemnification shall be deemed to have been made (I) at the end of
the sixty-day or ninety-day period (as the case may be) referred to in clause
(1)(b) of the immediately preceding sentence or (II) if the Board of Directors
has resolved on a timely basis to submit the determination to the shareowners,
on the last date within the period prescribed by law for holding such
shareowners meeting (or a postponement or adjournment thereof as permitted
above).
(G) Expenses (including attorneys' fees) incurred in defending a civil,
criminal, administrative or investigative action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding to a director or officer, promptly after receipt of a request
therefor stating in reasonable detail the expenses incurred, and to an employee
or agent as authorized by the Board of Directors; provided that in each case the
9 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
Corporation shall have received an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized in this section.
(H) The Board of Directors shall establish reasonable procedures for
the submission of claims for indemnification pursuant to this section,
determination of the entitlement of any person thereto and review of any such
determination. Such procedures shall be set forth in an appendix to these
by-laws and shall be deemed for all purposes to be a part hereof.
(I) For purposes of this section,
(1) "Change of Control" means a change of control of the Corporation
at any time after the distribution of the shares of capital stock of the
Corporation to the holders of capital stock of Rockwell International
Corporation of a nature that would be required to be reported in a proxy
statement pursuant to Section 14(a) of the Exchange Act or in a Form 8-K
pursuant to Section 13 of the Exchange Act (or in any similar form or schedule
under either of those provisions or any successor provision), whether or not the
Corporation is then subject to such reporting requirement; provided, however,
that, without limitation, a Change of Control shall be deemed to have occurred
if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities without the prior approval of at least
two-thirds of the members of the Board of Directors in office immediately prior
to such person attaining such percentage interest; (ii) the Corporation is a
party to a merger, consolidation, sale of assets or other reorganization, or a
proxy contest, as a consequence of which members of the Board of Directors in
office immediately prior to such transaction or event constitute less than a
majority of the Board of Directors immediately thereafter; or (iii) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (including for this purpose any new director
whose election or nomination for election by the Corporation's shareowners was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board of Directors.
(2) "Disinterested Director" means a director of the Corporation who
is not and was not a party to an action, suit or proceeding in respect of which
indemnification is sought by a director, officer, employee or agent.
(3) "Independent Counsel" means a law firm, or a member of a law
firm, that (i) is experienced in matters of corporation law; (ii) neither
presently is, nor in the past five years has been, retained to represent the
Corporation, the director, officer, employee or agent claiming indemnification
or any other party to the action, suit, or proceeding giving rise to a claim for
indemnification under this section, in any matter material to the Corporation,
the claimant or any such other party; and (iii) would not, under applicable
standards of professional conduct then prevailing, have a conflict of interest
10 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
in representing either the Corporation or such director, officer, employee or
agent in an action to determine the Corporation's or such person's rights under
this section.
(J) The Indemnification and advancement of expenses herein provided, or
granted pursuant hereto, shall not be deemed exclusive of any other rights to
which any of those indemnified or eligible for advancement of expenses may be
entitled under any agreement, vote of shareowners or Disinterested Directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office, and shall 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 person.
Notwithstanding any amendment, alteration or repeal of this section or any of
its provisions, or of any of the procedures established by the Board of
Directors pursuant to subsection (H) hereof, 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 or of any partnership, joint venture, employee benefit plan
or other enterprise shall be entitled to indemnification in accordance with the
provisions hereof and thereof with respect to any action taken or omitted prior
to such amendment, alteration or repeal except to the extent otherwise required
by law.
(K) No indemnification shall be payable pursuant to this section with
respect to any action against the Corporation commenced by an officer, director,
employee or agent unless the Board of Directors shall have authorized the
commencement thereof or unless and to the extent that this section or the
procedures established pursuant to subsection (H) shall specifically provide for
indemnification of expenses relating to the enforcement of rights under this
section and such procedures.
ARTICLE IV.
COMMITTEES
SECTION 1. Appointment and Powers. 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 or more directors of the
Corporation, which, to the extent provided in said resolution or in these
by-laws and not inconsistent with Section 141 of the Delaware General
Corporation Law, as amended, 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. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors.
