<PAGE>
1
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 1-13647
--------------------
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 73-1356520
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5330 East 31st Street, Tulsa, Oklahoma 74135
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (918) 660-7700
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
The number of shares outstanding of the registrant's Common Stock as of August
9, 1999 was 24,143,409.
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<PAGE>
2
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
FORM 10-Q
CONTENTS
Page
----
PART I - FINANCIAL INFORMATION..............................................3
ITEM 1. FINANCIAL STATEMENTS....................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........11
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK..........................19
PART II - OTHER INFORMATION................................................19
ITEM 1. LEGAL PROCEEDINGS......................................19
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS..............20
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....20
ITEM 5. OTHER INFORMATION......................................21
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.......................21
SIGNATURES.................................................................22
FACTORS AFFECTING FORWARD LOOKING STATEMENTS
Some of the statements contained herein under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although Dollar Thrifty Automotive Group, Inc.
believes such forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and certain factors
could cause results to differ materially from current expectations. These
factors include: economic and competitive conditions in markets and countries
where our customers reside and where our companies and their franchisees
operate; changes in capital availability or cost; costs and other terms related
to the acquisition and disposition of automobiles; the ability of the Company
and its third party providers, vendors, suppliers and independent franchisees to
adequately address the Year 2000 issue; and certain regulatory and environmental
matters. Should one or more of these risks or uncertainties, among others,
materialize, actual results could vary materially from those estimated,
anticipated or projected. Dollar Thrifty Automotive Group, Inc. undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results over time.
<PAGE>
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Dollar Thrifty Automotive Group, Inc.:
We have reviewed the accompanying consolidated balance sheet of Dollar Thrifty
Automotive Group, Inc. and subsidiaries as of June 30, 1999, and the related
consolidated statement of income for the three-month and six-month periods ended
June 30, 1999 and 1998, and the condensed consolidated statement of cash flows
for the six-month periods ended June 30, 1999 and 1998. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Dollar Thrifty Automotive Group,
Inc. and subsidiaries as of December 31, 1998, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated February 4, 1999, except
for Note 17, as to which the date is March 4, 1999, we expressed an unqualified
opinion on those consolidated financial statements.
DELOITTE & TOUCHE LLP
Tulsa, Oklahoma
July 21, 1999
<PAGE>
4
<TABLE>
<CAPTION>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999 AND DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------
(In Thousands Except Share Data)
June 30, December 31,
1999 1998
------------- -------------
(Unaudited)
ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 61,832 $ 49,505
Restricted cash and investments 30,932 62,255
Accounts and notes receivable, net 115,179 115,423
Prepaid expenses and other assets 48,493 42,186
Revenue-earning vehicles, net 2,013,615 1,342,066
Property and equipment, net 73,205 70,897
Deferred income taxes 8,694 8,554
Intangible assets, net 170,684 174,414
------------- -------------
$ 2,522,634 $ 1,865,300
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 57,415 $ 60,862
Accrued liabilities 117,674 88,426
Income taxes payable 3,468 9,161
Public liability and property damage 67,452 77,619
Debt and other obligations 1,938,344 1,313,799
------------- -------------
Total liabilities 2,184,353 1,549,867
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value:
Authorized 10,000,000 shares; none outstanding - -
Common stock, $.01 par value:
Authorized 50,000,000 shares; issued and outstanding
24,143,409 and 24,125,055, respectively 241 241
Additional capital 705,632 705,399
Accumulated deficit (366,665) (389,050)
Foreign currency translation adjustment (927) (1,157)
------------- -------------
338,281 315,433
------------- -------------
$ 2,522,634 $ 1,865,300
============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
5
<TABLE>
<CAPTION>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
- --------------------------------------------------------------------------------------------------
(In Thousands Except Per Share Data)
Three Months Six Months
Ended June 30, Ended June 30,
--------------------- ----------------------
(Unaudited)
1999 1998 1999 1998
--------- --------- --------- ---------
REVENUES:
<S> <C> <C> <C> <C>
Vehicle rentals $ 183,636 $ 159,369 $ 333,951 $ 294,426
Vehicle leasing 59,430 52,272 106,932 93,838
Fees and services 14,487 13,091 26,174 25,718
Other 1,797 2,445 3,844 4,527
--------- --------- --------- ---------
Total revenues 259,350 227,177 470,901 418,509
--------- --------- --------- ---------
COSTS AND EXPENSES:
Direct vehicle and operating 75,647 66,464 141,642 128,732
Vehicle depreciation and lease charges, net 78,899 78,825 148,535 145,774
Selling, general and administrative 48,236 40,756 92,156 79,958
Interest expense, net of interest income 24,672 22,673 44,523 41,317
Amortization of cost in excess of net
assets acquired 1,402 1,345 2,942 2,697
--------- --------- --------- ---------
Total costs and expenses 228,856 210,063 429,798 398,478
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 30,494 17,114 41,103 20,031
INCOME TAX EXPENSE 13,506 7,901 18,718 9,996
--------- --------- --------- ---------
NET INCOME $ 16,988 $ 9,213 $ 22,385 $ 10,035
========= ========= ========= =========
EARNINGS PER SHARE:
Basic $ 0.70 $ 0.38 $ 0.93 $ 0.42
========= ========= ========= =========
Diluted $ 0.69 $ 0.38 $ 0.92 $ 0.42
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
6
<TABLE>
<CAPTION>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
- -----------------------------------------------------------------------------------------------
(In Thousands)
Six Months
Ended June 30,
-------------------------------
(Unaudited)
1999 1998
------------ ------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 183,310 $ 205,850
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Revenue-earning vehicles:
Purchases (1,600,510) (1,230,501)
Proceeds from sales 784,389 642,764
Restricted cash and investments, net 31,323 105,259
Property and equipment
Purchases (8,657) (7,992)
Proceeds from sale 968 536
Acquisition of businesses, net of cash acquired - (1,014)
------------- ------------
Net cash used in investing activities (792,487) (490,948)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt and other obligations:
Proceeds 2,192,132 569,100
Payments (1,567,725) (266,402)
Issuance of common shares 221 9,648
Vehicle financing issue costs (3,124) (3,719)
------------- ------------
Net cash provided by financing activities 621,504 308,627
------------- ------------
CHANGE IN CASH AND CASH EQUIVALENTS 12,327 23,529
CASH AND CASH EQUIVALENTS:
Beginning of period 49,505 56,074
------------- ------------
End of period $ 61,832 $ 79,603
============= ============
</TABLE>
See notes to consolidated financial statements
<PAGE>
7
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
- --------------------------------------------------------------------------------
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Dollar Thrifty Automotive Group, Inc. and its subsidiaries (the "Company").
The Company's significant wholly owned subsidiaries include Dollar Rent A
Car Systems, Inc. ("Dollar") and Thrifty, Inc. ("Thrifty").
The accounting policies set forth in Note 2 to the consolidated financial
statements contained in the Form 10-K/A filed with the Securities Exchange
Commission on March 19, 1999 have been followed in preparing the
accompanying consolidated financial statements.
The consolidated financial statements and notes thereto for interim periods
included herein have not been audited by independent public accountants. In
the Company's opinion, all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the results of operations
for the interim periods have been made. Results for interim periods are not
necessarily indicative of results for a full year.
Certain amounts in the 1998 statement of operations have been reclassified
to conform with current year presentation.
2. VEHICLE DEPRECIATION AND LEASE CHARGES, NET
Vehicle depreciation and lease charges includes the following
(in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------------- ------------------------
1999 1998 1999 1998
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Depreciation of revenue-earning vehicles, net $ 76,677 $ 74,620 $ 144,572 $ 137,751
Rents paid for vehicles leased 2,222 4,205 3,963 8,023
---------- ---------- ----------- -----------
$ 78,899 $ 78,825 $ 148,535 $ 145,774
========== ========== =========== ===========
</TABLE>
<PAGE>
8
3. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted
earnings per share is based on the combined weighted average number of
common shares and common share equivalents outstanding which include, where
appropriate, the assumed exercise of options. In computing diluted earnings
per share, the Company has utilized the treasury stock method.