SECTION 2. Term of Office and Vacancies. Each member of a committee
shall continue in office until a director to succeed him or her shall have been
elected and shall have qualified, or until he or she ceases to be a director or
until he or she shall have resigned or shall have been removed in the manner
11 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
hereinafter provided. Any vacancy in a committee shall be filled by the vote of
a majority of the whole Board of Directors at any regular or special meeting
thereof.
SECTION 3. Alternates. The Board of Directors may, by resolution passed
by a majority of the whole Board, 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.
SECTION 4. Organization. Unless otherwise provided by the Board of
Directors, each committee shall appoint a chairman. Each committee shall keep a
record of its acts and proceedings and report the same from time to time to the
Board of Directors.
SECTION 5. Resignations. Any regular or alternate member of a committee
may resign at any time by giving written notice to the Chairman of the Board
or the Secretary of the Corporation. Such resignation shall take effect at the
time of the receipt of such notice or at any later time specified therein, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 6. Removal. Any regular or alternate member of a committee may
be removed with or without cause at any time by resolution passed by a majority
of the whole Board of Directors at any regular or special meeting.
SECTION 7. Meetings. Regular meetings of each committee, of which no
notice shall be necessary, shall be held on such days and at such places as the
chairman of the committee shall determine or as shall be fixed by a resolution
passed by a majority of all the members of such committee. Special meetings of
each committee will be called by the Secretary at the request of any two members
of such committee, or in such other manner as may be determined by the
committee. Notice of each special meeting of a committee shall be mailed to each
member thereof at least two days before the meeting or shall be given personally
or by telephone or other electronic transmission at least one day before the
meeting. Every such notice shall state the time and place, but need not state
the purposes of the meeting. No notice of any meeting of a committee shall be
required to be given to any alternate.
SECTION 8. Quorum and Manner of Acting. Unless otherwise provided by
resolution of the Board of Directors, a majority of a committee (including
alternates when acting in lieu of regular members of such committee) shall
constitute a quorum for the transaction of business and the act of a majority
of those present at a meeting at which a quorum is present shall be the act
of such committee. The members of each committee shall act only as a
committee and the individual members shall have no power as such.
SECTION 9. Compensation. Each regular or alternate member of a
committee shall be paid such compensation, if any, as shall be fixed by the
Board of Directors.
12 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
ARTICLE V.
OFFICERS
SECTION 1. Officers. The officers of the Corporation shall be a
Chairman of the Board of Directors, who shall be chosen from the members of the
Board of Directors, one or more Vice Presidents (one or more of whom may be
Executive Vice Presidents, Senior Vice Presidents or otherwise as may be
designated by the Board), a Secretary and a Treasurer, all of whom shall be
elected by the Board of Directors. Any two or more offices may be held by the
same person. The Board of Directors may also from time to time elect such other
officers as it deems necessary.
SECTION 2. Term of Office. Each officer shall hold office until his or
her successor shall have been duly elected and qualified in his or her stead, or
until his or her death or until he or she shall have resigned or shall have been
removed in the manner hereinafter provided.
SECTION 3. Additional Officers; Agents. The Chairman of the Board may
from time to time appoint and remove such additional officers and agents as may
be deemed necessary. Such persons shall hold office for such period, have such
authority, and perform such duties as in these by-laws provided or as the
Chairman of the Board may from time to time prescribe. The Board of Directors or
the Chairman of the Board may from time to time authorize any officer to appoint
and remove agents and employees and to prescribe their powers and duties.
SECTION 4. Salaries. Unless otherwise provided by resolution passed by
a majority of the whole Board, the salaries of all officers elected by the Board
of Directors shall be fixed by the Board of Directors.
SECTION 5. Removal. Except where otherwise expressly provided in a
contract authorized by the Board of Directors, any officer may be removed,
either with or without cause, by the vote of a majority of the Board at any
regular or special meeting or, except in the case of an officer elected by the
Board, by any superior officer upon whom the power of removal may be conferred
by the Board or by these by-laws.