The computation of weighted average common and common equivalent shares
used in the calculation of basic and diluted earnings per share ("EPS") is
shown below (in thousands except share and per share data):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 16,988 $ 9,213 $ 22,385 $ 10,035
Basic EPS:
Weighted average common shares 24,127,896 24,127,980 24,126,806 24,088,887
Basic EPS $ 0.70 $ 0.38 $ 0.93 $ 0.42
=========== =========== =========== ===========
Diluted EPS:
Weighted average common shares 24,127,896 24,127,980 24,126,806 24,088,887
Shares contingently issuable:
Stock options 227,406 - 175,678 -
Performance awards 132,912 23,667 133,062 23,667
Director compensation shares deferred 11,429 - 10,132 -
----------- ----------- ----------- -----------
Shares applicable to diluted 24,499,643 24,151,647 24,445,678 24,112,554
----------- ----------- ----------- -----------
Diluted EPS $ 0.69 $ 0.38 $ 0.92 $ 0.42
=========== =========== =========== ===========
</TABLE>
At June 30, 1999, options to purchase 1,153,930 shares of common stock were
outstanding but were not included in the computation of diluted earnings
per share because the options exercise price was greater than the average
market price of the common shares.
<PAGE>
9
4. DEBT AND OTHER OBLIGATIONS
Debt and other obligations as of June 30, 1999 and December 31, 1998
consist of the following (in thousands):
June 30, December 31,
1999 1998
------------- -------------
Vehicle Debt and Obligations:
Asset backed notes, net of discount $ 1,343,155 $ 1,182,998
Commercial paper, net of discount 512,612 79,786
Deferred vehicle rent 21,749 46,906
Other vehicle debt 60,643 3,884
------------- -------------
1,938,159 1,313,574
Other Notes Payable 185 225
------------- -------------
Total debt and other obligations $ 1,938,344 $ 1,313,799
============= =============
5. BUSINESS SEGMENTS
The Company has two reportable segments: Dollar and Thrifty. These
reportable segments are strategic business units that offer different
products and services. They are managed separately based on the fundamental
differences in their operations. The contributions of these segments to
revenues and income before income taxes for the three months and six months
ended June 30, 1999 and 1998 are summarized below (in thousands):
<TABLE>
<CAPTION>
For the Three Months
Ended June 30, 1999 Dollar Thrifty Other Total
- ---------------------------- --------- --------- --------- ----------
<S> <C> <C> <C> <C>
Revenues $ 189,290 $ 69,907 $ 153 $ 259,350
Income before income taxes $ 22,908 $ 7,586 $ - $ 30,494
For the Three Months
Ended June 30, 1998 Dollar Thrifty Other Total
- ---------------------------- --------- --------- --------- ----------
Revenues $ 165,363 $ 61,711 $ 103 $ 227,177
Income before income taxes $ 12,072 $ 5,042 $ - $ 17,114
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
For the Six Months
Ended June 30, 1999 Dollar Thrifty Other Total
- ---------------------------- --------- --------- --------- ----------
<S> <C> <C> <C> <C>
Revenues $ 343,845 $ 126,738 $ 318 $ 470,901
Income before income taxes $ 28,703 $ 12,400 $ - $ 41,103
For the Six Months
Ended June 30, 1998 Dollar Thrifty Other Total
- ---------------------------- --------- --------- -------- ----------
Revenues $ 306,450 $ 111,655 $ 404 $ 418,509
Income before income taxes $ 13,010 $ 7,021 $ - $ 20,031
</TABLE>
6. COMPREHENSIVE INCOME
Comprehensive income is comprised of the following (in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------------- -----------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $ 16,988 $ 9,213 $ 22,385 $ 10,035
Foreign currency translation adjustment 133 (193) 230 (133)
---------- ---------- ---------- ----------
Comprehensive income $ 17,121 $ 9,020 $ 22,615 $ 9,902
========== ========== ========== ==========
</TABLE>
7. CONTINGENCIES
Various claims and legal proceedings have been asserted or instituted
against the Company, including some purporting to be class actions, and
some which demand large monetary damages or other relief which could result
in significant expenditures. Litigation is subject to many uncertainties,
and the outcome of individual matters is not predictable with assurance.
The Company is also subject to potential liability related to environmental
matters. The Company establishes reserves for litigation and environmental
matters when the loss is probable and reasonably estimable. It is
reasonably possible that the final resolution of some of these matters may
require the Company to make expenditures, in excess of established
reserves, over an extended period of time and in a range of amounts that
cannot be reasonably estimated. The term "reasonably possible" is used
herein to mean that the chance of a future transaction or event occurring
is more than remote but less than likely. Although the final resolution of
any such matters could have a material effect on the Company's consolidated
operating results for the particular reporting period in which an
adjustment of the estimated liability is recorded, the Company believes
that any resulting liability should not materially affect its consolidated
financial position.
*******
<PAGE>
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company, Dollar, Thrifty and their respective subsidiaries are
sometimes referred to in this report collectively as the "Group". The majority
of Dollar's revenue is derived from renting vehicles to customers from
company-owned stores, while the majority of Thrifty's revenue is generated from
leasing vehicles and providing services to franchisees.
Results of Operations
The following table sets forth for the three months and six months
ended June 30, 1999 and 1998, the percentage of operating revenues represented
by the items in the Company's consolidated statement of income:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, (a) Ended June 30, (a)
------------------------ ------------------------
(Percentage of Revenues)
1999 1998 1999 1998
----------- ---------- ----------- ----------
Revenues:
<S> <C> <C> <C> <C>
Vehicle rentals 70.8% 70.2% 70.9% 70.4%
Vehicle leasing 22.9% 23.0% 22.7% 22.4%
Fees and services 5.6% 5.7% 5.6% 6.1%
Other 0.7% 1.1% 0.8% 1.1%
----------- ---------- ----------- ----------
Total revenues 100.0% 100.0% 100.0% 100.0%
----------- ---------- ----------- ----------
Costs and expenses:
Direct vehicle and operating 29.2% 29.3% 30.1% 30.8%
Vehicle depreciation and lease charges, net 30.4% 34.7% 31.5% 34.8%
Selling, general and administrative 18.6% 17.9% 19.6% 19.1%
Interest expense, net of interest income 9.5% 10.0% 9.5% 9.9%
Amortization of cost in excess of net
assets acquired 0.5% 0.6% 0.6% 0.6%
----------- ---------- ----------- ----------
Total costs and expenses 88.2% 92.5% 91.3% 95.2%
----------- ---------- ----------- ----------
Income before income taxes 11.8% 7.5% 8.7% 4.8%
Income tax expense 5.2% 3.5% 4.0% 2.4%
----------- ---------- ----------- ----------
Net income 6.6% 4.0% 4.7% 2.4%
=========== ========== =========== ==========
</TABLE>
- ---------------------------------------------------
(a) Certain reclassifications have been made in the 1998 consolidated financial
statements to conform to the classifications used in 1999.
<PAGE>
12
The Company's major sources of revenue are as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- --------------------------
(In Thousands)
1999 1998 1999 1998
----------- ----------- ----------- -----------
Vehicle rental revenue:
<S> <C> <C> <C> <C>
Dollar $ 174,761 $ 151,178 $ 319,071 $ 279,123
Thrifty 8,875 8,191 14,880 15,303
----------- ----------- ----------- -----------
$ 183,636 $ 159,369 $ 333,951 $ 294,426
=========== =========== =========== ===========
Vehicle leasing revenue:
Dollar $ 8,132 $ 8,611 $ 13,701 $ 15,630
Thrifty 51,298 43,661 93,231 78,208
----------- ----------- ----------- -----------
$ 59,430 $ 52,272 $ 106,932 $ 93,838
=========== =========== =========== ===========
</TABLE>
The following table sets forth certain selected operating data of the Company
for the three months and six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------ ------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
Company-Owned Stores Data
(U.S. and Canada)
<S> <C> <C> <C> <C>
Average number of vehicles operated 60,921 54,812 56,283 51,643
Number of rental transactions 951,320 868,839 1,768,898 1,630,897
Average revenue per transaction $ 193 $ 183 $ 189 $ 180
Monthly average revenue per vehicle $ 1,005 $ 969 $ 989 $ 950
Vehicle Leasing Data
(U.S. and Canada)
Average number of vehicles leased 41,323 38,969 37,755 35,847
Monthly average revenue per vehicle $ 479 $ 447 $ 472 $ 436
</TABLE>
<PAGE>
13
Three Months Ended June 30, 1999 Compared with Three Months Ended June 30, 1998
Revenues
Total revenues for the quarter ended June 30, 1999 increased $32.2
million, or 14.2%, to $259.4 million compared to the second quarter of 1998. The
growth in total revenue was due to an increase in vehicle rental revenue of
15.2% and an increase in vehicle leasing revenue of 13.7% over the second
quarter of 1998.