SECTION 6. Resignations. Any officer elected by the Board of Directors
may resign at any time by giving written notice to the Chairman of the Board
or the Secretary. Any other officer may resign at any time by giving written
notice to the Chairman of the Board. Any such resignation shall take effect at
the date of receipt of such notice or at any later time specified therein, and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 7. Vacancies. A vacancy in any office because of death,
resignation, removal, or otherwise, shall be filled for the unexpired portion of
the term in the manner provided in these by-laws for regular election or
appointment to such office.
13 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
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SECTION 8. Chairman of the Board of Directors. The Chairman of the
Board of Directors shall be the chief executive officer of the Corporation and,
subject to the control of the Board of Directors, shall have general and overall
charge of the business and affairs of the Corporation and of its officers. He
shall preside at all meetings of the shareowners and of the Board of Directors
and shall enforce the observance of the rules of order for the meetings of the
shareowners and the Board and of the by-laws of the Corporation. He shall keep
the Board of Directors appropriately informed on the business and affairs of the
Corporation.
SECTION 9. Executive Vice Presidents. One or more Executive Vice
Presidents shall, subject to the control of the Chairman of the Board, have lead
accountability for components or functions of the Corporation as and to the
extent designated by the Chairman of the Board. Each Executive Vice President
shall keep the Chairman of the Board appropriately informed on the business and
affairs of the designated components or functions of the Corporation.
SECTION 10. Vice Presidents. The Vice Presidents shall perform such
duties as may from time to time be assigned to them or any of them by the
Chairman of the Board.
SECTION 11. Secretary. The Secretary shall keep or cause to be kept in
books provided for the purpose the minutes of the meetings of the shareowners,
of the Board of Directors and of any committee constituted pursuant to Article
IV of these by-laws. The Secretary shall be custodian of the corporate seal and
see that it is affixed to all documents as required and attest the same. The
Secretary shall perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him or her.
SECTION 12. Assistant Secretaries. At the request of the Secretary, or
in his or her absence or disability, the Assistant Secretary designated by him
or her shall perform all the duties of the Secretary and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Secretary. The Assistant Secretaries shall perform such other duties as from
time to time may be assigned to them.
SECTION 13. Treasurer. The Treasurer shall have charge of and be
responsible for the receipt, disbursement and safekeeping of all funds and
securities of the Corporation. The Treasurer shall deposit all such funds in the
name of the Corporation in such banks, trust companies or other depositories as
shall be selected in accordance with the provisions of these by-laws. From time
to time and whenever requested to do so, the Treasurer shall render statements
of the condition of the finances of the Corporation to the Board of Directors.
The Treasurer shall perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him or her.
SECTION 14. Assistant Treasurers. At the request of the Treasurer, or
in his or her absence or disability, the Assistant Treasurer designated by him
or her shall perform all the duties of the Treasurer and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Treasurer. The Assistant Treasurers shall perform such other duties as from time
to time may be assigned to them.
14 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
SECTION 15. Certain Agreements. The Board of Directors shall have power
to authorize or direct the proper officers of the Corporation, on behalf of the
Corporation, to enter into valid and binding agreements in respect of
employment, incentive or deferred compensation, stock options, and similar or
related matters, notwithstanding the fact that a person with whom the
Corporation so contracts may be a member of its Board of Directors. Any such
agreement may validly and lawfully bind the Corporation for a term of more than
one year, in accordance with its terms, notwithstanding the fact that one of the
elements of any such agreement may involve the employment by the Corporation of
an officer, as such, for such term.
ARTICLE VI.
AUTHORIZATIONS
SECTION 1. Contracts. The Board of Directors, except as in these
by-laws otherwise provided, may authorize any officer, employee or agent of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation, and such authority may be general
or confined to specific instances.
SECTION 2. Loans. No loan shall be contracted on behalf of the
Corporation and no negotiable paper shall be issued in its name, unless
authorized by the Board of Directors.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, employee or
employees, of the Corporation as shall from time to time be determined in
accordance with authorization of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as the Board of Directors may from time to time
designate, or as may be designated by any officer or officers of the Corporation
to whom such power may be delegated by the Board, and for the purpose of such
deposit the officers and employees who have been authorized to do so in
accordance with the determinations of the Board may endorse, assign and deliver
checks, drafts, and other orders for the payment of money which are payable to
the order of the Corporation.
SECTION 5. Proxies. Except as otherwise provided in these by-laws or in
the Certificate of Incorporation, and unless otherwise provided by resolution of
the Board of Directors, the Chairman of the Board, the President or any other
officer may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation to cast
the votes which the Corporation may be entitled to cast as a shareowner or
otherwise in any other corporation any of whose stock or other securities may be
held by the Corporation, at meetings of the holders of the stock or other
securities of such other corporations, or to consent in writing to any action by
such other corporation, and may instruct the person or persons so appointed as
15 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
to the manner of casting such vote or giving such consent, and may execute or
cause to be executed in the name and on behalf of the Corporation and under
its corporate seal, or otherwise, all such written proxies or other
instruments as he may deem necessary or proper in the premises.
ARTICLE VII.
SHARES AND THEIR TRANSFER
SECTION 1. Certificates of Stock. Certificates for shares of the stock
of the Corporation shall be in such form as shall be approved by the Board of
Directors. They shall be numbered in the order of their issue, by class and
series, and shall be signed by the Chairman of the Board or a Vice President,
and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary, of the Corporation. If such certificate 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 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 shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if such person were such officer, transfer agent, or registrar at
the date of issue.
SECTION 2. Record Ownership. A record of the name and address of the
holder of each certificate, the number of shares represented thereby and the
date of issuance thereof shall be made on the Corporation's books. The
Corporation shall be entitled to treat the holder of record of any share of
stock as the holder in fact thereof and accordingly shall not be bound to
recognize any equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or other notice
thereof, except as required by law.
SECTION 3. Transfer of Stock. Shares of stock shall be transferable on
the books of the Corporation by the person named in the certificate for such
stock in person or by such person's attorney or other duly constituted
representative upon surrender of such certificate with an assignment endorsed
thereon or attached thereto duly executed and with such guarantee of signature
as the Corporation may reasonably require.
SECTION 4. Lost, Destroyed and Mutilated Certificates. The Corporation
may issue a new certificate of stock in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed certificate,
or such person's legal representative, to give the Corporation a bond sufficient
to indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
SECTION 5. Transfer Agent and Registrar; Regulations. The Corporation
shall, if and whenever the Board of Directors shall so determine, maintain one
or more transfer offices or agencies, each in charge of a transfer agent
16 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
designated by the Board of Directors, where the shares of the stock of the
Corporation shall be directly transferable, and also one or more registry
offices, each in charge of a registrar designated by the Board of Directors,
where such shares of stock shall be registered, and no certificate for shares of
the stock of the Corporation, in respect of which a registrar and transfer agent
shall have been designated, shall be valid unless countersigned by such transfer
agent and registered by such registrar. The Board of Directors may also make
such additional rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of stock of the
Corporation.
SECTION 6. Fixing Record Date. For the purpose of determining the
shareowners entitled to notice of or to vote at any meeting of shareowners 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 Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. If no record
date is fixed (1) the record date for determining shareowners entitled to notice
of or to vote at a meeting of shareowners shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held and (2) the record date for determining shareowners for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of shareowners
of record entitled to notice of or to vote at a meeting of shareowners 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.
SECTION 7. Examination of Books by Shareowners. The Board of Directors
shall, subject to the laws of the State of Delaware, have power to determine
from time to time, whether and to what extent and under what conditions and
regulations the accounts and books of the Corporation, or any of them, shall be
open to the inspection of the shareowners; and no shareowner shall have any
right to inspect any book or document of the Corporation, except as conferred by
the laws of the State of Delaware, unless and until authorized so to do by
resolution of the Board of Directors or of the shareowners of the Corporation.
ARTICLE VIII.
NOTICE
SECTION 1. Manner of Giving Written Notice. Any notice in writing
required by law or by these by-laws to be given to any person may be delivered
personally, may be transmitted by electronic means or may be given by depositing
the same in the post office or letter box in a postpaid envelope addressed to
such person at such address as appears on the books of the Corporation. Notice
by mail shall be deemed to be given at the time when the same shall be mailed,
and notice by other means shall be deemed given when actually delivered (and in
the case of notice transmitted by electronic means, when authenticated if and as
required by law).