The Group's vehicle rental revenue for the second quarter of 1999 was
$183.6 million, a $24.3 million increase (a $23.6 million increase for Dollar
and a $0.7 million increase at Thrifty) from the second quarter of 1998. The
growth in vehicle rental revenue at Dollar was the result of an increase of 9.3%
in transactions combined with a 5.9% increase in revenue per transaction. The
vehicle rental revenue growth at Dollar that related to the acquisition of
franchise operations was $4.3 million, which represented 18.2% of Dollar's total
vehicle rental revenue growth in the second quarter.
Vehicle leasing revenue for the second quarter of 1999 was $59.4
million, a $7.2 million increase from the second quarter of 1998. This higher
revenue reflects an increase of $7.6 million, or 17.5%, in Thrifty's leasing
revenue primarily due to a 9.8% increase in the average number of vehicles
leased to franchisees along with a 7.2% increase in the vehicle leasing rates
partially due to a change in vehicle mix.
Expenses
Total expenses increased 8.9% from $210.1 million in the second quarter
of 1998 to $228.9 million in the second quarter of 1999. This increase was due
primarily to a $13.1 million, or 8.5% increase at Dollar and a $5.7 million, or
10.0% increase at Thrifty. Total expenses as a percentage of revenue declined to
88.2% in 1999 from 92.5% in 1998.
Direct and vehicle operating expenses for the second quarter of 1999
increased $9.2 million, or 13.8%, over the 1998 second quarter, comprised of a
$7.1 million increase at Dollar and a $2.1 million increase at Thrifty. The
overall increase at Dollar was due to higher airport concession rents, personnel
and vehicle operating costs partially offset by lower insurance costs. The
increase at Thrifty was due primarily to higher lease program costs.
Net vehicle depreciation expense and lease charges increased slightly,
0.1%, in the second quarter of 1999 as compared to the second quarter of 1998.
Net vehicle depreciation expense increased $2.1 million, or 2.8%, due to a 12.7%
increase in depreciable fleet (14.5% at Dollar and 9.9% at Thrifty), offset by
$9.3 million in net vehicle gains on the disposal of non-program vehicles during
the second quarter of 1999. Lease charges, for vehicles leased from third
parties, declined $2.0 million due to fewer vehicles leased in the second
quarter of 1999.
Selling, general and administrative expenses of $48.2 million for the
second quarter of 1999 increased 18.4% from $40.7 million in the second quarter
of 1998, comprised of a $5.1 million increase at Dollar and a $2.4 million
increase at Thrifty. This increase was due primarily to Year 2000 remediation
costs, costs incurred with the start-up of Thrifty Car Sales, and other
personnel related costs.
Net interest expense increased $2.0 million, or 8.8% to $24.7 million
in the second quarter of 1999 primarily due to higher average vehicle debt
levels partially offset by a decrease in vehicle interest rates.
<PAGE>
14
The effective tax rate for the second quarter of 1999 was 44.3%. This
tax rate differs from the U.S. statutory rate due primarily to non-deductible
amortization costs in excess of net assets acquired, state and local taxes and
losses relating to Thrifty's Canadian subsidiary for which no benefit was
recorded. The improvement in the effective rate as compared to the second
quarter of 1998 was due to higher U.S. pre-tax income and improved results in
Canada in the second quarter of 1999.
Interim reporting requirements for applying separate, annual effective
income tax rates to U.S. and Canadian operations, combined with the seasonal
impact of Canadian operations, will cause significant variations in the
Company's quarterly consolidated effective income tax rates.
Operating Results
Income before income taxes increased $13.4 million, or 78.2% to $30.5
million for the second quarter of 1999. This growth was due to a $10.8 million
increase at Dollar and a $2.6 million increase at Thrifty.
Six Months Ended June 30, 1999 Compared with Six Months Ended June 30, 1998
Revenues
Total revenues for the six months ended June 30, 1999 increased $52.4
million, or 12.5%, to $470.9 million compared to the six months ended June 30,
1998. The growth in total revenue was due to an increase in vehicle rental
revenue of 13.4% and an increase in vehicle leasing revenue of 14.0% over the
first half of 1998. Vehicle rental revenue and vehicle leasing revenue were
impacted by the re-franchising of company-owned stores at Thrifty and by
franchise acquisitions at Dollar.
The Group's vehicle rental revenue for the first half of 1999 was
$334.0 million, a $39.5 million increase from the first half of 1998. This
higher revenue was due primarily to a $40.0 million increase for Dollar offset
by a $0.5 million decline at Thrifty. The growth in vehicle rental revenue at
Dollar was the result of a 9.2% increase in transactions combined with a 4.9%
increase in revenue per transaction. The rental revenue growth at Dollar that
related to the acquisition of franchise operations was $11.7 million, which
represented 29% of Dollar's total vehicle rental revenue growth in the first
half of 1999. The decline at Thrifty was due to the re-franchising of
company-owned stores in 1998.
Vehicle leasing revenue for the first half of 1999 was $106.9 million,
a $13.1 million increase (a $15.0 million increase at Thrifty and a $1.9 million
decline at Dollar) from the first half of 1998. The higher revenue at Thrifty is
primarily due to a 10.1% increase in the average number of vehicles leased to
franchisees along with a 8.3% increase in the vehicle leasing rates partially
due to a change in vehicle mix. Dollar's vehicle leasing revenue declined due to
a decrease in the average number of vehicles leased to franchisees as a result
of the acquisition of franchised locations during the second half 1998 partially
offset by an increase in lease rates.
Expenses
Total expenses increased 7.9% from $398.5 million in the first half of
1998 to $429.8 million in the first half of 1999. This increase was due
primarily to a $21.7 million, or 7.4% increase at Dollar and a $9.7 million, or
9.3% increase at Thrifty. Total expenses as a percentage of revenue declined to
91.3% in 1999 from 95.2% in 1998.
<PAGE>
15
Direct and vehicle operating expenses for the first half of 1999
increased $12.9 million, or 10.0%, compared to the first half of 1998, comprised
of an $11.1 million increase at Dollar and a $1.8 million increase at Thrifty.
The overall increase at Dollar was due to higher airport concession rents,
personnel and other vehicle operating costs partially offset by lower insurance
costs. The increase at Thrifty was due primarily to higher lease program costs.
Net vehicle depreciation expense and lease charges increased $2.8
million or 1.9% for the first half of 1999 as compared to the first half of
1998, consisting of a $0.9 million increase at Dollar and a $1.9 million
increase at Thrifty. Net vehicle depreciation expense increased $6.8 million, or
5.0%, due to a 10.2% increase in depreciable fleet (11.7% at Dollar and 8.0% at
Thrifty) partially offset by $12.2 million in net vehicle gains on the disposal
of non-program vehicles during the first half of 1999. Lease charges, for
vehicles leased from third parties, declined $4.0 million due to fewer vehicles
leased in the second quarter of 1999.
Selling, general and administrative expenses of $92.2 million for 1999
increased 15.3% from $80.0 million in 1998, comprised of a $6.7 million increase
at Dollar and a $5.5 million increase at Thrifty. This increase was due
primarily to Year 2000 remediation costs, costs incurred with the start-up of
Thrifty Car Sales, and other personnel related costs.
Net interest expense increased $3.2 million, or 7.8% to $44.5 million
in the first half of 1999 primarily due to higher average vehicle debt levels
partially offset by a decrease in vehicle interest rates.
The effective tax rate for the first half of 1999 was 45.5%. This rate
differs from the U.S. statutory rate due primarily to non-deductible
amortization costs in excess of net assets acquired, state and local taxes and
losses relating to Thrifty's Canadian subsidiary for which no benefit was
recorded. The improvement in the effective rate as compared to first half 1998
was due to higher U.S. pre-tax income and improved results in Canada in the
first half of 1999.
Operating Results
The Group had income before income taxes of $41.1 million for the six
months ended June 30, 1999 as compared to $20.0 million for the six months ended
June 30, 1998, a 105.2% increase. This growth was due to a $15.7 million
increase at Dollar and a $5.4 million increase at Thrifty.
Seasonality
The vehicle rental operation is a seasonal business and is impacted by
the leisure travel segment. The third quarter, which includes the peak summer
travel months, has historically been the strongest quarter of the year. During
the peak season, the Group increases its rental fleet and workforce to
accommodate increased rental activity. As a result, any occurrence that disrupts
travel patterns during the summer period could have a material adverse effect on
the annual performance of the Company. The first and fourth quarters for the
Group's rental operations are generally the weakest, when there is limited
leisure travel and a greater potential for adverse weather conditions. Many of
the operating expenses such as rent, general insurance and administrative
personnel are fixed and cannot be reduced during periods of decreased rental
demand.
Liquidity and Capital Resources
Cash provided by operating activities and its financing arrangements
fund the Group's U.S. and Canadian operations. The Group's primary use of funds
is for the acquisition of revenue-earning vehicles. For the six month period
ended June 30, 1999, the Group's expenditures for revenue-earning vehicles were
$1.6 billion ($1.0 billion at Dollar and $600 million at Thrifty) which were
partially offset by $784 million ($481 million at Dollar and $303 million at
Thrifty) in proceeds from the sale of used vehicles.
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16
The amount of cash used to purchase vehicles, net of proceeds from the
sale of used vehicles, was $816 million. This cash requirement was met by
increasing vehicle debt $625 million, utilizing restricted cash of $31.3 million
and from cash provided by operating activities. The Group's need for cash to
finance vehicles is highly seasonal and typically peaks in the second and third
quarters of the year when fleet levels build up to meet seasonal rental demand.
Fleet levels are lowest in the fourth quarter when rental demand is at a
seasonal low. The Company expects to continue to fund its revenue-earning
vehicles with secured financing.
The Group also requires cash for non-vehicle capital expenditures.
These expenditures totaled $8.7 million for the six months ended June 30, 1999.
These expenditures are financed with cash provided from operations.
The Group has significant requirements for bonds and letters of credit
to support its insurance programs and airport concession obligations. At June
30, 1999, the insurance companies had issued approximately $79.4 million in
bonds to secure these obligations.
Asset Backed Notes
The asset backed note program at June 30, 1999 was comprised of $1.34
billion in asset backed notes with maturities ranging from 2000 to 2005.
Borrowings under the asset backed notes are secured by eligible vehicle
collateral and bear interest at fixed rates on $1,306.6 million ranging from
5.90% to 7.10% and floating rates on $37.4 million ranging from LIBOR plus .95%
to LIBOR plus 1.25%. Proceeds from the asset backed notes that are temporarily
unutilized for financing vehicles and certain related receivables are maintained
in restricted cash and investment accounts, which were approximately $27.5
million at June 30, 1999.
Commercial Paper Program and Liquidity Facility
The Company has a commercial paper program of up to $640 million and a
364 day, $575 million liquidity facility to support the commercial paper
program. Borrowings under the commercial paper program are secured by eligible
vehicle collateral and bear interest based on market-dictated commercial paper
rates. At June 30, 1999, the Group had $512.6 million in commercial paper
outstanding under its commercial paper program. The commercial paper program and
the liquidity facility are renewable annually.
Other Vehicle Debt
Thrifty has financed its Canadian vehicle fleet under a lease agreement
with an unrelated auto leasing trust providing for CND$125 million
(approximately US$85 million at June 30, 1999) of funding, which is supported by
underlying bank financing that is required to be renewed annually. On February
18, 1999, Thrifty established new arrangements for its Canadian vehicle
financing through a five-year fleet securitization program. Under this program,
Thrifty can borrow up to CND$150 million (approximately US$102 million at June
30, 1999) funded through a bank commercial paper conduit. The previous facility
is being phased out as the vehicles financed thereunder are taken out of
service. At June 30, 1999, the Company had $62.2 million outstanding under these
programs.
On May 20, 1999, Ford Motor Credit Company extended a $102 million
revolving line of credit to the Group to purchase revenue-earning vehicles. The
line of credit is secured by the vehicles purchased. This credit facility has a
one-year term and is renewable for successive one-year terms by mutual
agreement.
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17
Revolving Credit Facility
The Company has a $215 million five-year, senior secured, revolving
credit facility (the "Revolving Credit Facility") that expires December 2002.
The Revolving Credit Facility is used to provide letters of credit with a
sublimit of $190 million and cash for operating activities with a sublimit of
$70 million. The Group had letters of credit outstanding under the Revolving
Credit Facility of approximately $73.1 million and no working capital borrowings
at June 30, 1999.
DaimlerChrysler Credit Support
In connection with the Company's separation from DaimlerChrysler
Corporation ("DaimlerChrysler") and completion of the Company's initial public
offering, in December 1997, DaimlerChrysler provided $28.6 million credit
support for the Group's vehicle fleet financing in the form of a letter of
credit facility. The letter of credit amount will decline annually over five
years beginning September 30, 1999, by the greater of $5.7 million or 50% of the
Group's excess cash flow. The Company may need to replace reductions in the
letter of credit amount with cash from operations or with borrowings or letters
of credit under the Revolving Credit Facility. To secure reimbursement
obligations under the DaimlerChrysler credit support agreement, DaimlerChrysler
has liens and security interests on certain assets of the Group.
Year 2000
Introduction
The Year 2000 issue ("Y2K") relates to potential problems with computer
systems or any equipment employing technology that uses dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any date
recording mechanism within the computer system, including date sensitive
software, which uses only two digits to represent the year may recognize a date
using 00 as the year 1900 rather than the year 2000. If this occurs, it could
cause system failures or miscalculations resulting in disruption of operations.
The Group's management recognizes the importance of ensuring that its
operations and material relationships with third parties will not be negatively
affected by interruptions caused from failure to be Y2K compliant. The Group has
formed committees to address Y2K compliance of its separate operating entities.
State of Readiness
A formalized project began in 1997, in which the Group identified
mission-critical areas of information technology ("IT") for Y2K compliance
review. Hardware, software applications and other technologies, which in the
event of a failure would have a material adverse impact on the Group's business,
financial condition, or results of operations, are considered mission-critical.
These include fleet systems, reservation systems, counter systems, revenue
management systems, and financial systems.
The Group is using a five-phase process to review each of its systems,
which includes awareness, assessment, renovation, validation, and
implementation. During the awareness phase, the Company inventoried each system
to identify the components that require modification to become Y2K compliant.
Once identified, each component was assessed for its risk of failure and the
impact of potential failure to the Company's operations. During the next phase,
renovation, each system component is either modified or replaced in order to
meet Y2K requirements. Each system is then validated by installing it in a
separate testing environment that will simulate the Year 2000 and test for
compliance. Once the results of the validation phase verify that the date change
does not cause operational problems, the system is moved to the final phase of
implementation, at which time it is considered to be Y2K compliant and returned
to normal operation.
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18
The Group has completed the awareness and assessment phases and is
currently in the renovation, validation and implementation phases of its
mission-critical IT systems. These phases are expected to be completed in the
third quarter of 1999. With regard to non-IT systems such as phone systems,
security systems, and elevator operations, the Group is currently in the
renovation and validation phases. All mission-critical systems that are not
already Y2K compliant will be modified, upgraded or replaced and are anticipated
to be compliant no later than September 30, 1999.
During the first quarter of 1998, the Group began sending inquiries to
third parties with whom it transacts significant business requesting assurances
of Y2K compliance. The Group continues to make additional inquiries to third
parties seeking Y2K assurances as well as collecting responses, discussing
concerns, and sending follow-up inquiries requesting status of remediation
plans. Dollar and Thrifty have also been advising their independent franchisees
of the need to conduct their own Y2K assessments.
Costs
The Group's costs to remediate Y2K issues are projected to total $7.0
million. Of this total, $5.3 million has been incurred as of June 30, 1999 and
$1.7 million is expected to be incurred during the remainder of 1999. Certain IT
projects to enhance systems and improve operating efficiencies are being delayed
due to Y2K compliance efforts. The Group's Y2K costs for 1999 represent
approximately 15% of the total annual IT budget and is being funded through its
internal cash flow.
Risks
Like many organizations, the Group relies on third parties such as
telecommunication companies, airlines, vehicle manufacturers, travel agents,
credit card processors, banks, utilities, and also its independent franchisees.
The Group recognizes that failure to resolve Y2K issues could result in
disruptions in operations. In the worst case, non-compliance by the Group
regarding Y2K issues may result in significant interruptions in business flow
including failure to process rental transactions efficiently and inability to
invoice or process payments. Third party failures may result in additional
business interruptions such as airline, FAA, travel agent, and tour company
failures causing reduction of travel and tourism revenues, telecommunication
failures resulting in inability to process reservations and service clientele,
and vehicle manufacturer or vehicle delivery source failures causing shortages
of vehicles. Failure of independent franchisees to be Y2K compliant could result
in disruptions in the Dollar and Thrifty vehicle rental systems, and potentially
affect fees and vehicle leasing revenues received from these independent
parties. Accordingly, third party Y2K failures could significantly limit the
Group's revenue-earning potential and result in a material adverse effect on the
Group's business, financial condition, and results of operations.