17 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
SECTION 2. Waiver of Notice. Whenever any notice is required to be
given to any person, a waiver thereof by such person in writing or transmitted
by electronic means (and authenticated if and as required by law), whether
before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE IX.
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal" and
"Delaware".
ARTICLE X.
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
October in each year.
18 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
APPENDIX
PROCEDURES FOR SUBMISSION AND DETERMINATION OF CLAIMS FOR INDEMNIFICATION
PURSUANT TO ARTICLE III, SECTION 13 OF THE BY-LAWS.
SECTION 1. Purpose. The Procedures for Submission and Determination of
Claims for Indemnification Pursuant to Article III, Section 13 of the by-laws
(the "Procedures") are to implement the provisions of Article III, Section 13 of
the by-laws of the Corporation (the "by-laws") in compliance with the
requirement of subsection (H) thereof.
SECTION 2. Definitions. For purposes of these Procedures:
(A) All terms that are defined in Article III, Section 13 of the
by-laws shall have the meanings ascribed to them therein when used in these
Procedures unless otherwise defined herein.
(B) "Expenses" include all reasonable attorneys' fees, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating
costs, printing and binding costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types customarily incurred
in connection with prosecuting, defending, preparing to prosecute or defend,
investigating, or being or preparing to be a witness in, a Proceeding; and shall
also include such retainers as counsel may reasonably require in advance of
undertaking the representation of an indemnitee in a Proceeding.
(C) "Indemnitee" includes any person who was or is, or is threatened to
be made, a witness in or a party to any Proceeding by reason of the fact that
such person 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 (except in each of the foregoing situations to the extent any
agreement, arrangement or understanding of agency contains provisions that
supersede or abrogate indemnification under Article III, Section 13 of the
by-laws) of another corporation or of any partnership, joint venture, trust,
employee benefit plan or other enterprise.
(D) "Proceeding" includes any action, suit, arbitration, alternative
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee unless the Board of Directors shall have authorized
the commencement thereof.
SECTION 3. Submission and Determination of Claims.
(A) To obtain indemnification or advancement of Expenses under Article
III, Section 13 of the by-laws, an Indemnitee shall submit to the Secretary of
the Corporation a written request therefor, including therein or therewith such
documentation and information as is reasonably available to the Indemnitee and
is reasonably necessary to permit a determination as to whether and what extent
19 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
the Indemnitee is entitled to indemnification or advancement of Expenses, as the
case may be. The Secretary shall, promptly upon receipt of a request for
indemnification, advise the Board of Directors thereof in writing if a
determination in accordance with Article III, Section 13(E) of the by-laws is
required.
(B) Upon written request by an Indemnitee for indemnification pursuant
to Section 3(A) hereof a determination with respect to the Indemnitee's
entitlement thereto in the specific case, if required by the by-laws, shall be
made in accordance with Article III, Section 13(E) of the by-laws, and, if it is
so determined that the Indemnitee is entitled to indemnification, payment to the
Indemnitee shall be made within ten days after such determination. The
Indemnitee shall cooperate with the person, persons or entity making such
determination, with respect to the Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to the Indemnitee
and reasonably necessary to such determination.