Contingency Plans
The Group is in the process of developing basic contingency plans to
cover all mission-critical processes that could result in a material adverse
impact on the Group's operations. The Group plans to continually refine these
plans as more information becomes available from third parties and through
completion of the validation phase of the Group's remediation plan. The Group
intends to have a formalized contingency plan in place no later than the third
quarter of 1999.
Management believes that the Group is taking adequate actions to
remediate all of its mission-critical IT and its non-IT systems. Nevertheless,
since it is impossible to anticipate all future outcomes, especially when third
parties are involved, there can be no assurance that the Group will not
experience disruptions in operations that could materially and adversely affect
the Group's business, results of operations, and financial condition.
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19
New Accounting Standards
Effective January 1, 1999, the Company adopted Statement of Position
("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." This SOP provides guidance on accounting for the
costs of computer software developed or obtained for internal use and requires
that entities capitalize certain internal-use software costs once certain
criteria are met. The adoption of SOP 98-1 did not have a material impact on the
consolidated financial statements.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that all derivatives be
recognized as either assets or liabilities in the statement of financial
position and be measured at fair valueDuring 1999, the Financial Accounting
Standards Board delayed the effective date of SFAS No. 133 for one year to
fiscal years beginning after June 15, 2000. SFAS No. 133 is effective for the
Company beginning January 1, 2001. The Company plans to adopt the standard when
required.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following information about the Group's market sensitive financial
instruments constitutes a "forward-looking" statement. The Group's primary
market risk exposure is changing interest rates, primarily in the United States.
The Group's policy is to manage interest rates through use of a combination of
fixed and floating rate debt. A portion of the Group's borrowings are
denominated in Canadian dollars which exposes the Group to market risk
associated with exchange rate fluctuations. The Group has entered into no
hedging or derivative transactions. All items described are non-trading and are
stated in U.S. Dollars.
Reference is made to the Group's quantitative disclosures about market
risk as of December 31, 1998 included under Item 7A. of the Company's most
recent Form 10-K/A.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 2, 1997, a purported class action suit was filed in the
Circuit Court of Coosa County, Alabama, against Dollar, Thrifty and other car
rental companies. The plaintiffs in this suit alleged violations of state law in
connection with the sale by the car rental companies of certain insurance
products. Dollar and Thrifty have filed answers denying the alleged violations.
The case has been removed to the U.S. District Court for the Middle District of
Alabama. Plaintiffs filed an amended complaint on February 16, 1998, dropping
their fraud allegations, but adding a claim for a refund of the amounts paid for
insurance. Dollar, Thrifty and other car rental companies filed a motion to
dismiss the conspiracy claim portion of the suit, which dismissal was granted.
On April 10, 1999, the Court dismissed the case in its entirety with prejudice.
Plaintiffs failed to file an appeal within the time period allowed.
In addition to the foregoing, various legal actions, claims and
governmental inquiries and proceedings are pending or may be instituted or
asserted in the future against the Company and its subsidiaries. Litigation is
subject to many uncertainties, and the outcome of the individual litigated
matters is not predictable with assurance. It is possible that certain of the
actions, claims, inquiries or proceedings, including those discussed above,
could be decided unfavorably to the Company or the subsidiaries involved.
Although the amount of liability with respect to these matters cannot be
ascertained, potential liability is not expected to materially affect the
consolidated financial position or results of operations of the Company.
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20
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On July 22, 1999, the Board of Directors amended the Bylaws of the
Company to lengthen the annual meeting advance notice requirement for
stockholder proposals and for stockholder nominations for director. The Bylaws
previously provided such notice must be given not less than 60 nor more than 90
days prior to the meeting, and now provide that timely notice must be given not
less than 90 nor more than 120 days prior to the meeting.
The Board of Directors believes the requirement of advance notice will
give the Board the time needed to consider the proposed business or candidates,
to inform the Company stockholders, and, if appropriate, to give stockholders
the benefit of the Board's recommendations. The effect of this amendment is to
require stockholders be prepared at an earlier date to properly make proposals
or director nominations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
[a] On May 27, 1999, the 1999 Annual Meeting of Stockholders of the Company
was held. Proxies for the meeting were solicited pursuant to Section
14(a) of the Securities Exchange Act of 1934 and there was no
solicitation in opposition to management's director nominees.
[b] The Company's stockholders elected Joseph E. Cappy, Donald M.Himelfarb,
Gary L. Paxton, Thomas P. Capo, Edward L. Hogan, Edward C. Lumley,
John C. Pope, John P. Tierney and Edward L. Wax to serve as directors
of the Company until the next Annual Meeting of Stockholders or until
their successors have been duly elected.
[c] The votes cast by the Company's stockholders by proxy or in person for
the election of directors listed in paragraph (b), as determined by the
final report of the inspectors, are set forth below:
NUMBER OF VOTES
--------------------------------------
NOMINEE FOR WITHHELD
--------------------- ------------------ ---------------
Joseph E. Cappy 19,245,453 202,838
Donald M. Himelfarb 19,244,353 203,938
Gary L. Paxton 19,244,253 204,038
Thomas P. Capo 19,244,353 203,938
Edward J. Hogan 19,277,553 170,738
Edward C. Lumley 19,254,153 194,138
John C. Pope 19,264,303 183,988
John P. Tierney 19,243,953 204,338
Edward L. Wax 19,276,853 171,438
The Company's stockholders voted on the following proposals:
Proposal 1 - Election of Directors. See paragraphs (b) and (c) above.
Proposal 2 - Appointment of Deloitte & Touche LLP as Auditors for the 1999 year.
A proposal to appoint Deloitte & Touche LLP as independent public accountants to
audit the books of account and other corporate records of the Company for 1999
was adopted, with 19,241,741 votes cast for, 202,300 votes cast against and
4,250 votes abstained.
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21
ITEM 5. OTHER INFORMATION
The Company has established the date for its next Annual Meeting of
Stockholders which will be held on May 18, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
[a] Index of Exhibits
Exhibit 3.2 Bylaws of the Company, as amended, which
became effective July 22, 1999
Exhibit 27.1 Financial Data Schedule (EDGAR version only)
[b] Reports on Form 8-K
On May 18, 1999 a report on Form 8-K was filed by the Company
to report the renewal of the Commercial Paper Program and the Liquidity
Facility on March 4, 1999 and the issuance of $250 million in asset
backed notes on April 29, 1999.
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22
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, in the City of Tulsa, Oklahoma, on
August 12, 1999.
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
By: /s/ JOSEPH E. CAPPY
---------------------------------------------
Name: Joseph E. Cappy
Title: President and Principal Executive Officer
By: /s/ STEVEN B. HILDEBRAND
---------------------------------------------
Name: Steven B. Hildebrand
Title: Vice President, Principal Financial Officer
and Principal Accounting Officer
Revised as of July 22, 1999 EXHIBIT 3.2
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meetings. An annual meeting of stockholders
shall be held to elect directors and transact any other business properly
brought before the meeting. The Board of Directors shall designate the date,
time and place of the meeting.
Section 2. Special Meetings. Special meetings of stockholders
may be called by the Board of Directors, the Chairman of the Board, or a Vice
Chairman of the Board for any proper purpose or purposes. The Board of Directors
or the officer calling the meeting shall designate the date, time and place of
the meeting. Only the business stated in the meeting notice shall be conducted
at a special meeting.
Section 3. Notice of Meeting. The Secretary shall give written
notice of an annual or special meeting to stockholders of record entitled to
vote at the meeting. The notice shall be directed to the stockholder's address
as it appears on the Corporation's records and shall state the date, time and
place of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Unless otherwise provided by law, the
notice shall be given not less than ten nor more than sixty days before the date
of the meeting.
When a meeting of stockholders is adjourned to another date,
time or place, notice need not be given of the adjourned meeting if the date,
time and place thereof are announced at the meeting at which the adjournment is
taken; provided, however, that if the adjournment is for more than thirty days
or if, after the adjournment, a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. At the adjourned meeting any business
may be transacted which may have been transacted at the original meeting.
Section 4. Quorum. The holders of a majority of the shares of
capital stock issued and outstanding and entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless a larger number shall be required by law, the Certificate of
Incorporation or these By-Laws. In the absence of a quorum, the holders of a
majority of the shares so present may adjourn the meeting from time to time as
provided in Section 3 of this Article, until a quorum is obtained.
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Section 5. Qualifications to Vote. Only stockholders whose
shares are registered in their names on the Corporation's stock transfer records
at the close of business on the record date fixed in accordance with Article V
of these By-Laws for a stockholders meeting shall be entitled to vote at such
meeting. The Secretary shall prepare at least ten days before every meeting of
stockholders a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
The list shall be available for inspection by stockholders during ordinary
business hours, for any purpose germane to the meeting, for at least ten days
before the meeting. The list shall be available at the meeting site or at
another place within the city where the meeting is to be held, which place shall
be specified in the notice of the meeting. The list shall be available for
inspection at the meeting site during the meeting.
Section 6. Organization. The Chairman of the Board or, in his
absence, a Vice Chairman of the Board shall preside over stockholder meetings.
In the absence of those individuals, the stockholders present at the meeting
shall elect a person to preside as chairman of the meeting. The Secretary of the
Corporation shall act as secretary of all meetings of stockholders. In the
absence of the Secretary, the chairman of the meeting may appoint any person to
act as secretary of the meeting.
Section 7. Voting. Except as otherwise provided by law or the
Certificate of Incorporation, a stockholder entitled to vote at a meeting of
stockholders shall be entitled to one vote for each share of stock registered in
the stockholder's name on the Corporation's stock transfer records at the close
of business on the record date established for the meeting. Directors shall be
elected by a plurality of the votes cast at the meeting. Unless otherwise
provided by law, the Certificate of Incorporation or these By-Laws, any other
matter shall be decided by the affirmative vote of the holders of a majority of
the total number of shares of stock present in person or represented by proxy
and entitled to vote on such matter. The vote for Directors and, upon the demand
of any stockholder, the vote upon any other matter before the meeting, shall be
by ballot. No proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
Section 8. Inspectors. At each meeting of stockholders, the
polls shall be opened and closed, the proxies and ballots shall be received and
taken in charge, and all questions touching the qualifications of voters, the
validity of proxies and the acceptance or rejection of votes shall be decided by
two or more Inspectors. Such Inspectors shall be appointed by the Board of
Directors before the meeting or, if no such appointment shall have been made,
then by the presiding officer at the meeting. If, for any reason, any of the
Inspectors previously appointed shall fail to attend, or refuse or be unable to
serve, Inspectors in place of any so failing to attend, or refusing or unable to
attend, shall be appointed in like manner.
Section 9. Procedures Governing Business of Meetings of
Stockholders. At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the
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Board of Directors, (b) otherwise properly brought before the meeting by or at
the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary. To be timely, a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Corporation not less than ninety (90) nor more than one hundred twenty
(120) days prior to the meeting; provided, however, that in the event that not
less than one hundred (100) days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in these By-Laws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 9. The Chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting in accordance with the
provisions of this Section 9, and if he should so determine, the Chairman shall
so declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
Section 10. Notice of Stockholder Nominations. Only persons
who are nominated in accordance with the procedures set forth in this Section 10
shall be eligible for election as Directors by the stockholders. Nominations of
persons for election to the Board of Directors of the Corporation may be made at
a meeting of stockholders by or at the direction of the Board of Directors or by
any stockholder of the Corporation entitled to vote for the election of
Directors at the meeting who complies with the notice procedures set forth in
this Section 10. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than ninety (90) nor more than one hundred twenty (120) days prior to the
meeting; provided, however, that in the event that not less than one hundred
(100) days notice or prior public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made. In no event shall the public announcement of an
adjournment of an annual meeting commence a new time period for the giving of a
stockholder's notice as described above. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a Director, (i) the name, age, business address and
residence address of such person, (ii) the principal occupation or
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employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a Director if
elected); and (b) as to the stockholder giving the notice (i) the name and
address, as they appear on the Corporation's books, of such stockholder and (ii)
the class and number of shares of the Corporation which are beneficially owned
by such stockholder. At the request of the Board of Directors any person
nominated by the Board of Directors for election as a Director shall furnish to
the Secretary, that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a Director of the Corporation unless nominated in accordance
with the procedures set forth in this Section 10. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by these
ByLaws, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.
Section 11. Action by Consent. (a) Unless otherwise provided
in the Certificate of Incorporation, any action which is required to be or may
be taken at any annual or special meeting of stockholders of the Corporation,
subject to the provisions of subsections (b), (c), (d) and (e) of this Section
11, may be taken without a meeting, without prior notice and without a vote, if
a consent or consents in writing, setting forth the action so taken, shall have
been signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or to take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation as provided in this Section 11. Prompt
notice of the taking of the corporate action without a meeting and by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated written consent received by the Corporation in accordance
with this Section 11, a written consent or consents signed by a sufficient
number of holders to take such action are delivered to the Corporation in the
manner prescribed in this Section 11.
(c) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors shall fix a record date. Any stockholder of
record seeking to have the stockholders authorize or take corporate action by
written consent without a meeting shall, by written notice to the Secretary,
request the Board of Directors to fix a record date. Upon receipt of such a
request, the Secretary shall, as promptly as practicable, call a special meeting
of the Board of Directors to be held as promptly as practicable, but in any
event not more than 10 days following the date of receipt of such a request. At
such meeting, the Board of Directors shall fix a record date, which record date
shall not precede the date upon which
-4-
<PAGE>
the resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than 10 days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. Notice
of the record date shall be published in accordance with the rules and policies
of the principal stock exchange in the United States on which securities of the
Corporation are then listed. If no record date has been so fixed by the Board of
Directors pursuant to this Section 11 or otherwise within 10 days of the date on
which such a request is received, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by the Delaware General
Corporation Law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation pursuant to this Section 11. If no record date has been fixed by the
Board of Directors following observance of the procedures described in this
Section 11 and prior action by the Board of Directors is required by the
Delaware General Corporation Law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
(d) In the event of the delivery to the Corporation of a
written consent or consents, in the manner provided in this Section 11,
purporting to represent the requisite voting power to authorize or take
corporate action and/or related revocations, the Secretary shall provide for the
safekeeping of such consents and revocations and shall as promptly as
practicable, engage nationally recognized independent Inspectors for the purpose
of promptly performing a ministerial review of the validity of the consents and
revocations. No action by written consent without a meeting shall be effective
until such Inspectors have completed their review, determined that the requisite
number of valid and unrevoked consents delivered to the Corporation in
accordance with this Section 11 has been obtained to authorize or take the
action specified in the consents, and certified such determination for entry in
the records of the Corporation kept for the purpose of recording the proceedings
of meetings of stockholders. Nothing contained in this Section 11 shall in any
way be construed to suggest or imply that the Board of Directors or any
stockholder shall not be entitled to contest the validity of any consent or
revocation thereof, whether before or after such certification by the
independent Inspectors, or to take any other action (including, without
limitation, the commencement, prosecution, or defense of any litigation with
respect thereto, and the seeking of injunctive relief in such litigation).
(e) For purposes of this Section 11, delivery to the
Corporation shall be effected by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
ARTICLE II
BOARD OF DIRECTORS
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<PAGE>
Section 1. Number and Term of Office. The number of Directors
shall be fixed from time to time by the Board of Directors by resolution and the
number so fixed shall constitute the whole Board of Directors. Directors need
not be stockholders. Except as otherwise provided in the Certificate of
Incorporation or these By-Laws, Directors shall be elected by ballot at the
annual meeting of stockholders and shall continue in office until the next
annual meeting and until their successors shall have been elected and shall
qualify. If the Board of Directors increases the number of Directors at any time
or from time to time, the additional offices so created may be filled as
vacancies by affirmative vote of a majority of the Directors in office at the
time such increase becomes effective. The Directors elected to such additional
offices shall serve until the next annual meeting of stockholders and until
their successors have been elected and shall qualify.
Section 2. Removal and Vacancies. The stockholders may, at any
special meeting the notice of which shall state that it is called for that
purpose, remove any Director and fill the vacancy. Any vacancy not caused by
such removal, and any vacancy caused by such removal and not filled by the
stockholders at the meeting at which such removal shall have been made, may be
filled by the affirmative vote of a majority of the Directors in office,
although less than a quorum, when such vote is taken. The Director elected to
fill the vacancy shall serve until the next annual meeting of stockholders and
until his successor has been elected and shall qualify.
Section 3. Meetings and Consents in Lieu of Meetings. Meetings
of the Board of Directors shall be held on such dates, at such times and at such
places within or without the State of Delaware as the Board by resolution may
from time to time determine or as called by or at the order of the Chairman of
the Board or a Vice Chairman of the Board or by one-third of the Directors then
in office. The Secretary shall give notice of the date, time and place of each
meeting by mailing the same at least two days before the meeting, to each
Director, but such notice may be waived by any Director. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if each of the Directors consents thereto in writing and the
writing or writings are filed with the minutes of proceedings of the Board.