(C) If entitlement to indemnification is to be made by Independent
Counsel pursuant to Article III, Section 13(E) of the by-laws, the Independent
Counsel shall be selected as provided in this Section 3(C). If a Change of
Control shall not have occurred, the Independent Counsel shall be selected by
the Board of Directors, and the Corporation shall give written notice to the
Indemnitee advising the Indemnitee of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, the Independent Counsel
shall be selected by the Indemnitee (unless the Indemnitee shall request that
such selection be made by the Board of Directors, in which event the immediately
preceding sentence shall apply), and the Indemnitee shall give written notice to
the Corporation advising it of the identity of the Independent Counsel so
selected. In either event, the Indemnitee or the Corporation, as the case may
be, may, within seven days after such written notice of selection shall have
been given, deliver to the Corporation or to the Indemnitee, as the case may be,
a written objection to such selection. Such objection may be asserted only on
the ground that the Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Article III, Section 13 of
the by-laws, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, the Independent
Counsel so selected may not serve as Independent Counsel unless and until a
court has determined that such objection is without merit. If, within twenty
days after the next regularly scheduled Board of Directors meeting following
submission by the Indemnitee of a written request for indemnification pursuant
to Section 3(A) hereof, no Independent Counsel shall have been selected and not
objected to, either the Corporation or the Indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent jurisdiction for
resolution of any objection which shall have been made by the Corporation or the
Indemnitee to the other's selection of Independent Counsel and/or for the
appointment as Independent Counsel of a person selected by the Court or by such
other person as the Court shall designate, and the person with respect to whom
an objection is favorably resolved or the person so appointed shall act as
Independent Counsel under Article III, Section 13(E) of the by-laws. The
Corporation shall pay any and all reasonable fees and expenses (including
without limitation any advance retainers reasonably required by counsel) of
20 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
Independent Counsel incurred by such Independent Counsel in connection with
acting pursuant to Article III, Section 13(E) of the by-laws, and the
Corporation shall pay all reasonable fees and expenses (including without
limitation any advance retainers reasonably required by counsel) incident to the
procedures of Article III, Section 13(E) of the by-laws and this Section 3(C),
regardless of the manner in which Independent Counsel was selected or appointed.
Upon the delivery of its opinion pursuant to Article III, Section 13 of the
by-laws or, if earlier, the due commencement of any judicial proceeding or
arbitration pursuant to Section 4(A)(3) of these Procedures, Independent Counsel
shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).
(D) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification under the by-laws,
the person, persons or entity making such determination shall presume that an
Indemnitee is entitled to indemnification under the by-laws if the Indemnitee
has submitted a request for indemnification in accordance with Section 3(A)
hereof, and the Corporation shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
SECTION 4. Review and Enforcement of Determination.
(A) In the event that (1) advancement of Expenses is not timely made
pursuant to Article III, Section 13(G) of the by-laws, (2) payment of
indemnification is not made pursuant to Article III, Section 13(C) or (D) of the
by-laws within ten days after receipt by the Corporation of written request
therefor, (3) a determination is made pursuant to Article III, Section 13(E) of
the by-laws that an Indemnitee is not entitled to indemnification under the
by-laws, (4) the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Article III, Section 13(E) of the by-laws and
such determination shall not have been made and delivered in a written opinion
within ninety days after receipt by the Corporation of the written request for
indemnification, or (5) payment of indemnification is not made within ten days
after a determination has been made pursuant to Article III, Section 13(E) of
the by-laws that an Indemnitee is entitled to indemnification or within ten days
after such determination is deemed to have been made pursuant to Article III,
Section 13(F) of the by-laws, the Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of the Indemnitee's entitlement to such
indemnification or advancement of Expenses. Alternatively, the Indemnitee, at
his or her option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association. The
Indemnitee shall commence such proceeding seeking an adjudication or an award in
arbitration within one year following the date on which the Indemnitee first has
the right to commence such proceeding pursuant to this Section 4(A). The
Corporation shall not oppose the Indemnitee's right to seek any such
adjudication or award in arbitration.
(B) In the event that a determination shall have been made pursuant to
Article III, Section 13(E) of the by-laws that an Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 4 shall be conducted in all respects as a de novo trial, or
21 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
<PAGE>
arbitration, on the merits and the Indemnitee shall not be prejudiced by reason
of that adverse determination. If a Change of Control shall have occurred, the
Corporation shall have the burden of proving in any judicial proceeding or
arbitration commenced pursuant to this Section 4 that the Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.
(C) If a determination shall have been made or deemed to have been made
pursuant to Article III, Section 13(E) or (F) of the by-laws that an Indemnitee
is entitled to indemnification, the Corporation shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 4, absent (1) a misstatement or omission of a material fact in
connection with the Indemnitee's request for indemnification, or (2) a
prohibition of such indemnification under applicable law.
(D) The Corporation shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 4 that the
procedures and presumptions of these Procedures are not valid, binding and
enforceable, and shall stipulate in any such judicial proceeding or arbitration
that the Corporation is bound by all the provisions of these Procedures.