Section 4. Quorum. One-third of the whole Board of Directors
shall constitute a quorum for the transaction of business and the vote of a
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board. If at any meeting of the Board there be less than
a quorum present, a majority of those present may adjourn the meeting from time
to time without notice other than announcement at the meeting, until a quorum
shall be obtained. All Directors present at any meeting of the Board may be
counted in determining the presence of a quorum for all purposes and for all
matters before the meeting regardless of the interest a Director may have in any
matter brought before the meeting.
Section 5. Organization. At all meetings of the Board of
Directors, the Chairman of the Board or, in his absence, a Vice Chairman of the
Board shall preside. In the absence of the Chairman of the Board and a Vice
Chairman of the Board, the Directors present shall appoint a Chairman of the
meeting.
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<PAGE>
Section 6. Compensation of Directors. Each Director not an
officer or an employee of the Corporation shall be entitled to receive such
compensation for his services as a director as the Board of Directors by
resolution may from time to time determine. Each Director, whether or not an
officer or employee of the Corporation, shall be entitled to reimbursement for
all expenses incurred by him in attending any meeting of the Board of Directors.
Such compensation and reimbursement for expenses shall be payable even though
the meeting is adjourned because of the absence of a quorum.
Section 7. Independent Directors. (a) A majority of the
persons nominated by the Board of Directors or any stockholder for election as
Directors at the annual meeting or any special meeting of stockholders of the
Corporation shall be, on the earlier of the date of their nomination or
designation as nominees, eligible to be classified as Independent Directors.
(b) If the Board of Directors acts to increase the number of
Directors pursuant to Section 1 of this Article or to fill vacancies pursuant to
Section 2 of this Article, the majority of all Directors holding office
immediately after such action shall have been eligible to be classified as
Independent Directors on the earlier of the date of their nomination or
designation as nominees for election as Directors.
(c) For purposes of this Section 7, "Independent Director"
shall mean a Director who is not:
(i) an officer or senior executive employee of the
Corporation (which, for purposes of this Section 7, shall include all
corporations a majority of the voting stock of which is owned, directly or
indirectly, by the Corporation) and who has not been an officer or senior
executive employee of the Corporation within five years preceding the date of
such person's nomination;
(ii) affiliated with any entity having a business
relationship with the Corporation so as to require description of such
relationship pursuant to 17 CFR 229.404(b)(1)(2)(4) or (5), as in effect on June
10, 1993, in any proxy statement utilized to solicit proxies for the election of
Directors at the annual meeting or any special meeting of stockholders of the
Corporation;
(iii) a party or related to a party to a personal services
contract with the Corporation so as to require description of such contract
pursuant to 17 CFR 229.404(a), as in effect on June 10, 1993, in any proxy
statement utilized to solicit proxies for the election of Directors at the
annual meeting or any special meeting of stockholders of the Corporation;
(iv) affiliated, as contemplated by the Securities
Exchange Act of 1934, as amended, with a tax-exempt entity that, during the
Corporation's last fiscal year, received contributions from the Corporation in
excess of the lesser of either three percent of the consolidated gross revenues
of the Corporation during its last fiscal year or five percent of the total
contributions received by such tax-exempt entity during its last fiscal year; or
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<PAGE>
(v) the spouse, parent, sibling or child of any person
who, if such person is or were to become a Director, would not qualify as an
Independent Director under (i), (ii) or (iv) above; and who is free of any other
relationship which would, in the opinion of the Board of Directors, interfere
with the exercise of independent judgment by such Director.
(d) The Board of Directors shall have the exclusive right,
power and authority to interpret and apply the provisions of this Section 7 and,
in interpreting and applying these provisions, the Board of Directors shall be
entitled to rely on the completeness and accuracy of information furnished by or
on behalf of any nominee for the purpose of enabling the Board of Directors to
make such interpretations and applications. Any such interpretations and
applications made in good faith shall be binding and conclusive upon all
stockholders of the Corporation.
ARTICLE III
COMMITTEES
Section 1. Committees. The Board of Directors, by a resolution
passed by a majority of the whole Board, may create from time to time one or
more committees to be constituted in such manner and to have such organization
and powers as the Board of Directors in such resolution shall provide. All of
the members of any such committee having any of the powers of the Board of
Directors shall be Directors, and the members of any such committee not having
any of the powers of the Board of Directors need not be Directors.
Section 2. Alternate Members. The Board of Directors, by a
resolution passed by a majority of the whole Board, may designate alternate
members of any committee who shall possess the same qualifications for
eligibility as regular members and who may replace any absent or disqualified
member at any meeting of the committee in the order, if any, designated in the
resolution appointing such alternate members.
Section 3. Committee Proceedings. A quorum for transacting
business by any committee shall be one-third of the number of members of the
committee as then constituted, not including the number of alternate members,
but the alternate members present at any meeting shall be counted for the
purpose of determining if a quorum is present at the meeting. The vote of a
majority of the members, including alternate members sitting as members, present
at a meeting at which a quorum is present shall be the act of the committee. All
members present at any meeting of a committee may be counted in determining the
presence of a quorum for all purposes and for all matters before the meeting
regardless of the interest a member may have in any matter brought before the
meeting. Each of the committees may appoint a secretary of the committee, who
need not be a Director. Each of the committees shall have power to fix the date,
time and place of holding its meetings and the method of giving notice thereof
and to adopt its own rules of procedure. Each of them shall keep minutes of all
its meetings which shall be open to the inspection of any Director at any time.
Section 4. Compensation. Each member of a committee, and each
alternate member of a committee, who is not an officer or an employee of the
Corporation shall be entitled to receive, for
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<PAGE>
his services as a member or as an alternate member of such committee,
compensation in such amounts as the Board of Directors by resolution may from
time to time determine. Each member of a committee, and each alternate member of
a committee, whether or not an officer or an employee of the Corporation, shall
be entitled to reimbursement for all expenses incurred by him in attending any
meeting of such committee.
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<PAGE>
ARTICLE IV
OFFICERS
Section 1. Officers. The executive officers of the Corporation
shall be a Chairman of the Board, one or more Vice Chairmen of the Board, a
President, one or more Executive Vice Presidents, one or more Vice Presidents, a
Controller, a Treasurer and a Secretary. Any number of offices may be held by
the same person. All such officers shall be elected by the Board of Directors at
the first meeting of the Board of Directors held after each annual meeting of
the stockholders. The Board of Directors may elect such other officers as they
deem necessary, who shall have such authority and shall perform such duties as
the Board of Directors from time to time prescribe. In its discretion, the Board
of Directors may leave any office unfilled.
Except as otherwise expressly provided in a contract duly
authorized by the Board of Directors, all officers and agents shall be subject
to removal at any time by the affirmative vote of a majority of the whole Board
of Directors, and all officers, agents and employees other than officers elected
by the Board of Directors shall hold office at the discretion of the Committee
or of the officers appointing them. Salaried officers shall devote their entire
time, skill and energy to the business of the Corporation unless the contrary is
expressly assented to by resolution of the Board of Directors.
Section 2. Powers and Duties of the Chairman of the Board. The
Chairman of the Board shall be the chief executive and policy officer of the
Corporation and, subject to the control of the Board of Directors, shall have
general charge and control of all the business and affairs of the Corporation.
The Chairman shall (i) preside at all meetings of stockholders and of the Board
of Directors, (ii) from time to time secure information concerning the business
and affairs of the Corporation and promptly communicate such information to the
Board, (iii) communicate to the Board all matters presented by any officer for
its consideration, and (iv) from time to time communicate to the officers such
action of the Board of Directors as may affect the performance of their official
duties.
Section 3. Powers and Duties of the Vice Chairmen of the
Board. Each Vice Chairman of the Board shall have such powers and perform such
duties as may from time to time be assigned to such office by these By-Laws, the
Board of Directors or the Chairman of the Board.
Section 4. Powers and Duties of the President. The President
shall have such powers and perform such duties as may from time to time be
assigned to such office by these By-Laws, the Board of Directors or the Chairman
of the Board.
Section 5. Powers and Duties of the Executive Vice Presidents.
Each Executive Vice President shall have such powers and perform such duties as
may from time to time be assigned to such office by these By-Laws, the Board of
Directors or the Chairman of the Board.
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<PAGE>
Section 6. Powers and Duties of the Vice Presidents. Each Vice
President shall have such powers and perform such duties as may from time to
time be assigned to such office by these By-Laws, the Board of Directors or the
Chairman of the Board.
Section 7. Powers and Duties of the Controller. The Controller
shall be the principal officer in charge of the accounts of the Corporation, and
shall perform such duties as from time to time may be assigned to such office by
the Board of Directors or the Chairman of the Board.
Section 8. Powers and Duties of the Treasurer. The Treasurer
shall have custody of all the funds and securities of the Corporation and shall
perform all acts incident to the position of Treasurer, subject to the control
of the Board of Directors. When necessary or proper, the Treasurer may endorse
or cause to be endorsed on behalf of the Corporation for collection, checks,
notes and other obligations and shall deposit the same to the credit of the
Corporation in such bank or banks or depository or depositories as may have been
designated by the Board of Directors or by any officer authorized by the Board
of Directors to make such designation. Whenever required by the Board of
Directors, the Treasurer shall render a statement of the funds and securities of
the Corporation in his or her custody.
Section 9. Powers and Duties of the Secretary. The Secretary
shall keep the minutes of all meetings of the Board of Directors and the minutes
of all meetings of stockholders in books to be kept for that purpose. The
Secretary shall attend to the giving or serving of all notices of the
Corporation and may sign with any executive officer in the name of the
Corporation, all contracts authorized by the Board of Directors or by any
committee of the Corporation having the requisite authority and, when so ordered
by the Board of Directors or such committee, shall affix the seal of the
Corporation thereto. The Secretary shall have charge of the stock certificate
books, transfer books and stock ledgers and such other books and papers as the
Board of Directors shall direct, all of which shall at all reasonable times be
open to the examination of any Director at the offices of the Corporation during
business hours. The Secretary shall in general perform all the duties incident
to the office of Secretary, subject to the control of the Board of Directors.
Section 10. Powers and Duties of Additional Officers. The
Board of Directors or the Executive Committee may from time to time by
resolution delegate to any Assistant Controller or Controllers, any Assistant
Treasurer or Treasurers and/or any Assistant Secretary or Secretaries, elected
by the Board, any of the powers or duties herein assigned to the Controller, the
Treasurer or the Secretary, respectively.
Section 11. Giving of Bond by Officers. All officers of the
Corporation, if required to do so by the Board of Directors, shall furnish bonds
to the Corporation for the faithful performance of their duties, in such
penalties and with such conditions and security as the Board may require.
Section 12. Voting Upon Stocks. Unless otherwise ordered by
the Board of Directors, any executive officer shall have full power and
authority on behalf of the Corporation to attend, in person or by proxy, and to
act and to vote at any meetings of stockholders of any corporation in
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<PAGE>
which the Corporation may hold stock, and at or in connection with any such
meetings shall possess and may exercise any and all rights and powers incident
to the ownership of such stock which, as the owner thereof, the Corporation
might have possessed and exercised if present. The Board of Directors may, by
resolution, from time to time, confer like powers upon any other person or
persons.
Section 13. Compensation of Officers. The officers shall be
entitled to receive such compensation for their services as may be determined
from time to time by the Board of Directors or, if the Board of Directors shall
so authorize and direct, by a committee of the Board of Directors.
ARTICLE V
CAPITAL STOCK -- SEAL -- FISCAL YEAR
Section 1. Certificates for Shares. Certificates for shares of
the capital stock of the Corporation shall be in such form not inconsistent with
the Certificate of Incorporation as shall be approved by the Board of Directors.
The certificates shall be signed by the Chairman of the Board or a Vice Chairman
of the Board and also by the Treasurer or an Assistant Treasurer and shall not
be valid unless so signed. If a 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. If 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 though such
person were such officer, transfer agent or registrar at the date of issue.
All certificates shall be consecutively numbered. The name of
the person owning the shares represented thereby with the number of such shares
and the date of issue thereof shall be entered in the Corporation's books.
Except as hereinafter provided, all certificates surrendered
to the Corporation shall be canceled and no new certificates shall be issued
until former certificates for the same number of shares of the same class shall
have been surrendered and canceled.
Section 2. Replacing Lost, Stolen, Destroyed or Escheated
Stock Certificates. The Board of Directors or any officer to whom the Board of
Directors has delegated authority, may authorize any transfer agent to issue at
any time and from time to time until otherwise directed new stock certificates
in the place of certificates previously issued by the Corporation, alleged to
have been lost, stolen or destroyed, upon receipt by the transfer agent of (a)
evidence of loss, theft or destruction (which may be the affidavit of the
applicant), (b) an undertaking to indemnify the Corporation and any transfer
agent and registrar of stock of the Corporation against claims that may be made
against it or them on account of the lost, stolen or destroyed certificate or
the issue of a new certificate, of such kind and in such amount (which may be
either a fixed or open amount) as the Board of Directors or authorized officer
or officers shall have authorized the transfer agent to accept,
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<PAGE>
and (c) any other documents or instruments that the Board of Directors or an
authorized officer may from time to time require.
The Board of Directors or any officer to whom the Board of
Directors has delegated authority, may authorize any transfer agent to issue at
any time and from time to time until otherwise directed new stock certificates,
in the place of certificates previously issued by the Corporation, representing
shares of stock of the Corporation which, together with all unclaimed dividends
thereon, are claimed and demanded by any State of the United States in
accordance with its escheat laws regarding unclaimed or abandoned property.
Section 3. Transfer of Shares. A stock transfer book shall be
kept by the Corporation or by one or more agents appointed by it, in which the
shares of the capital stock of the Corporation shall be transferred. Such shares
shall be transferred on the books of the Corporation by the holder thereof in
person or by his attorney duly authorized in writing, upon surrender and
cancellation of certificates for a like number of shares.
Section 4. Regulations. The Board of Directors shall have
power and authority to make all such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of the capital stock of the Corporation.
The Board of Directors may appoint one or more transfer agents
and registrars of transfers and may require all stock certificates to bear the
signature of one of the transfer agents and of one of the registrars of
transfers so appointed.
Section 5. Fixing of Record Dates. In order to determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action (other than action by consent, which is the subject of
Article 1, Section 11 of these ByLaws), the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date 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. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting, provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
Section 6. Dividends. Subject to the provisions of the
Certificate of Incorporation of the Corporation, the Board of Directors may
declare dividends from the surplus of the Corporation or from the net profits
arising from its business. Subject to the provisions of the Certificate of
Incorporation of the Corporation, the dividends on any class of stock of the
Corporation, if declared, shall be payable on dates to be fixed by the Board of
Directors. If the date fixed for the payment of any dividend shall in any year
fall upon a legal holiday, then the dividend payable on such date shall be paid
on the next day not a legal holiday.
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<PAGE>
Section 7. Corporate Seal. The Board of Directors shall
provide a suitable seal, containing the name of the Corporation, which seal
shall be in the charge of the Secretary. If and when so directed by the Board of
Directors, a duplicate of the seal may be kept and be used by the Treasurer, any
Assistant Secretary or any Assistant Treasurer.
Section 8. Fiscal Year. The fiscal year of the Corporation
shall begin on the first day of January and terminate on the thirty-first day of
December in each year.
ARTICLE VI
SIGNING OF CHECKS, NOTES, ETC.
All checks, drafts, bills of exchange, notes or other
obligations or orders for the payment of money shall be signed by such officer
or officers or employee or employees of the Corporation and in such manner as
shall from time to time be determined by resolution of the Board of Directors or
by any officer of the Corporation authorized by resolution of the Board of
Directors to make such determinations.
ARTICLE VII
AMENDMENTS
These By-Laws may be altered, amended or repealed, or new
By-Laws may be adopted, by the Board of Directors or by the stockholders as
provided in the Certificate of Incorporation.
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of June 30, 1999 and the Consolidated Statement of
Income for the three months and six months ended June 30, 1999 and 1998 and
Condensed Consolidated Statement of Cash Flows for the six months ended June 30,
1999 and 1998 and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 92,764
<SECURITIES> 0
<RECEIVABLES> 131,925
<ALLOWANCES> 16,746
<INVENTORY> 2,013,615
<CURRENT-ASSETS> 0
<PP&E> 127,240
<DEPRECIATION> 54,035
<TOTAL-ASSETS> 2,522,634
<CURRENT-LIABILITIES> 0
<BONDS> 1,938,344
0
0
<COMMON> 241
<OTHER-SE> 338,040
<TOTAL-LIABILITY-AND-EQUITY> 2,522,634
<SALES> 0
<TOTAL-REVENUES> 470,901
<CGS> 0
<TOTAL-COSTS> 290,177
<OTHER-EXPENSES> 2,697
<LOSS-PROVISION> 4,927
<INTEREST-EXPENSE> 44,523
<INCOME-PRETAX> 41,103
<INCOME-TAX> 18,718
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,385
<EPS-BASIC> 0.93
<EPS-DILUTED> 0.92
</TABLE>