(E) In the event that an Indemnitee, pursuant to this Section 4, seeks
to enforce the Indemnitee's rights under, or to recover damages for breach of,
Article III, Section 13 of the by-laws or these Procedures in a judicial
proceeding or arbitration, the Indemnitee shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against, any and all
expenses (of the types described in the definition of Expenses in Section 2
of these Procedures) actually and reasonably incurred in such judicial
proceeding or arbitration, but only if the Indemnitee prevails therein. If it
shall be determined in such judicial proceeding or arbitration that the
Indemnitee is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the expenses incurred by the Indemnitee in
connection with such judicial proceeding or arbitration shall be appropriately
prorated.
SECTION 5. Amendments. These Procedures may be amended at any time and
from time to time in the same manner as any by-law of the Corporation in
accordance with the Certificate of Incorporation; provided, however, that
notwithstanding any amendment, alteration or repeal of these Procedures or any
provision hereof, any Indemnitee shall be entitled to utilize these Procedures
with respect to any claim for indemnification arising out of any action taken or
omitted prior to such amendment, alteration or repeal except to the extent
otherwise required by law.
22 BY-LAWS OF ROCKWELL INTERNATIONAL CORPORATION
EXHIBIT 11
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
December 31
1997 1996
(In millions, except
per share amounts)
Basic earnings per share:
Income from continuing operations................... $ 89 $ 154
Income from discontinued operations................. - $ 25
Net income.......................................... $ 89 $ 179
Average number of common shares outstanding
during the period................................. 204.8 218.7
Basic earnings per share:
Continuing operations............................. $ 0.43 $ 0.70
Discontinued operations........................... - 0.12
Net income........................................ $ 0.43 $ 0.82
Diluted earnings per share:
Income from continuing operations................... $ 89 $ 154
Income from discontinued operations................. - 25
Net income.......................................... $ 89 $ 179
Average number of common shares outstanding
during the period assuming full dilution:
Common stock................................... 204.8 218.7
Assumed issuance of stock under award plans.... 3.0 3.1
Total diluted shares.............................. 207.8 221.8
Diluted earnings per share:
Continuing operations............................. $ 0.43 $ 0.69
Discontinued operations........................... - 0.12
Net income........................................ $ 0.43 $ 0.81
Exhibit 12
ROCKWELL INTERNATIONAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
THREE MONTHS ENDED DECEMBER 31, 1997
(In millions, except ratio)
EARNINGS AVAILABLE FOR FIXED CHARGES:
Income from continuing operations before income taxes............ $ 139
Less undistributed income of affiliates........................ (2)
137
Add fixed charges included in earnings:
Interest expense.............................................. 4
Interest element of rentals................................... 14
18
Total earnings available for fixed charges....................... $ 155
FIXED CHARGES:
Fixed charges included in earnings............................... $ 18
Capitalized interest............................................. 3
Total fixed charges........................................... $ 21
RATIO OF EARNINGS TO FIXED CHARGES (1).............................. 7.4
(1) In computing the ratio of earnings to fixed charges, earnings are defined
as income from continuing operations before income taxes, adjusted for
minority interest in income or loss of subsidiaries, undistributed
earnings of affiliates, and fixed charges exclusive of capitalized
interest. Fixed charges consist of interest on borrowings and that
portion of rentals deemed representative of the interest factor.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1997 CONSOLIDATED BALANCE SHEET, CONSOLIDATED INCOME STATEMENT FOR THE THREE
MONTHS ENDED DECEMBER 31, 1997 AND NOTES TO THE FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 183
<SECURITIES> 0
<RECEIVABLES> 1294
<ALLOWANCES> 67
<INVENTORY> 1616
<CURRENT-ASSETS> 3615
<PP&E> 2246
<DEPRECIATION> 0
<TOTAL-ASSETS> 7904
<CURRENT-LIABILITIES> 2130
<BONDS> 157
0
0
<COMMON> 216
<OTHER-SE> 4384
<TOTAL-LIABILITY-AND-EQUITY> 7904
<SALES> 1979
<TOTAL-REVENUES> 2004
<CGS> 1402
<TOTAL-COSTS> 1865
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> 139
<INCOME-TAX> 50
<INCOME-CONTINUING> 89
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<EXTRAORDINARY> 0
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<NET-INCOME> 89
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
